As of the time of the case, 2007, although IMAX was involved in three different industries, the case suggests that it was primarily in Photographic Equipment and Supplier industry primarily because about 51 per cent of its total revenue of IMAX was system sale. Therefore, the following analysis will focus on that industry. Bargaining Power of Suppliers
Major suppliers of photographic equipment and supplier industry may include manufacturers producing relevant components of any kind of equipment, contractors making the complete equipment, and so forth. From my viewpoint, the suppliers’ bargaining power is low because of several reasons. First, along with the development of photographically relevant equipment, although the products firms provide are technically concentrated, there are certain standards recognized and adopted, such as film size of 35 mm or certain sizes of lens filter, in the industry. Therefore, the switching cost for their buyers is low. Second, photographic equipment and supplier industry is an important customer to its supplier group. Specifically, the usage of the products that the supplier group provides is limited to machinery or equipment in other industries. Besides, although there are few substitute products, which situation generally increases supplier group’s bargaining power, firms in photographic equipment and supplier industry still can easily find other manufacturers with lower cost. Bargaining Power of Buyers
The buyer group of photographic equipment and supplier industry is enormous, ranging from B2B buyers like motion picture production firms to B2C buyers like customers who purchase digital single lens cameras. Considering the difference of consuming difference of buyers and following reasons, the bargaining power of buyers is medium. First, sales volume varies among different segments. For example, motion movie production studios or chain multiplexes may have high bargaining power because of high purchasing volumes; on the other hand, customers who go to Staple to purchase a copy machine have little or no bargaining power. Second, the products in photographic equipment and supplier industry are generally undifferentiated because of aforementioned regular standard existing, and therefore bargaining power increases. However, exception could be that once new products are launched with attracting feature and highly accepted by buyers, such as IMAX format, the bargaining power decreases. Moreover, because of the great scope of photographic equipment, switching cost varies extremely, taking the difference between cameras shooting in IMAX digital format and little digital cameras from all brands in the market as example. Besides, backward integrations are less likely to happen compared to forward integrations from supplier group.
Threat of Substitute Products
In photographic equipment and supplier industry, treat of substitute is low primarily because products from this industry has been evolving for decades and has become essential goods. For instance, copy machine, also provided from the industry, has become essential equipment in firms and institutions. Although the substitute products to this example could be pens and paper, few people really would do that for efficiency concern, and therefore the switching cost is high. Intensity of Rivalry
Competition in photographic equipment and supplier industry is intense for reasons. Because of the specialized nature of the products, generally exist barrier is high for big companies like Cannon, Nikon, and Xerox, and those major competitors are highly committed to the industry by providing products with advanced technology and competing against each other intensively. Although some products in the industry can differentiate themselves from others and protected by patents for a period of time, new film format from IMAX for example, once competitors foresee the great potential profitability, it is not difficult for them...