Adventure Works Cycle Porter’s Five Forces, Strategies & Traits

Subject: Marketing Law

Paper Model: APA

Paper Type: Article Review

Total Words: 1186

Document Outline

Adventure Works Cycle
Porter’s Five Forces, Strategies & Traits
Adventure Works Cycle
Porter’s Five Forces, Strategies & Traits
Introduction
Porter’s Five Forces Model
Porter’s three generic Strategies to Consider
Two Tactics to Achieve Strategy
Customer Services
Be Patient
Conclusion
References
 


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Adventure Works Cycle

Porter’s Five Forces, Strategies & Traits

Introduction

Every organization wants to increase its market share to increase revenues and profitability. This is necessary to have strategic plan to deal in market and react according to competitive environment. Adventure Works Cycle Company has a good business in United States, intends to have a good position in Europe. Company is selling bikes and composite bicycle through a net work of independent cycle & sports shops in United States. Contribution of IMPORTADORES NEPTUNO is prominent for Adventure Works Cycle, and now acting as sole manufacturer of this company. In this study, we will discuss Porter’s Five Forces Analysis for CEO Janet Cash, as she intends to make a strategic plan with mutual consent of all management members. Apart of this, three generic strategies will be recommended to Janet to implement her plans in her company. In addition, there is a need of effective implementation of some tactics to achieve organizational goals.

Porter’s Five Forces Model

Porter’s Five Forces Model helps organizations to make a strategic plan to achieve organizational goals. This five forces analysis helps companies to observe the level of competition within an industry and company. Porter’s Five Forces Model will help Janet to have clear competitive conditions to make an effective strategic plan. Fives forces are threats of new entrants, bargaining power of buyers, bargaining power of suppliers, threats of substitutes and competition rivalry.

Competition Rivalry

There is immense competition in this industry, as many competitors offer different process to customers according to rival actions and reactions. Cost of production is efficient in all organizations. Therefore, these companies have potions to conduct price wars. Adventure Works Cycle has to exist in the fray, and must offer with product association and differentiation. Companies are investing to make tour bicycles more creative and innovative to let customers find a huge comfort experience. Janet has to make plans regarding these investments for further innovation with collaboration of NEPTUNO. Companies are fighting with each other, and every year, management launches new product fir customers with attractive and effective promotions. Therefore, we can consider competition rivalry as moderate to high.  (Eldring, 2009)

Threats of Substitutes

As mentioned above, companies are making new products. These products are substitutes for Adventure Works Cycle’s customers. It means that Janet must have to implement the plans regarding quality and customers satisfaction. People have alternatives, and management may suffer to call them back. Threats of substitutes are considered as high for this company. However, recreation and innovation is still an ongoing process in this company to evade this barrier. In addition, company have to initiates more efforts to retain customers. (Hill, 2009)

Bargaining Power of Buyers

Adventure Works Cycle has low bargaining power of customers due to specialized industry. Tour bicycles are not a necessity for customers. This may be low to moderate, as people with high income intend to have adventure of these tour bicycles. Customers usually pay a price according to company expectations, and this is the comfort zone for this company. However, some of customers may bargain due to technicalities and quality, which is regardless of prices. Therefore, we can consider bargaining power of customers as low to moderate, which is constructive for this company. (Karydes, 2015)

Bargaining Power of Suppliers

Bargaining power of supplier is considered as low for this company. NEPTUNO is a previous supplier for this company, which manufactures several critical subcomponents for Adventure Works Cycle Company’s product line. There are not numerous companies in this industry, as suppliers have not more options to deal with companies. Adventure Works collaborated with previous supplier with suits it and has a low bargaining power. This is in favor of company, and management does not have to plan or offer more to retain suppliers. Apart of this, if new suppliers come, then bargaining power will also be expected as low for this company. (Karydes, 2015)

Threats of Entry

Threat of entry is low for Adventure Works Cycle. New entrants will face immense barriers due to brand loyalty and high cost of raw materials of bike or bicycle’s component. This will evade them to shift their business, which is in favor of this company. There is a need of heavy investment on marketing to exist in this industry. People are loyal with Adventure Works, as this will be difficult for new entrants to position better in their minds.

Porter’s three generic Strategies to Consider

I would like to recommend differentiation strategy to Janet to make the difference between Adventure products and other competitors in market. I think there is much room for Janet to consider differentiation to attract customers and make them loyal with the company.  This company should take initiatives regarding product development, creativity and innovation. Company is going to sell its products in Europe. This is necessary to conduct research and development, particularity in raw components of bicycles. This will give a new trend and shape to customers, which will create difference in market. Product associations can also make difference in market with the help of different promotional tools. People can relate themselves with products due to quality and satisfaction. This is better for management of this company to conduct differentiation in production, quality, designing and in marketing to have satisfied and loyal customers. (Rubenstein, 2002)

Two Tactics to Achieve Strategy

Customer Services

This company can use customer services as trait to have differentiation. Adventure Works Cycle intends to sell its products directly to customers through internet, which is also a good trait. However, retaining customers with providing them complete information regarding technicalities, quality and credibility is a good choice for management. I think they must have shops with effective sales staff to serve customers. Handling complaints, pleasant environments and test samples in grounds are traits, which are considered vital to create differentiation. (Eldring, 2009)

Be Patient

Company should have slow process of research and innovation. Research and development process should be unique, creative and innovative and must take time to develop something new for customers. Fast process of production and development will contain low quality, which can disappoint customers. Therefore, be patient, and keep developing raw components and final products is a trait, which will create differentiation for Janet Cash and its company. (Hill, 2009)

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