The Rivalry Among Existing Firms: Strong

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  • Topic: Office supplies, Retailing, Office Depot
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  • Published : November 20, 2012
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The Rivalry among existing firms: strong
The office supply industry has a large number of players with a high diversity of rivals. Competition is very furies between them because the office supply industry is so divers in product and services they provide; they include high volume office supply, warehouse clubs, online retailers, copy and print businesses, discount retailers and local and regional contract stationers. The large number of competitors in this industry, along with a lack of product differences, with low switching coast for buyers and the ability of the buyers to shop around the internet for the best price. Had made this industry growth to become very slow.

source
http://360.datamonitor.com/Product?pid=4CA55D31-18F9-44E1-BB86-D1E5E5306887 Rivalry
Figure 9: Drivers of degree of rivalry in the office services & supplies market in the United States, 2010
Players range in size and product diversity; they include high-volume office supply providers (e.g. Staples), warehouse clubs (e.g. Costco), copy and print businesses (e.g. FedEx Office), online retailers (e.g. Amazon.com), ink cartridge specialty stores, discount retailers, as well as several local and regional contract stationers. The large number of players, along with low-cost switching for buyers, low product differentiation, easy expansion by utilizing the internet, and poor market growth in recent years, intensifies rivalry amongst incumbents. This is ameliorated somewhat by the diversity displayed in the product portfolio of some players, such as online retailers and discount retailers, who operate in other markets and are therefore not solely reliant on the revenues generated from the office services and supplies market. Relatively low storage costs and the non-specificity of players’ assets lowers barriers to exit and eases rivalry. Overall, rivalry is strong.

FIVE FORCES ANALYSIS
The office services & supplies market will be analyzed taking retailers of paper, storage, stationary, and office services, such as photocopying, printing and binding as players. The key buyers will be taken as businesses, and manufacturers of paper, storage, stationary, and equipment for photocopying, printing and binding as the key suppliers.

Summary
Figure 4: Forces driving competition in the office services & supplies market in the United

States, 2010
The market is highly fragmented with players ranging from multinational high-volume office supply providers to local stationers.
The abundance and diversity of buyers weakens buyer power, whilst low-cost switching, low product differentiation, and high price sensitivity strengthen it. Such factors, along with low brand loyalty and easy access to suppliers and distribution, also contribute to the high likelihood of new entrants. Suppliers are numerous, and low differentiation, along with some backwards integration by players who sell their own branded goods, weakens supplier power. The large number of players, along with low-cost switching for buyers, low product differentiation, easy expansion by utilizing the internet, and poor market growth in recent years, intensifies rivalry amongst incumbents.

Buyer power
Figure 5: Drivers of buyer power in the office services & supplies market in the United States, 2010
Buyers are numerous and diverse. This, along with the importance of the products and services provided by players to buyers, weakens buyer power. Buyers can range in size from sole proprietors to multinational corporations and buyer power is boosted by larger buyers with greater financial muscle. Large businesses put office services and supplies out to tender bids while smaller businesses can negotiate discounts through trade associations. However, buyer power is sustained by low customer loyalty, low switching costs, low level product differentiation and high price sensitivity, giving customers a wide choice of retailers. The internet has made cost comparison easier, raising price...
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