Porter’s Five Factor Model and the Hotel Industry
The hotels chosen for this paper are: Vintage Inns primarily located in Niagara-on-the-Lake, Canada, Sheraton Hotel chain and Best Western Hotel Chain. “Every business must design a strategy for achieving its goals, consisting of marketing strategy and compatible technological strategy and sourcing strategy”. Porter’s Five Factor Model
According to Porter (2001) the internet is an enabling technology that can be used within the context of a good business strategy in any industry. Although the Internet alters industry structures and levels the competitive ground often dampening profitability in the industry, it can be used to encourage and promote greater profitability if properly implemented. Threat of Substitute Goods
In the hotel industry there is usually another hotel just around the corner. They appear in all price ranges, with varying levels of service and amenities. The constant challenge will always be to get the guest to choose your hotel over the competitor. The internet makes the overall market more efficient while expanding the size of the potential market and creating new substitution threats. Given the potency of this threat a superb internet presence is vital. Bargaining Power of Buyers
Business persons choosing a hotel for business travel are savvy consumers and they are comfortable with computer technology. It has become very simple for them to go online and book a hotel. They no longer need travel agents, corporate travel consultants or middle men of any kind to determine where they will stay. Porter’s model predicts this elimination of intermediaries. Rivalry among existing competitors
The rivalry among competitors in the hotel industry is fierce. When potential customers can learn about a hotel on line, the internet reduces the differences among competitors. People tend to seek the best price for the best experience and the tendency is to reduce price to be competitive. The internet...
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