Bargaining Power of Suppliers
Supplier bargaining power is likely to be high.
*The market is dominated by a few large suppliers rather than a fragmented source of supply,
*There is the possibility of the supplier integrating forwards in order to obtain higher prices and margins.
*Forward integration provides economies of scale for the supplier
Bargaining Power of Customers
Customers bargaining power is likely to be high
*Switching to an alternative brand or store is relatively simple and is not related to high costs,
*Customers have low margins and are price-sensitive,
*The product is not strategically important to the customer,
*There is the possibility for the customer integrating backwards.
Threat of New Entrants
The competition in a sports good industry will be high; it is easier for other companies to enter this industry. In such a situation, new entrants could change major determinants of the market environment (e.g. market shares, prices, customer loyalty) at any time.
*Distribution channels are controlled by existing players,
*High switching costs for customers
Threat of Substitutes
Threat from substitutes in a sports goods retail industry is high
*there are many possible substitutes such as the internet, chains outside of the city and small specialty stores that sell a small number of sporting goods.
The Term Paper on Barriers to Entry and Bargaining Power
... have little bargaining power and Coke and Pepsi are able to charge them relatively high prices for syrup. ... bargaining power with the supplier increases. Bargaining Power of Suppliers. The greater the bargaining power of suppliers, the lower the industry’s profitability. Suppliers’ bargaining ... access to channels of distribution and existing customer relationships, and legal barriers to entry. Threat ...
Competitive Rivalry between Existing Players
Competition between existing players is likely to be high
*There are many players of about the same size,
*Players have similar strategies
*use of internet, allowing customers to buy from other stores
There is not much differentiation between players and their products; hence, there is much price competition Barriers for exit are high (e.g. expensive and highly specialz-ed equipment)
Note: we can state from porter’s five forces that it is not a very attractive industry to enter. The competion is high and survival rate is low. In Boston, there are more that 50 stores, making it harder for a new one to enter this field. The suppliers have a strong hold over the market with customers having their own brand preferences and loyalty.
