Robin Hood Case Study
Porters Five Forces Model is a framework for industry analysis and business strategy development. The five forces of competition is a key tool for diagnosing the competitive environment of the online auction industry. The competitive forces operating in this industry, in line with the Five Forces Model, include competition from industry rivalry, potential new entrants, substitute products, buyers, and suppliers.
Rivalry among competing sellers is a strong competitive pressure within the online auction industry. The online auction has been changing rapidly since it first became a new fad. Many different companies have entered this industry and so there is much rivalry amongst the many users. In order to get ahead in this fast growing market, companies must keep up their reputation. There are many opportunities within this market that can give companies an upper hand. Competing sellers must attempt to sustain a competitive advantage through innovation, efficiency, and culture. Because so many competitors are entering the market, companies must make their online auction site the most appealing and user-friendly. The buyers and sellers using the site are the ones determining its success. It is most important for companies to frame their competitive strategies around this factor. With a hassle free and happy auction experience, a company will inevitably gain popularity. With obvious similarities from company to company within the industry, it is important to make any attempt to set yourself apart from the others. A strong competitive strategy is important.
The threat of entry of new competitors is another competitive force operating in the online auction industry. Considering the lack of technological entry barriers, this is a strong competitive pressure. Just about anyone can compose a website and start an online auction. It is just a matter of who can do it better and attract the most users. So many different types of companies can be a threat in this industry. Not only online auction sites, but also actual retailers in stores and e-tailers can pose a threat as a new competitor. Companies must be able to adapt and compete against all types of competition. Online auction companies must adjust to these changes in the industry and make their sites and what they offer comparable to all other competition. This is important to generate traffic on their sites as well as to retain the customer base they do gain.
The existence of similar products and services outside the realm of the online auction industry increases the chance of customers switching to alternatives. It is obvious that many substitute products exist through other mediums. The online auction industry is attempting to sell many products that are available through retail stores, online retail stores (e-tailers), and even physical auctions. Due to these similarities, online auctions must make the buying