Five Forces analysis.

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Five Forces analysis

In a business, there is always competition; it does not care if the company is taking part in the public or commercial sector. Competition means gaining advantage or excellence over competitors.

There are many other factors in the environment, which influence this competitiveness. Therefore, the five forces framework helps to identify the sources of competition in a sector or industry.

The following must be bearded in mind:

  • The Five Forces framework can only be used at the level of strategic business units and not for the whole organization. It is important to understand how the forces can be countered and overcome in the future instead of only describing the forces.
  • With the forces, also the discontinuities caused by changes in the macro-environment must be described.
  • The forces are not independent of each other.
  • Competitive behavior may be concerned with disrupting these forces and not simply accommodating them.

The description of the Five Forces framework is described below the model.


Threat of entry

This is dependable of the barriers to entry. When a new company wants to enter the same market as Sheffield Theatres, there might be some factors which need to be overcome when they want to compete successfully. These factors are not permanent, but only providing delays when entering the market.

The market where Sheffield Theatre is operating on, is the market of theatres, and to be more specific, the market of making own new productions and hiring touring companies.

To begin a theatre, there must be done a lot. For example, there must be building, which is big enough to house a lot of spectators. That is not the only demand: the building must have a good ventilation system, a good temperature installation, good music installations, enough parking space, proper sanitaria, bars and restaurants for extra service and income, good personnel, rooms for the actors and so on.

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This is quite expensive and therefore, the theatre needs extra grants of the different Councils. These Councils will not give grants to anybody and therefore, a new theatre must prove it is worth it. Also, when there are a couple of theatres in the same area, not everybody is enthusiastic of a new theatre.

Therefore, the threat of entry is not high.

Threat of substitutes

With substition, demand for a particular product can reduce when customers switch to an alternative product. The alternative can provide better advantages, like lower costs or less time needed.

There are different ...

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