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AIR Internal Environment
While playing Mikes Bikes, how might your team use Porter's Five Forces as a tool for making decisions?
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Porter’s five forces indicates whether an industry is attractive based on five factors which are threat of new entrants, bargaining power of buyers, bargaining power of suppliers, threat of substitutes and rivalry between competition. In relation to Mikes Bikes, the threat of new entrant factors which need to be considered for the bicycle industry is to find new and innovative avenues to differentiate your production line, distribution and marketing strategies from current competitors within the industry. This could be done by producing new production lines, enhancing advertising or PR or gaining more distribution stores. The bargaining power of buyers is high due to the low switching cost of substitutes and price sensitive consumers. This can be addressed by pricing products low though increasing production and increase advertising to enhance brand awareness. Bargaining power of suppliers is moderate as bike components are externally sourced therefore external suppliers have power over manufacturers. The threat of substitutes is high for all three different types of bikes within the Mikes Bikes simulation as road bikes can be replaced by cars, youth bikes by scooters and mountain bikes by dirt bikes. Therefore, we will need to highlight the important factors of our products by enhancing advertising and PR thus increasing brand awareness. As competition is high within this industry, we will need to use non-price strategies to differentiate our product such as increase brand awareness.

THREAT OF NEW ENTRANTS
Thoroughly research barriers before entering
Take risks and be creative and innovative in your production, distribution and marketing strategies
Understand the opportunities and tools change

BARGAINING POWER OF BUYERS
Buyer has considerable power
Low

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