Question

1. Do a five-force analysis for the camera industry. Is it an attractive industry?

Answer 1

Porter's Five Competitive Forces - the digital camera industry

Analyzing Porter's Five Competitive Forces are useful to judge an industry's long-term attractiveness at a point of time. These five forces are rivalry among present competitors, threat of new entrants into the industry, the bargaining power of suppliers, the bargaining power of buyers, and the threat of substitute products. Moreover, Porter's Five Competitive Forces explains why some industries are more profitable than others. Analyzing an industry by using Porter's five competitive forces is the first step to do for the people who want to invest or enter the industry.

1. Rivalry Among Present Competitors - Rivalry occurs among companies that product similar products and it is more likely to occur when one competitor tries to improve its standing. Therefore, the greater the competitive rivalry in an industry, the less attractive it is to current players or people who are planning to enter.

Digital Camera Industry - Rivalry is high because many well known brands such as Cannon, Sony, and Olympic are the dominant players of the industry. And these competitors are trying to differentiated their products through new features and functions. Rivalry is really unfavorable in the camera industry.

2. Threat of New Entrants - Threat occurs when competition is intense which means new competitors add capacity to the industry and bring the need to gain market share. Once again, the greater the threat of new entrants, the less will be an industry’s attractiveness.

Digital Camera Industry - Threat of new entrants is low. Since rapid pace of technological change, new entrants will need large amounts of financial support to do development and research. Therefore, threat of new entrants is low and it is favorable for the camera industry.

3. Bargaining Power of Suppliers - This determinant is exercised through increased prices or more complicate terms and conditions of sale. When there are limited of suppliers, this factor will be more crucial. Thus, the greater the bargaining power of the key suppliers to an industry, the less will be the overall attractiveness of the industry.

Digital Camera Industry - Supplier power is medium in the camera industry because number of suppliers are limited due to the fulfillment of government requirements for electronic products. Under this forces, camera industry is moderately unfavorable.

4. Bargaining Power of Buyers - This force is based on customers' efforts to look for reduced prices, improved product quality, and added services which all will affect competition within an industry. The industry will be less attractive when the greater the power of the customers served by an industry.

Digital Camera Industry - Buyer power is medium, which make the camera industry moderately unfavorable. Customers have many choices to choose from, so they can easily change their mind and buy camera from other competitors.

5. Threat of Substitute Products - Substitutes are alternative product types that perform almost the same functions as the original product. Substitute products are limiting the ability of the industry to charge the product and constrain the profit of an industry. Same as all other forces, when the threat of substitute products is high, the attractiveness of the industry will decrease.

Digital Camera Industry - Threat of substitutes is medium. Many people like to use cellphone as a photograph device because the photograph functions of cellphones are become more alike to actual digital camera. Lastly, threat of substitutes is moderately unfavorable to the industry.

Due to technology improvements and competitions between different competitors already exist in the industry, four out of five forces of the digital camera industry are unfavorable. Thus, the digital camera industry is not attractive at this time.