September 21, 2011
5 Forces Analysis
1) Intensity of Rivalry
a) Level of industry concentration is low so you will have high intensity of rivalry. b) The growth rate of the industry is slowing down so that will also create a high intensity of rivalry. c) Some of the goods they deliver are perishable and time sensitive that creates a high intensity of rivalry. d) The products are undifferentiated so you have high intensity of rivalry. e) They have high exit barriers because of the high fixed costs from flight slots to warehouse buildings. This will create high intensity of rivalry. So over all when you look at the level of industry concentration to the high exit barriers the level of intensity of rivalry will be high for the express mail industry. 2) Threat of New Entry
a) In this industry, you have to start off with a high level of capital to afford everything that goes along with it from airplanes to sorting facilities. So this will create a low threat of new entry. b) You also have high government regulations in certain countries especially in America when it pertains to aircrafts and traveling the friendly skies. Because of the high regulations, you will have low threat of new entry. c) With the Express Mail Industry, you cannot survive without flight slots to get mail and packages where they need to be. Flight slots are hard to come by because most major airlines that own them do not want to part with them. So with this in mind, the threat of new entry will be low. d) Since you have firms in the industry like FedEx (purple and white), UPS (brown), and Airborne with strong brand identification, you will have low threat of new entry. So with all of the government regulations, capital needs, and fight for space and recognition in the industry, chances are companies will think twice before entry this market creating low level of threat of new entry. 3) Buyer Power
a) Medical facilities have low buyer power because they are dealing with highly time sensitive organs and other documents so they have to not only look at cost but more importantly look at quality and timeliness. b) Large firms have high buyer power because they have a high volume of business that enable them to negotiate a reduce rate probably and choose the company that has the best rates to achieve their shipping needs. c) Smaller firms have high buyer power because they are more prices sensitive and take out the time to search for the lowest cost to save money to use in other areas of the busy. They also will look at ways to keep from using express mail as much. d) Consumers have high buyer power because the product is undifferentiated and gives the consumer a pick of which price is the lowest and meets their need. e) Online shoppers have low buyer power because certain websites only offer a certain delivery to choose from taking away their power to negotiate. f) Catalog and website retailers have low buyer power because they depend on express shipping to maintain their business and help it grow with word of mouth advertising and things. 4) Supplier Power
a) Airplane lessors and manufactures are few and will give the supplier high supplier power when it comes to pricing and choosing to accept a deal or not. b) You have your employees who will consist of unskilled works like loaders and sorters that will have low supplier power and then you have your skilled workers like pilots that will have high supplier power because of the knowledge they provide. c) Cargo container manufacturers if they are selling just the standard containers will have low supplier power but if they manufacturer custom containers like in Airborne case they will have high supplier power d) Truck manufacturers are many and with the company buying in bulk mostly will give the suppliers low supplier power because the company will have a choice and chances to search around...
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