Porters Five Forces

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S/ID- 21034681
2nd January 2011-
Markets and Strategy
Assignment Title- CW 1

Review of Srilanka tourism’s operating environment and Trends in Key economic variables within targeted countries.


Section page

1.0 Introduction2

2.0 Five forces in tourism2
3.1 Rivalry
3.2 Threat of new entrants
3.3 Threat of substitute
3.4 Bargaining power of buyers
3.5 Bargaining power of suppliers

3.0 Review of Trends in economic variables5
3.1 operating countries and segments of Srilanka tourism
3.2Key economic variables7
* GDP growth
* Falling prices
* Development of technology
* Demand from emerging economies
* Climate change
* Demographic change
* Exchange rate

4.0 Conclusion and Recommendation 9

5.0 References 10

1. Introduction -Srilanka Tourism Industry
A country which had been battered by the brutal civil war for two decades, has shown over 45% growth in tourism for the year 2010 compared to 2009 thus passing the 600,000 targeted tourists arrivals for the first time. (SLTDA, 2010) While the travel warnings issued by many countries have being withdrawn, many international flights have resumed their normal schedules and the local services providers are getting very active with high occupancy . This means Srilanka has already raised the eye browse of its competitors who is fighting for the same market share . Tourism in Sri Lanka accounted for 2.5% of the G D P (Central Bank, 2009) and the government of has set a target of 2.5 million tourists by 2016. ( Mahinda Chinthanaya 2010). Growth of the tourism is expected link to other sectors directly or indirectly. It is expected to provide direct and indirect employment for over 625,000 employees by 20106 providing sustenance to 15% of the population .It is estimated that tourism will be the3rd largest foreign exchange earner by 2016 with over USD 2 billion annual earnings. (SLTDA,2010 ). Sri Lanka being a small island with 65,610 sq.km it possesses a high level of diversity includes flora, fauna, world heritage sites to sunny beaches. Sri Lanka has a wide range of topographic and climatic variations, where a 20 degree Celsius temperature difference can be experienced within a mere 100 km distance. Sri Lanka’s such extreme diversity and compactness coupled with unspoiled territory is differentiating the island from its immediate competitors thus positioning it as Asia’s diverse, compact and authentic Island. (SLTDA,2009). 2.Porter’s Five forces

2.1 Intensity of competition Rivalry
Intensity of competitive rivalry is very high . In 2009 over 825 million tourists have travelled for more than 150 countries. Europe and America have enjoyed over 72% of the market share while S. Asia has enjoyed only 1.2% with around 10 million tourists . However South east Asia has enjoyed over 20% of the market share in 2009 . (UNWTO, 2010 ). Being a country In Asia and in South Asia , Srilanka is fighting with in a total share between 1,2% to 20 % and for market segments very similar to competitors. Further ,Srilanka not only has to compete with other asian giants such as India, Malaysia, Thailand, Nepal, Indonesia ,Mauritius who are offering similar products but also countries like Kenya, Cuba, Madagascar who are offering stiff resistance with competitive prices.

2.2 Threats of new entrants
In tourism new entrants always get the attention of travelers as travellers have a tendency of exploring new destinations. While countries like Ruwanda in post conflict period may get the attention of some visitors there is little room for any new country to come In as most of...
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