Managing Strategies

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Managing Strategies
Visiocom International

Question 3.
Pin point the threats of the company through Porter’s 5 sources model

The five forces model (competitive-forces model) is a model developed by Michael Porter. The model aims to determine the potential profit of a certain market or industry. According to Michael Porter, this potential is influenced by five factors which he calls 'forces'.

The competitive-forces model for Visiocom is as follows:

1. Bargaining power of suppliers

* The main manufacturers of the hardware are engaged in merciless competition, which means that Visiocom has difficulty launching new products on time because they must work with different technologies developed by consoles providers. * There are not that many suppliers for the hardware that Visiocom needs. For that reason Visiocom has not that much power against suppliers because they cannot threaten to go working with another supplier. * It is also possible that the suppliers are going to sell the consoles by themselves (vertical integration). That way Visiocom needs to search another supplier.

2. Bargaining power of customers (buyers)

* Every customer that has a game console, PC/MAC computer etc., and wants to play games, needs to buy a video game. So Visiocom has power in that case. But probably there is more than only one company who produces and distributes videogames. Customers can easily chose to buy games from another company. Visiocom has to care that they sell their games for a good price and that they offer high quality products.

3. Threat of substitute products or services

* Visiocom is involved in the production and distribution of video games to be used on games consoles, PC/Mac computers as well as any interactive platform such as interactive TV, Internet or compatible WAP Terminals. Because the company is specialized in so many different platforms, they will barely be threatened by substitute products...
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