Case Study : Porter 's Five Forces Model

Connected strengths decide eBays force of rivalry and henceforth the productivity and engaging quality of

Ebay is primarily service providers who connect the sellers and buyers by providing platform to sell and buy any goods.

​A Porter analysis will be performed throughout this paper, on the internet sales industry. Included in the Porter analysis is six relative competitive forces; threat of new entrants, rivalry amongst firms, threat of substitute services, bargaining power of buyers, bargaining power of suppliers, and relative power of other stakeholders.

Porter 's five forces framework assesses the competitive pressures a company faces within the industry. The five forces of competitive pressure include: competition from rival sellers, competition from potential new entrants to the industry, competition from producers of substitute products, supplier bargaining power and customer bargaining power. The model helps us determine the strength of competitive pressures and profitability of an industry. [3]

Porter's Five Forces is a simple but powerful tool that consist of 5 different forces to understand the competitiveness of your business environment, and for identifying your strategy's potential profitability. The five forces are degree of rivalry, threat of entry, threat of substitutions, buyer power, and supplier power. Each force is helpful in their own way to get to know your rivals a lot better and get to know what can happen in your market.

When looking at eBay’s target market, the segmentation of users appears to be majority males, ranging from 25-34 years old. Over half of the users don’t have kids and also lack college experience. The majority of the people are Caucasian and have a household income of $100,000. After looking at this information there are some good opportunities that eBay could capitalize on.

Our company was the first e-commerce website to revolutionize the way people shop online. eBay allows an individual to reach the global market from the comfort of their own home. Competition has significantly increased and we are no longer the leader in the industry. As Business Analysis Manager I have had a unique perspective to see the problems that exist and offer solutions for future growth.

I am a registered nurse employed in a hospital in the healthcare industry. Porter’s five forces model begins with the first force being the intensity of rivalry among incumbent firms (Parnell, 2014). Competition in healthcare, particularly hospitals, is limited. Due to the accredidation process, government regulations such as a certificate of need (Certificate of need, n.d.) and licensing of facilities and providers, competition is limited. The Federal Trade Commission (FTC) is looking at ways to increase competition in healthcare such as opening up opportunities for nurse practitioners, increasing the availability of such technologies as telehealth and establish more competitive healthcare pricing. In cities, there is more of a concentration of competitors. The hospital that I work at is the largest between Memphis and Nashville and has the busiest ER in the state of Tennessee. Therefore, the concentration of competition is low for that particular hospital. There are high fixed costs with a hospital such as buildings, overhead, equipment, and salaried personnel. Yet, a hospital does not cut their prices to increase patient census. However, it could be questionable in a low census period as to whether there are additional tests run or hospital admissions that would ordinarily not happen if the census were higher. There is strong growth in the healthcare industry with the industry growing at twice the rate of the national economy (Health Care Industry, 2012).

“EBay Inc. enables commerce by delivering flexible and scalable solutions that foster merchant growth.” The business mission statement of eBay is a visualization of global, social, and entrepreneurial trading that is making achievable by eBay 's Internet commerce systems and services. The mission statement of the eBay company plainly describes the visualization of what eBay has and will maintain to produce for buyers and sellers associated in the virtual world:

By implementing their business model, eBay employed three main tactics. First, they looked to build strategic partnerships, such as PayPal and Half.com. Second, they looked for customer feedback to constantly make changes and improvements. Finally, they monitored of their internal and external environments for possible opportunities. By initiating all of these tactics, eBay is able to adapt to the changing ways while keeping their customers satisfied. To be successful eBay must continue to mold and change their business model to satisfy customers and keep the level of quality they employ to the highest degree possible. If eBay is able to work these ideas into their everyday business life, they will continue to be successful. Furthermore, eBay must continue to improve its level of service, strengthen community trust and safety, increase system reliability, enhance website features and functionality, and broaden the company’s trading platform by growing existing product categories and promoting new product categories in order to cope with competitive pressures and maintain its existing customers and attract new ones. Finally, they can expand their market to the growing population of older generations by making their websites more attractive by catering to

The new entrants requires a big capital, experience, understanding the advance technology system, learning online grocery and access to suppliers and distributors (Low).

The fact that eBay does have some successful competition means that its strategic capability has become less unique. There is a hint in their competitor profile that innovation and perhaps adaptability to different cultures as they innovate is not core to eBay and something which has been developed more successfully by others working within their own national culture. Indeed, eBay rules in its own territory of North America and in Europe. The search capability of eBay also means that niche players do not really make sense, whereas the consumer trust that comes from being a big player is worth everything when trading on-line, as is the notion that whatever you want it will be on eBay because of its size. Thus, the so-called network effects of eBay (the bigger the company, the more successful it will be) and its first mover advantage that has led to this level are key to its success.

Amazon and Ebay are two well-known brands of online shopping sites. They have evolved and grown from small firms to the giants of e-commerce today. In this essay, a comparison would be made between the two firms.

The Five Forces Model Analysis is assumed that to analyze five areas of competition in the marketplace. It is analyzing the elements:

The Porter`s five forces are threats of new entrants, the bargaining power of buyers ,product substitution and intensity of rival of rival among competitors .These forces measure the competitiveness of the market and also helps the company to identify strategies to use to penetrate such and gain market share.