Question

Assume that you have recently joined a firm that makes high-quality waterproof action cameras; these were originally designed to appeal to consumers participating in extreme and not-so extreme sports and recreational activities. These cameras are now used by consumers worldwide and have become popular for filming extreme sports and recreation, and even sports analysis because they offer remarkable ease of operation and durability, and may be fixed to a user or object, for instant capture of motion with high resolution. The firm divides its resources between production of cameras for both personal and professional use. In reviewing product pricing, you note that existing prices of all products sold by this company are substantially below pricing of products commonly used by professionals, however this camera maker’s products offer quality similar to that of established brands commonly used by professionals. Higher-end models within your product line incorporate functions suited to personal users, such as Wi-Fi for instant upload to the internet, that are equally attractive to professional users, and no constraints on production or supply exist that might allow production for one variety of user to be more costly.

As manager of the product development division of this firm, you have been asked to evaluate existing product lines. Using Porter’s five categories or “forces” that impact the sustainability of industry profits and your own knowledge of this industry, explain which type of user might provide optimal benefit to the company, and briefly describe facts which justify your recommended allocation or re-allocation of productive resources toward personal and/or professional users. If additional topics covered in this chapter are relevant to these issues, these should be included in your presentation. Assume that you will present your findings to your firm’s board of directors, whom you know to have only limited familiarity with economic concepts and principles. You will, therefore, need to be creative in your presentation.

Answer 1

Porter's five forces is a tool for analyzing the competition of business. This framework is associated with Michael E. Porter of Harvard University. Based on these five forces the existing product line is evaluated.

1. Competitive Rivalry:

In this case there is some established brands , instead of these established brands the firm is maintained its quality and prices are low.

2. Supplier Power:

supplier power is medium . In the last para it is clearly mention that there is no constraints on supply. If there is less supplier then there will be high power because they charge higher from the firm. If there is large supplier base then it will be cheaper because other options will be easily available to move.

3. Buyer Power:

Buyer power is high because there is large consumer base. The camera are used by personal users and professionals.

4. Threats of substitution:

In this category there is no threat of substitution because we cant use any other gadgets to capture the moveable movement.

5. Threats of new entrants:

Threats of new entrants is low because in this industry a new entrants needs large financial support and technology is changing day by day.

Based on the above analysis i recommend that professional user might provide optimal benefit to the company. Some facts which justify the above statement is given below.

1. Large No. Of buyers

As we know that these type of cameras are mostly used by the professionals. It is an essential thing in their routine. So they purchase it more than the personal users.

2. Good Financial Resources

They have good Financial Resources to purchase these gadgets because this is the most important things which is used by them.

3. Used in different sports activities

The use of these cameras is not limited . It is used in various sports activities which makes a larger market.

Thus, all these are the essential point related to the above mentioned case. The analysis is done on the basis of porter's five forces.