Question

Industry Level Analysis/ Porters Five Forces of Etsy

Answer 1

Threat of New Entrants- The threat of new entrants reflects how new players in the market place threats against existing players. If the industry is profitable, and barriers to entering the industry are low, it will attract more players and, consequently, the threat to new entrants. Are going to be high.

Here are some factors that reduce the threat of new entrants to Etsy Inc.: Entry into the industry requires significant investment in capital and resources. This force also loses strength if the differentiation of the product is high, and customers place great importance on unique experience. By working on customer relationship management Etsy Inc can develop brand loyalty. It will raise the psychological cost of switching. It can develop long-term contractual relationships with distributors to broaden the target market access.

Threat of substitute products/Services- The availability of substitute products or services creates challenges for Etsy Inc and other existing players in the competitive environment. High threat from substitutes shows that customers can use alternative products / services from other industries to satisfy their needs. Different factors determine the intensity of this threat to Etsy Inc The threat of substitute products or services increases when; a cheaper substitute product / service is available from another industry The psychological cost of moving from industry to substitute products is low. Etsy Inc can reduce the threat of substitute products or services by clearly emphasizing how its product / service offered is better than the substitutes available. It should provide convincing reasons for customers by offering better experience and high value for money. It can increase switching costs by working on loyalty.

Rivalry amongst existing firms- The rivalry between existing firms shows the number of competitors that give the Etsy Inc High rivalry tough competition, showing that Etsy Inc can face strong pressure from rival firms that can limit the growth potential of each other. Profitability in such industries is low as companies take aggressive strategies for targeting and pricing against each other. For Etsy Inc, the rivalry between existing firms will be low if there is only a limited number of players on the market The industry is growing at a rapid rate.

To strengthen the differentiation base, Etsy Inc should focus on its customers 'implicit needs and expectations. By developing long-term customer relationships, it should raise the switching costs. In order to identify new customer segments the organization should also invest in research and development activities. In some cases it can be mutually beneficial to collaborate with competitors. The organisation, too, can look for this option.

Bargaining power of suppliers- In the Porter 5 force model, the bargaining power of suppliers reflects the pressure exerted by suppliers on business organizations by adopting various tactics such as reducing product availability, reducing quality or increasing prices. It costs the buyers- (business organizations) when suppliers have strong bargaining power. In addition, high supplier bargaining power can boost industry competition and lower Etsy Inc's profit and growth potential Similarly, weak supplier power can make the industry more attractive because of high profitability and growth potential

Bargaining power of buyers- Buyer bargaining power indicates the pressure exerted by customers on business organizations to obtain high-quality products with excellent customer service at affordable prices. This force directly influences the ability of the Etsy Inc to achieve the business goals. Strong bargaining power lowers profitability and increases competitiveness for the industry. Whereas when buyer power is weak, it makes the industry less competitive and increases Etsy Inc's profitability and growth opportunities Some factors increase buyer bargaining power.

A more concentrated customer base will also increase their bargaining power against Etsy IncBuyer power if there are few in number whereas there are too many sellers (business organisations).