Five forces model
In this section, the structure of our company will be explained using the five competitive forces model developed by Harvard professor Michael Porter. These forces include: rivalry among existing firms, threat of new entrants, bargaining power of buyers, threat of substitutes and bargaining power of suppliers. Each of these forces will have their own distinctive effect on determining industry profitability.
Intensity of rivalry among competitors:
Recently there are many types of recreation in Hanoi such as swimming pool, coffee house, karaoke and cinema, etc. The competition among these services seems to be very strong. Also, it is quite easy for customers to change among these types. People just simply choose the service which is more suitable and affordable for them. However, there is no center that provides similar service as we do, so the direct competition in this sector might not be strong. The rivalry among competitors in this sector is considered weak force.
Threat of new entrance and barriers to entry
The major barriers when entering the service market is government license, equipment, plan and access to customers. In order to establish a new business in recreation sector, it is compulsory to attain license from bureau of planning and investment. According to Vietnam Enterprise Law, the owners have to submit certain required document and pay submission fee so they can get the approval after 10 days. Besides, basic equipment needed to set up stress relief center or recreation center can be easily purchased through many supply channels. Moreover, it is possible to use brochure, leaflets and advertising in order to attract customers. These barriers are not too difficult to overcome, especially when the owner possesses enough financial resources. Overall, we can see that barriers to entry are quite low and threat of new entrance is a strong force.
Threat of substitutes
Substitutes of this service include types of