Question

Suppose you and your friend want to start a business, and the friend suggests to start a movie dvd rental store in the bronx. Is that an attractive market? Discuss using Porter's Five Forces

Answer 1

Porters five forces:-

1.Competition in the industry:-

Nintendo is a Japanese multinational consumer electronics and video game company. Some of its best known and top selling video games are Mario and Pokemon. It is facing intense competition from Sony PlayStation and Microsoft Xbox. Although competition is intense, significant R&D capabilities can be employed to excel.

2.Potential of New Entrants:-

Since, the barriers to entry into the video game industry are very few i.e. good user interface, etc and no other legal barriers, new entrants can enter the market very easily.

3.Power of Suppliers:-

Supplier power is considered to be low to medium. Since there are numerous companies to provide the software and hardware to Nintendo, power of suppliers is comparatively low.

4.Power of Customers:-

Buyers do not have many choices in the video game industry except from Sony and Microsoft and have to purchase games at the prices as set by the company. Hence, power of customers is relatively low.

5.Threat of Substitute product:-

Many alternative gaming platforms are the major threat eg- mobiles. Hence, threat from substitute products is relatively high.