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Mr Porters Five Forces Model on Toy Industry Older Kids Pre-school Buyer Power Games for older kids are attractive for discount retailers who need large volumes
restaurants in North America and international markets. In Exhibit 1, this states the Porters Five Forces Model of Competition of The Restaurant Industry. Threat
Submitted by helenhunt on May 23, 2008
Category: Business
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Porters Five Forces Model on Toy Industry
Older Kids Pre-school
Buyer Power Games for older kids are attractive for discount retailers who need large volumes for high demand products. They have substantial buyer power and are demanding (NEGATIVE) Specialty stores do not usually carry franchise items. They purchase directly form the manufacturers, typically carry a full line and focuses on pre-school market. (POSITIVE)
Supplier power Toys for older kids (plastic toys) are produced by manufacturers that use high volume injection molding that result in economies of scale. (POSITIVE) The rotational molding process allowing for a rapid changeover of molds is good for typical pre-school toys. Less cost effective than high volume production (NEGATIVE)
Barriers to entry Slow market growth , high fixed cost and expense, unpredictable business and demanding retailers make the industry less attractive thus protecting current players (POSITIVE ) Market is more stable and predicted to growth best among the industry for the next 20 years, although has high fixed costs. This makes it an attractive market for new entrants. (NEGATIVE)
Substitutes products Several substitutes exist -video games, Lego or activities (Cartoon Network, sports, and playground games). This might reduce market share (NEGATIVE) Because of parents choice for developmental toys there are few or no substitutes products for preschool kids toys. Lego and Learning channel might affect market share but not significantly (POSITIVE )
Rivalry Because of major players in the industry and economies of scale will drive down prices, will be hard for a small manufacturer to compete in the market. (NEGATIVE) Fisher’s price dominates the market, thus small manufacturers might need to compete on niches: geographically to local specialty stores or daycares (POSITIVE)
Market size and growth Increasing substitutes products (video games, etc – see above) might shrink...
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