Porter 5 Force on Travel Industry

Topics: Strategic management, Barriers to entry, Management Pages: 3 (683 words) Published: August 5, 2012
Porter’s Five Forces: Travel Agency : 
Industry Rivalry : Highly Fragmented Industry with Intense Rivalry Highly Fragmented Industry. Organized players would barely have 15-20% of the marketplace Most of organized players are present in metros & mini-metros Large disposable incomes in towns like Lucknow, Jaipur, Coimbatore etc. serviced by family run unorganized players Industry rivalry is intense but not cutthroat Rivalry Intense because of low switching costs, low levels of product differentiation, perishability of products diversity of rivals Rivalry is not cut throat since exit barriers are not high, fixed costs are not high, market growth is good Porter’s Five Forces: Travel Agency

Porter’s Five Forces: Travel Agency : 
Threat of Substitutes: Low Threat of Substitutes, as travel moves up the list of household priorities Lot of Possible Substitutes , Threat of Substitution Low India is witnessing a growth of discretionary spend as % of income from 30% in 2005 to around 70% by 2025. Travel , being a discretionary spend poised to gain. Travel has moved up the list of household spending priorities Unlikely to be substituted by a durable purchase or investments Education & Recreation will occupy 9% share of wallet in 2025 as compared to 5% now. Travel Industry currently at $16 billion, is expected to touch $26 billion by 2010 Porter’s Five Forces: Travel Agency

Porter’s Five Forces : Travel Agency : 
Buyer Power: While buyers are fragmented, their diminishing brand loyalty and ability to switch (for most products) gives them reasonable buying power Buyers are fragmented Diverse retail buyer and corporate buyer profiles Switching costs for buyers is not high as brand loyalty is low/diminishing Credible threat of backward integration Buyers can directly buy from suppliers (hotels, airlines etc) Luxury segment is brand conscious to and willing to pay a premium for great experience and service quality Porter’s Five Forces : Travel Agency

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