Porters Analysis Example

Porters 5 Forces Analysis

Threat of New Entrants to the Industry:

* Overall: Low, due to the size of already established brands such as Addidas and Nike it would be difficult for newcomers to settle in an already established market such as the US. Asian and Russian markets however are still growing at a considerable rate so the possibility of a new competitor arising in either of those regions is slightly higher, but still low overall for the following reasons.

* Med-High Initial Capital needed: Two of the key expenses required for a company to operate in the sporting goods industry is R+D and Marketing. R+D is a necessity in order to create a comfortable yet functional product which does not infringe on any existing patents. Marketing expenses consist primarily of player endorsements which are required simply to achieve competitive parity with existing company's in the industry. This therefore restricts the number of potential competitors to only affluent entities.

* Economies of scale seem to be largely irrelevant in this industry due to the large amount of operations which are outsourced.

* Low product differentiation in the industry: Although shoe's for example can vary between sports such running and football the basic design is essentially the same, with brand name being the only key difference in most cases, therefore unless a new competitor should attempt to be a cost leader it would be difficult for them to make their product stand out amongst other more established brands.

* Low access to distribution channels: Again creating slight exceptions for Asian and Russian markets but overall primary distribution channels have been taken by established competitors in the industry such as Nike and Addidas. This evidenced in part simply by the sheer amount of stores Addidas has around the world without even counting 3rd party distributors such as walmart.

Bargaining Power of Buyers

* Overall: Medium, mainly due to the lack of...