Main competitors are Hilton Hotels, Marriot International, and Hyatt Hotels. Competition: High No company over 40% market share.Third party travel websites reduce switching costs even further. Low switching costs for customers between firms. Buyer Power: High Buyers include customers, travellers, and travel agents.Market share is uneven ly distributed among existing players, who are often in various kinds of legal and advertising battles with one another.Starwood Hotels and ResortsPorter’s Five Forces Group 2: Alessandro Galeone, Anthony MacPhee, Donisha Young, Eric D’Eon, Jacquelyn Smith, Jordan Ellis Products in this industry are well branded and tend to have a strong customer base. Large companies in this industry benefit from economies of scale, which is valuable and something they try very hard not to lo se. A main reason why many new entrants are not successful is the intense rivalry between existing players. Rivalry Among Existing Players: The IT industry is known for its rapid growth, effectiveness and competition. Nothing can really replace all that computers do for us as a society. An example of a substitute would be a scientific calculator, but to compare the two is a stretch. We live in a digital age, so we rely on IT to run our lives and businesses. Threat from Substitutes: There is not much of a threat from substitutes to the IT industry, mostly because there aren't true substitutes. Many new firms try to enter this industry, but they rarely give established names a real run for their money. Overall, the IT industry isn't overly attractive, but it is routine and profitable enough that a lot of people try and enter it. The best way for a new entrant in this field to be successful would be if they had a brand new idea for a product or service the lack of differentiation in the industry is one thing a newcomer could exploit. Any newcomer in this industry can expect a strong retaliation from existing players, which is a major reason this industry is not too attractive. At the same time, the industry is unattractive to newcomers because of the cost advantage large-scale incumbents possess, the significant amount of capital a new firm would need, and the major established brands already in the industry. Threat of New Entrants: The IT industry is relatively attractive to newcomers because of its rapid growth and appealing customer base. Suppliers are not "locked" into deals with specific firms (contracts exempt), but most of the relationships between the firms and suppliers in this industry are well established, and these suppliers would most likely not want to end their relationships with firms in the first place.
IT firms are very important to suppliers because they are their primary customers, but I believe suppliers are even more important to buyers(IT firms). Though the inputs are standard, new companies find it difficult (not impossible) to enter this industry as a supplier because of the existing relationships between current suppliers and IT firms, the ever changing and improving technologies of the world and the intense rivalry between existing players. The inputs in this industry are pretty standard, with differences being speed, memory etc. There are typically many interactions between buyers and IT companies because of the need for training to use products, constantly upgraded technology and an abundance of advertising.īargaining Power of Suppliers: Although companies like Intel and AMD are a part of the IT industry, for the purpose of this project I will be classifying those companies as suppliers to the IT industry's firms. Customers are sensitive to price, but IT products and services are necessary to the success of businesses, so they are willing to spend a lot of money to get a good product. Also, because a lot of IT sales come from companies that make large purchases, those companies are powerful and important to the IT firms (who often provide incentives to these businesses, in order to convince them to utilize their products over competitors). There are so many choices for a buyer (many firms in this industry) and there are minimal switching costs, so customers aren't typically "locked in" to one firm. Given the large number of buyers, it is safe to say that the customers control the IT industry. While there are countries that are behind technologically, a majority of locations in the world have access to computers and the internet etc.
Bar gaining Power of Buyers: In an industry as massive as Information Technology, the term "buyers" refers to almost everyone in the world.
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