Five Forces Analysis Of The Video Rental Industry Management Essay
The five forces analysis is structure for industry exploration and business tactic development that helps the promoters of a certain company compare a competitive environment (Grand, 1991). It is very vital to always conducting this kind of analysis to companies in order to determine the level of competitiveness. At this point, this paper will seek to conduct the five forces analysis of the video rental industry, at the time of the Netflix case. In this case, the CEO of Netflix, Reed Hastings, passed congratulation information through his Facebook page.to his team as a result of good work in the month of July. In so doing, Hastings violated S.E.C rules and regulation and the action was to be taken against him and the company. This case stands to affect Netflix in various ways. The following is the five forces analysis of Netflix during this case.
As mentioned earlier, this case will affect the company in various ways on of the being the threat of new entrants. Netflix as a well-established video rental company has always been at the top of the competition thus making it very hard for the entry of other company in the same video rental industry. Any company, which is experiencing any many problem, like the one faced by Netflix will definitely be affected greatly, therefore, this case will reduce the dominance of Netflix and other companies will take advantage of it and strengthen their competitiveness (Grand, 1991). Netflix operation will be disrupted by this case. This will lead to a slower growth and development compared to the time before that case. Therefore, other companies in the same industry which have not established themselves well, will take advantage of this and get an entry point into the market.
Also, this case will affect Bargaining Power of Buyers. Buyers will also realize that Netflix is faced by a major problem, case filed against it, and the company will be desperate to do well in the market by ensuring it remain competitive and avoid any loss. Buyers are likely to take advantage of the company fear to make loss and desperate to make profit. This will make buyer strength their bargaining power and be more aggressive in bargaining for the product they are buying (Grand, 1991).
Threat of Auxiliary Products or Services will be another factor that will affected in that other company will see the need to introduce other products and services offered by Netflix. Other companies will be encouraged to produce other similar products and services offered by Netflix since they will see prospect of doing well give the fact that Netflix might collapse due to the case facing it.
Just like buyers, suppliers will have more Bargaining Power of Suppliers since they will also take advantage of the case filed against them. Suppliers will tend to be more aggressive to suppliers since they will have to be careful by ensuring that Netflix does not collapse before paying money owed to them, suppliers. Also rivalry among existing competitors will be against Netflix and in favor of other companies in the same industry (Barney, 1991).
As a result of this case, a new company should take advantage of competitive environment which has considerably weakened the company to get entry into the video rental industry.
Wal-Mart’s Strategy in the US
Wal-Mart Stores, which is trademarked as Wal-Mart from back in 2008, is an American worldwide merchant body that runs numerous chains of massive discount branch stores and depository supplies (Fishman, 2006). The organization is one of the world's leading public corporations. Rated by revenue, it is the biggest public business. Also, it is the major public firm in the world with more than a million workers. It is the prime retailer in the whole world.
In all the years, since their commencement in the early 1960’s, Wal-Mart has developed at an alarming speed. Even though in the initial years Wal-Mart was supposed to be unproductive, it has since demonstrated to be a store of the future. It is the biggest retailer in the entire world. Wal-Mart has the uppermost gross profits of whichever company globally in addition to the highest disposable profits (Fishman, 2006).
Wal-Mart being the largest retail store in United States has strategies which include: putting more stress one e-commerce and smaller-format stores. These strategies are meant to outdo their competitors. These strategies can be compared with VRIO framework in order to scrutinize the interior environment of Wal-Mart (Fishman, 2006). Since VRIO emphasis on questions about Value, Rarity, Imitability, and Organization that one must ask about a resource or proficiency to determine its competitive prospective, all this has to be taken into consideration (Michael, 1998).
Since e-commerce and smaller-format stores are welcome to the customers in American market because this strategy provides a unique activity (Hitt, 2001). Using VRIO, the question on Value, Rarity, Imitability are positively answered since there is no threat to this strategies; the resources to be used in these strategy are adequate in America and also these strategies will not be easy for other companies to imitate. In addition, the Wal-Mart policies will allow these strategies to be implemented (Fishman, 2006). This means that Wal-Mart’s strategy is justifiable in American market. By employing these strategies, Wal-Mart is able to consider customers’ needs, accessibility and the type of company’s products. Also, these strategies horizon is more than decade (Fishman, 2006).
