POTER'S FIVE FORCES ANALYSIS

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In conclusion, for all the aforementioned reasons, we believe that this force is medium.

The bargaining power of customers (buyers)

The bargaining power of buyers refers to the profitability of an industry in the market, because the buyers influence the prices and the supply, having a great impact on the organization’s profit. This bargaining power can be measured by the concentration level of the clients, of the importance of these to business and the cost of loosing a client to the competitors. To analyze this force, an identification of DINOS’ clients will be done.

In this situation it is important to separate between two types of buyers: the city councils and the final users.

Final users: There are a lot of potential buyers and, due to low contribution per capita, losing a customer to competition is not very harmful. However, DINOS is an application that is relatively dependent on customers, since their reviews and opinions are important to maximize the value of the product. All in all, the bargaining power of final users is medium.

City councils: City councils are crucial to the maintenance of the positioning of DINOS as the “official guide”. Also, it is the city council that controls the entry of the product in a given city. So, bargaining power of city councils is medium/high.

Threat the entry of new entrants

Another force that has a great impact in the yield of an industry is the possibility of new competitors to enter the market, creating new market conditions. This threat depends on the presence of market entry barriers and the reaction of existing enterprises.

With globalization, the tendency is to abolish entry restrictions to international markers and so, it is easy for a new competitor to enter and develop a similar service to DINOS. However, the fact that DINOS has contracts with the city councils represents a big barrier for the entry of new competitors. Therefore, this threat is medium.

The bargaining power of suppliers

The bargaining power of suppliers depends of several factors, e.g. quality, importance and differentiation of the product or service provided, the number of suppliers that exist in the market, the capacity of these to change the price of the good and the buyer’s importance to the supplier.

As DINOS is a mobile application and it is developed by internal IT engineers, there are no suppliers. Hence, their bargaining power is a low force.

Porter’s 5 Forces Illustrative Graph

For a better systematization, here is a graph that illustrates the analysis made above: