Moderate Competitive Rivalry
Global industry growth rate is 4.1% (UNWTO .2005 )
High fixed cost largely favours the incumbents
Variation of sizes of incumbents
The threats of Substitutes
Low threats of substitutes
Technologies (TV and Games ) could act as substitutes but cant replace travel. Low differentiation of product limits the substitutes.
The bargaining power of the buyers
Low bargaining power
Few substitutes and low differentiation of products
This makes them in a weaker negotiation position even though they have low – medium switching cost.
The bargaining power of the suppliers
Moderate bargaining power
Low switching cost for incumbents
50% of market share is with top 4 players
Threat of backward integration (Incumbents like TUI and Thomas cook have their own hotels , airlines cruises ect.
The threats of new entrants
Low threats of entrants
High capital requirements reduces threats of entry
Top 10 market leaders cover 70% of the industry so expected price retaliation reduces and economies of scale is high. Brand recognition.
Perform a SWOT analysis and use this to help think through the industry dynamics in the hi-fi sector.
What are the opportunities and threats facing these specialist hi-fi firms?
On the one hand, these firms do have the right strengths to take advantage of the opportunities in the market. Indeed, we analyzed that these firms tried to develop new products in order to deal with the rapid growth in sales of audio and video products. Moreover, they have a good engineered department which tends to improve the quality of products with the aim of catching the rapid growth in sales of digital music for example. So these specialist hi-fi firms have to evolve towards new audio...
STRENGTHS & WEAKNESSES
Employees are audiophiles, passionate by music.