The Porters five force model is a technique for analyzing the competitors and industry for a particular company. This theory has been adapted by many companies to understand their structure and the plan they use to run their business. The five forces in the model talk of the five forces that affect the market. Knowledge of the forces helps the company analyze how they make profits. It can also identify how to attract other companies that they can do business with and those that they compete with. These five forces include the threat of new competitors entering the market, the intensity of the rivalry that results from the competition, threat of products that act as substitutes, the power of the customers or the buyers and the power of the suppliers (Miller, Vandome & McBrewster, 2011)
The Ocean Park Hong Kong is a marine park, animal theme park and oceanarium. It is among the most popular amusement parks in the world. The Hong Kong Ocean Park is a major contributor to the tourism industry. The tourism industry in Hong Kong is an important part of their economy. The ocean park was started as a non profit making organization. Its aim was to connect man to nature and it attracted a lot of tourists. As a result of poor management the park has not been so popular before 2000. After the management was changed they introduced new products like the Halloween party which led to the popularity of the park increasing. The park is now able to finance itself to bring up new attractions, services, distribution channels and working capital. One of the biggest competitors for the park is Disney land but the ocean park is larger than Disney land.
Some companies are more competitive than others (Porter, 1985, p. 122-128). For a business like the Ocean Park that is in existence it has to know how to enhance the competitiveness of its business. The model by Porter is useful to the manager as it will show him how to strive to get ahead of their rivals. This is because it provides an understanding of the industry in which one operates in. The forces mentioned above will now be discussed in relation to the Hong Kong Ocean Park.
One of the forces is the power of the buyer. The buyers for the Ocean Park are the customers who come to visit the park. These visitors will obviously have an impact on the industry. In the park the power of the buyer is high as there are many other theme parks that they can opt to go to. The buyers are therefore not tied to only visiting one park. They are not obligated to follow the prices that they are given and the rules that are there on availability of the services and attractions. Ocean Park targets different customers from households, educational institutions and business corporations who are both local and international. The biggest market for the theme park is the households and educational institutions. The marketing team for the park aims at building and maintaining relations with the customers.
In addition to understanding the needs of the customer the park has activities that reinforce the buying power so that the guests can do the actual visit. It provides information to the consumers by radio, online website and leaflets. This assists the guests in the information searching process. It also does promotions through payment of a lump some for a one year’s pass. This is a form of price bundling and it goes a long way to help the customers in evaluation and decision making process. Once the visitors come to the park they are given assistance this helps in the decision making and actual purchase. Offering value to the guests will go ahead to influencing the re-evaluation process after they have purchased (“Sales and Marketing”, 2009)
The suppliers of a firm have an impact on the industry in which a business operates from. For any industry to survive it requires raw materials to be able to produce goods and services. The suppliers in Ocean Park include the human resource, the food providers, animal accessories, and those that provide other services in the park. The suppliers are varied as they provide both goods and services. The park has 1500 workers who are the human resource suppliers and they could double once the expansion is finished. At the aquarium supplies of the fish food are stored for up to a month. The supplies are imported from United States and Japan and their quality is high. The fish are fed with up to 50 to 60 kilograms of mackerel, squid and shrimp everyday. The park has several restaurants and one of them is the Neptune that serves western, Chinese and Japanese food. They get the supplies from reliable suppliers who harvest the shrimps and fish in a sustainable way.
In any case the suppliers do not have a great power over the industry this due to the improving state of the industry and increased competition among themselves. For instance the airlines that act as the supplier of the guests to the country compete vigorously among themselves. They all compete to deliver the guests to the destination by providing packaged tours. Packaged tours are very popular and most persons find it more cost effective and time saving when taking a holiday. Technological exchange between the players in China also helps a lot in exchange of information between the supplier and the company. This way they can be able to buy online and delivery is done. Also the guests can book for airlines online and still travel with ease.
Another force is the force of new entrants and the barriers to entry in the business. The possibility of new entrants in any industry always has an impact to the pace of competition. Different industries are affected differently by new entrants. The unique characteristics are what are referred to as entry barriers. They aim to reduce the pace of new entrants that way a level of profits earned by a company is maintained. The threat of new entrants for amusements parks is quite low. This is due to the high cost of opening and establishing the park, also the amount of land space required is large and it could be hard to access. Another barrier is the location of the park it should be strategic and easy to access by the visitors.
The other force is the force of new substitutes. These are the products or services that the consumers will choose to satisfy a similar need or want. For a theme park new substitutes would be businesses such as movie theatres; where they can go to instead of the theme park. Although the actual substitutes for the theme park would be a leisure and recreation facility. These facilities can substitute for a while but they can not satisfy the exact need to interact with nature, learn and still have fun. The industry of themed amusement is growing and the demand is high especially from Chinese tourists. These results to a low threat form the substitutes in the tourism industry.
Industry competitors act as a force and they include existing competitors in the same industry. For the Ocean Park their main competitor is Disney land. Ocean Park remained in a monopolistic market in Hong Kong for a long time until the opening of Disney land. To compete with Disney land Hong Kong Ocean Park places itself uniquely. It markets itself as an educational centre as well as a recreation centre. It has developed a nature conservation slogan to differentiate itself from Disney land. Disney land focuses on cartoons and animated characters on the other hand Ocean Park provides a fun and interactive experience with animals and nature. As a result of combining nature and entertainment the company retains its traditional values but still meets the interest of its customers.
For any industry to succeed according to Porter they have to consider the five forces. For the Ocean Park in Hong Kong they have clearly analyzed themselves and that is how they are able to compete effectively. This is because they know the position they stand in their industry and how to continue claiming a higher competitive advantage.
REFERENCES
Miller, F. Vandome, A. & McBrewster, J. (2011). Porter Five Forces Analysis. Beau Bassin:
Betascript publishing.
Sales and Marketing of Ocean Park Hong Kong (2009). Thinking made easy. Retrieved from
http://ivythesis.typepad.com.
Porter, M. (1985). Competitive Advantage: Creating and Sustaining Superior Performance. New
York: The Free Press.
