Business Driven Technology
Business Driven Technology
6th Edition
ISBN: 9780073376905
Author: Paige Baltzan Instructor
Publisher: McGraw-Hill Education
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Chapter 5, Problem 10MBD

Explanation of Solution

Implementing Porter’s five forces to measure attractiveness in entering movie rental business:

The Porter’s five forces model can be used by the given company to ensure the attractiveness in entering movie rental business:

  • Bargaining power of buyers: Power is low for buyers when their choices are limited by a fewer sellers among producers of a particular product type.
  • Bargaining power of supplier: When buyer has less power and choices then suppliers have high power, when buyer has more power and suppliers have low power and choices.
  • Availability of substitute goods and services: When there are many substitutes available to good or service then the threat from substitutes is high. When fewer substitutes are present then threat is low.
  • Threat of new entrants: The threat from entry of new firms is high when can easily enter a market and threat is low when they cannot easily enter a market.
  • Rivalry among existing customers: When there is fierce competition in market then the rivalry is high and competition is low when competitors are complacent.

Strategy used by the Movie Rental Business:

The given company can use the generic strategy from porter’s five force model as:

  • “ Product Differentiation”:
    • Significant research must be done to embrace IT...

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