Business Finance Homework Help

According to the below, write one paragraph conclusion: (Attached an example)

Porter’s Five Forces Conclusion: [This section should include a discussion (1 paragraph) of the implications of the model: What forces present the biggest threat to your company? What actions do you recommend the company take to manage the 5 Forces?]

1.Threat of New Entrants:

• Economies Scales
  • High: Marriott is a large company where it can simultaneously providing service to multiple customers at the same time through various departments such as front desk, housekeeping, and customer service. This decreases the threat of new entrants.
• Capital Requirements
  • High: Since Marriott is a large company with multiple departments, the cost will be higher. This will prevent the small competitors from entering the industry, which decreases the threat of new entrants.
• Switching Costs
  • High: Marriott has already built its loyal customer relationship, and customers are benefitting from the loyalty programs. Switching to a new firm will increase the cost, which decreases the threats of new entrants.

Overall Threat of New Entrants is Low.

2. Bargaining Power of Buyers:

• Number of Customers:
  • Low: Marriott’s target market is the people who seek a luxurious experience during their vacation or business trip. Only a specific group of people will choose Marriott, which means the buyers’ power will increase.
• Volume of Purchases:
  • High: Luxurious hotel is not the best fit for everyone. For example, customers planning an event at our hotel will increase buyers’ power to negotiate based on the high volume of purchases.
• Price Sensitivity:
  • Low: Marriott is a luxurious hotel which means the price is already at a high standard. Customers are used to paying the high fees for Marriott hotels to give low power to the buyers if there is a price change.

Overall Buyer power is Moderate-High

3. Bargaining Power of Suppliers:

• Importance of Business to Suppliers:
  • High: Marriott is a worldwide company which means this would be an essential contract to the suppliers they do not want to lose. This decreases the power of suppliers.
• Availability of Substitutes of Suppliers:
  • High: Marriott is an international company where the business is all over the world. Multiple suppliers are willing to partner with Marriott company. This decreases the power of suppliers.
• Knowledge about Buyer Industry:
  • Low: Most of the suppliers for Marriott will not be able to have information on the profit structure of Marriott and take advantage of it. This decreases the power of suppliers.

Overall, the Supplier’s power is Low.

4. Rivalry:

• The number of competitors in the industry
  • High: There are many competitors in the hotel industry that are providing the same concept as Marriott. Thus, the rivalry is intense.
• Industry growth
  • High: Many hotels are becoming international, which expands the market worldwide. As the industry grows globally, the rivalry is not intense because every company will have an opportunity to increase the market.
• Fixed costs
  • High: It is expensive to operate a hotel like Marriott, which means the rivalry is intense because the company needs to compete to meet the expected revenue for those expenditures.

Overall the Rivalry is Moderate- Intense

5. Threat of Substitutes:

• Availability of Alternatives
  • High: There are many alternatives options like airb&b, motel, or other hotels. This increases the threat of substitutes.
• Switching costs
  • High: Each company has its rewarding program so that when customers are switching to a new company, they may lose all of the rewards from the previous hotel. This decreases the threat of substitutes.
• Profitability of companies producing substitute
  • Low: The substitution companies for Marriott may not be profitable because of the concept between each hotel, which affects the customers’ experiences and future consumption. This decreases the threat of substitutes.

Overall, the threat of substitutes is low – moderate.