All markets in the current time are very dynamic (Fishman, 2006). Alteration is in the air the world over, and change effects existing strategy. Any charming strategy now may not triumph tomorrow. In most cases, it might not even be applicable tomorrow. Due to the continually changing markets, many companies generate appropriate strategic ingenuities starting by building a tactical plan. This plan permits them to define areas at which companies should emphasize on. This helps the administration team alongside the employees to form a resilient mission statement. This inspires the employees in the direction of improving the enterprise, since they have an auxiliary hand in determining how company is run (Fishman, 2006). Depending on the mission and the vision of any company, different companies use different strategic initiatives comparative to operational and organizational adaptation to the fluctuating markets. In this paper, we will be reviewing the strategic initiatives engaged by Wal-Mart comparative to operational and organizational adaptation to the fluctuating markets (Fishman, 2006).
Blue Ocean Strategy Tools
This proposes that a company should create its own demand in a new market space instead of competing with other existing suppliers in a prevailing industry (Thompson, 2004). In United states, for example, there so many companies in athletic footwear industries. To create something new in this industry and create a new demand, there is need for introduction of something new (Nelson, 2009). The new demand for athletic footwear that should be created is one that is made using different materials combining leather, rubber and plastic. The new athletic footwear should also be easily recycled. This will allow the consumers be well served since all these materials have different life-long. Instead of having to create something which is already there in the market, this new athletic footwear will create new demand.
Creation of a new product that is not there in the market will be a good idea since this will result into the creation of a new demand without necessarily copying or competing with already established demand. New product in the market always offers something new to the customers and reduces competition on one single commodity being traded in the market.
In this case, athletic footwear which uses different raw materials would be the best kind of commodity in the market compared to the one being made from one raw material. Combination of leather, plastic and rubber will even make work easier for the manufacturers since the availability of these three raw materials will always vary.
Having three raw materials to make one commodity is better than using one commodity because when one material is not easily accessible, one can change the proportion of other material in order to cover for the one which is not easily accessible.
Also, customers will have a taste of new commodity in the market thus enabling them make the best choice from a variety of commodities available in the market. This will in turn lead to creation of new demand in the market. Individuals will be able to buy footwear made from different materials unlike before when they were used to footwear made from a single raw material.
Wal-Mart Corporation has various impacts on society. These impacts are as a result of Consumption and Production Externalities. Despite Wal-Mart Corporation having many benefits to the society which include providing employment opportunity, provision of good and services and improvement of the infrastructure, there are many negative impacts to the society. These impacts include destruction of natural environment by the waste materials from this company, air pollution by the company’s vehicle and machines. Wal-Mart Corporation should employ technology that conserve natural environment.
All markets in the current time are very dynamic. Alteration is in the air the world over, and change effects existing operations of any company. Any charming strategy now may not triumph tomorrow. In most cases, it might not even be applicable tomorrow. Due to the continually changing technology, many companies generate appropriate strategic ingenuities starting by building a tactical plan that are aimed at conserving environment even as it work toward their key goals. This plan permits them to define areas at which companies should emphasize on and what need to avoided depending on the various effects on the community. This helps the administration team alongside the employees to form a resilient mission statement. This inspires the employees in the direction of improving the environment and the community’s welfares, since they have an auxiliary hand in determining how company is run. Depending on the mission and the vision of any company, different companies use different strategic initiatives comparative to operational and organizational use of the best technology which has no harm to the community.
The capability to innovate in any company is very crucial to successfully endearing in vibrant environment. Although innovation sometimes turns out to have a host of dimensions, Wal-Mart should always innovate in order to create something new that is suitable to the ever changing environment. Wal-Mart should have a strategic plan of creating the right mix of novelties that ranges from additional to conversional. It is very necessary to fit innovations into contributions in the environment. While engaging in innovation, the company will have new ways of handling the new trends in the fluctuating environment. This will ensure that Wal-Mart always remain competitive and at the same time conserve natural environment.
There are excellent strategies put in place to ensure that Wal-Mart always conserve natural environment. Human resource management has very strong initiative that helps the company realize the importance of conserving natural environment. The company has chosen the most appropriate ways of ensuring that it always keeps the environment clean.
Having explored the company, it is now clear that Wal-Mart, which is the largest retail shop in United States, has increased a better empathetic of its strategies of conserving natural environment. Wal-Mart has capability to advance in the latest technology which preserve the environment, improve its public image as one of the best company in the world in caring its customer’s wellbeing, and gradually accelerate its effort in educating its employees in keeping the environment clean. Due to increased growth and initiative to conserve natural environment, the company will always be the leading retailer in the world.
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