Competituive Forces

Topics: Strategic management, Marketing, Porter five forces analysis Pages: 6 (2108 words) Published: May 16, 2013
Michael Porter identified 5 forces analysis of which he defined as a framework for industry analysis and business strategy that draws up industrial organization economics to derive the 5 forces. These five forces determine the intrinsic long run attractiveness and strength of a market segment: industry competitors potential entrants, substitutes, buyers and supplies. Three of Porter's five forces refer to competition from external sources. The remainders are internal threats. Porter referred to these forces as the micro environment, to contrast it with the more general term macro environment. They consist of those forces close to a company that affect its ability to serve its customers and make a profit. A change in any of the forces normally requires a business unit to re-assess the marketplace given the overall change in industry information. The overall industry attractiveness does not imply that every firm in the industry will return the same profitability. Firms are able to apply their core competencies, business model or network to achieve a profit above the industry average and the writer is going to look at the impacts these forces have on the Zimbabwean Tourism Industry. The diagram below is an overview of Porters five forces

Adaped from Phillpe Kolter (2010)
Threat of intense segment rivalry
A segment is unattractive if it contains numerous, strong and aggressive competitors as according to Phillipe Kotler. As in the diagram above all the 4 forces mentioned in the digramram contribute to the intensity of rivalry within the industry. For example, Rainbow hotel in Bulawayo faces stiff competition from its rivals like Cresta Churchill, Nesbit Castle, holiday Inn and the nearby Hotel St. Patrick’s. The existence of these rivals in respect to their exceptional environment like in the case of Hotel St. Patrick’s is a live threat to rainbow hotel which is located in the CBD and in a less quiet environment as compared to St. Patrick’s. Rainbow offers services like which are offered at Hotel St. Patrick’s for example wedding planning and function management. Looking at these two hotels they offer the service differently and this makes it a threat to each and every firm in the industry. A segment is even more unattractive if it is stable or declining and fixed costs in need to be increased or exit barriers are high or its competitors have high stakes in staying in the segment. For example in African Sun limited, one of its Strategic business unit Hwange Safari lodge, had not been pumping in profits from 2008-2010. The corporate was keeping this unit for strategic reasons, thus business was going to boast on the 2010 world cup and gain its competitive advantage and recap on its position in the market. The reason why it did not exit the market is the potential that it possessed as far as the dog factor in the BCG matrix is concerned. These conditions will lead to frequent price wars as some rivals may restructure their marketing strategy to price penetration into the existing market, advertising battles and new product introduction and will make it expensive to compete. In the case of INSCCOR, expensive renovations were done to catch the customers and position its self in within the market. Hotels and lodges in Gweru like Village Lodge are advertising through billboards to attract customer attention and fight the competition. On price wars, analysis Zimbabwe’s hospitality industry concentrating on Bulawayo locality, food outlets like Chicken Inn, their chicken is less expensive, for example ‘1 piercer’, 2piecer combos’ unlike hotel food which is generally expensive, for example Holiday inn half chicken costs US$22 comparing to Mamoyo restaurant billing it at $11, half the price for Holiday inn. The price at Mamoyos attracts customers’ from different levels of affluence. In an effort to eliminate intense segment rivalry food outlets, lodges and hotels invested in setting up billboards like chicken inn, village...
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