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Five Forces Model

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Five Forces Model Competitors and their Relationships
• Dick’s Sporting Goods
• Hibbetts
• Sports Authority
• Foot Locker
• Wal-Mart
Threat of New Entrants The threat of new entrants is moderate. It is relatively easy for a company to enter this market because there are not a lot of legal barriers. But a smaller company that has just entered the market would have a tougher time competing with some of the larger companies – an obvious reason being that larger companies can have larger inventories. Another reason is that larger companies can do things to weaken the smaller companies, such as offer discounts, sales promotions, and increase spending on advertising. Since most of the companies in this industry are competing on price, it would be difficult for the smaller company to keep up with these tactics and remain profitable. So in short, the threat is there, but it isn’t a huge one.
Threat of Substitutes The threat of substitutes is high. One example is online shopping. Customers can easily buy just about anything they could find in a sporting goods store on websites such as Amazon.com, eBay, and Craig’s List. These substitutes are readily available and there is also a good chance that they will be at competitive prices as well. The ease of the internet and good chances of finding good deals makes the willingness of switching to substitutes higher.
Buyers
Buyer bargaining power is strong. This is for a number of reasons, but a few are:
• The buyers have low costs of switching to substitutes
• Buyer demand is weak compared to industry supply
• Buyers are price-sensitive

Suppliers Supplier bargaining power is moderate as it carries both strong and weak characteristics in this industry. One of the main determinates of supplier power is the relationship of suppliers to buyers. When there are many buyers and few suppliers,…...

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