Porter Five Force Analysis Writing Assignment

Porter Five Force Analysis
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Porter Five Force Analysis
The threat of New Entrants/Barriers of Entry
Well, the threat of new entrants is currently low, and this is because of the presence of tech giants namely NetEase, Sohu, and Tencent. These companies including others like Jagex, Alibaba, and Unix CCTV continue to make things difficult for any new entrant. Tencent, for example, continues to make headlines with its expansion agenda as it spreads its wings far and wide. Regarded among the top 10 internet companies in the world, Tencent has been giving Sina and other companies a run for their money on many fronts. Together, these companies make it difficult for any hopeful entrant.
Getting into a world that is already soaked with great companies like Tencent, Sina, Alibaba, NetEase (worth over $50 billion as of 2017) makes things difficult. The first reason is that having a breakthrough in the market will be difficult because customers are already accustomed to these large companies. Additionally, a large company is always given the benefit of the doubt because of its presence. This makes it difficult to convince customers to switch loyalties. Secondly, large companies have been known to set barriers themselves, which make it difficult for young budding companies to enter a market. There is a history of strong retaliation in many markets when new entrants try to make their way through, and China is not any different. The last reason is related to the cost of entry or capital requirements to enter any new market. Well, capital requirements to enter into any market are quite high, and this makes it difficult for new entrants as well.
Bargaining Power of Suppliers/Supplier Power
The bargaining power of suppliers can also be a major factor that contributes to either the success or downfall of an organization. Suppliers have the power to increase the prices of their products or services or to create an artificial scarcity. Well, this means that they often have a higher power and influence over companies. Looking at Sina Corp, one is inclined to say that the bargaining power of suppliers is average because while suppliers might want to have power over a company, they are also wary of the strength of a company. With a reported revenue of more than $1.5 billion, Sina has proven to be resilient and so, losing such a business would be a big blow to suppliers.
Rivalry among Existing Players
In an article titled Competition growing for internet giants, Shijia (2017) implies that competition continues to be high in China especially with Alibaba and Tencent leading the way. These two giants have been competing for a while now each trying to eclipse the other and remain as the reigning giant. However, even with their feud, this does not mean that other companies, most not...