Week 5

This weeks blog by me will consist of me discussing Porters Five Forces. I will discuss and analyse each of the Five Forces in regards to wine.com and discuss how each Force impacts their website and company. Below is a diagram of how the Five Forces are all related and an explanation on the impacts of wine.com.

The diagram was taking from google images after writing in the search bar Porters Five Forces.

Porters Five Forces

The threat of substitute products and services

When a customer is buying wine there is not really a substitute product available and that they can only buy wine if they want it. There are different services available but it is unlikely that having such a good following and a wide range of publicity that new services would erode the profits of wine.com. Wine.com will monitor the market and will establish if a new competitor will come into the market and begin competing. Although there is a chance of a substitute of services wine.com do not need to worry about the substitute of their products.

The threat of the entry of new competitors (barriers to entry)

Wine.com needs to worry about new entrants into the market; they do not want to start sharing the market with a new competitor and have a fight on their hands for customers. The new competitors if able to compete on the same front as wine.com will possible hold a threat although it may prove beneficial to the market as it could allow customers to search for more wine and end up at wine.com’s website. Wine.com have a big enough grip on the website that they do not need to worry about new competitors and should also be aware that it may be a positive thing if they have a new competitor to compete with in the market.

The intensity of competitive rivalry

Wine.com has over the years adapted to different companies opening new sites to sell and compete in the wine industry. Wine.com offer services like none of their competitors, they offer deals and have many different employees that are experts in their fields and enable the customer buying products to see what they are getting is off good quality. Wine.com have also opened retail shops to cope with the new competitors that they may face, they are in a good position though because they once again were voted the number one internet retailer of the year, for the fifth straight year. So they have do not have to worry about new competitors at the current minute in time.

The bargaining power of customers/buyers

When determining who has the power between the company in this case wine.com and the buyers you have to determine who needs who the most. In the case of wine.com the customers have less commercial power as there are not as many companies that offer the same deals and service that wine.com offer. Wine.com has a set price that is not open to negotiation although they do offer deals that keep customers happy. If wine.com had more competitors than the customer would have more negotiating power.

The bargaining power of suppliers

When studying the bargaining power of the suppliers is like the bargaining power of customers only in reverse where before wine.com was the supplier. Wine.com has a timetable that it has to meet when a customer orders a product they need to get to goods to them as soon as possible. Wine.com orders the goods from suppliers who in turn get their goods from a vineyard. The suppliers are essential to wine.com as they need someone who sells them the wine. Although wine.com do not necessarily get the products of one supplier, different suppliers have different products that wine.com need and therefore not every supplier is essential to the company. Suppliers may find it difficult to raise prices to wine.com as they could move to another one of their suppliers for the business.

Advertisements

Tags: ,

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s


%d bloggers like this: