Generally speaking, by analyzing Porter’s five forces of radio station industry in New Zealand, we could get the conclusion that four of those five forces have negative influences on the industry, namely the intensity of rivalry, the threat of substitutes, the bargaining power of buyers, and the bargaining power of suppliers. Only the threat of new entrants has positive influence. Fortunately, ICTs are broadly used in converting the negatives to positives among the radio station industry. And it actually does very well. The below facts are the analysis of Porter’s five forces and ICTs being implicated in radio station industry.
Threat of New Entrants
Initially, we would like to comment the unique constructive factor of Porter’s five forces in NZ radio industry. Overall, it is not easy to enter the radio industry. In the first place, it is not a free market. Limitations are both from legislation and government. Only those who satisfy all the terms could get full licenses and get the permission to start the business. Obviously, it is risky for investors. Secondly, huge amount of money is needed to throw into a radio station. The numerous capital requirements frighten those who do not have sufficient capital. Information and technology is another obstacle for new entrants. Furthermore, the exit of radio cost investors lots of money. Hence, it is clearly quite an expensive investment. Next, the greatest threat of entering the industry is the brands that have been existed for a rather long time. Actually, in New Zealand, over 250 radio stations are consolidated into 17 brands and two primary media owners, CanWest and The Radio Network cover approximately 85% of the radio audience. How could a new entrant compete with those mature and strong radio stations in fair? Therefore, it is rather difficult for people to start new business in radio industry. On the contrary, the existing radio stations do not have to worry a lot about the threat from new entrants.
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