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National Bookstore Industry Analysis

3461 words - 14 pages

CHAPTER 4
INDUSTRY AND COMPETITOR ANALYSIS

Industry Analysis
4.1 Porter's Five Forces

A. Rivalry among Competing Firms - Weak
Rivalry among competing firms is considerably low since NBS has maintained its position on being the largest and top bookstore and distributor of the country.

Moreover, there are relatively fewer sellers that any one company's actions have little direct impact on rival's business. Products of rival competitors were also somehow different in approach as to which, say, Fully Booked and Goodwill Bookstore focus on book retailing rather than offering school supplies. Even if firms compete with same books and other materials, the pricing strategy of NBS is ...view middle of the document...

C. Potential Development of Substitute Products - Strong
The threat of substitute products is strong for NBS since; end users are growing more comfortable using substitutes. Substitute products can be in the form of photocopied materials, e-books, torrent and epubs. Moreover, the price of these substitute were relatively low (after purchasing premiums) and sometimes comes free for all online readers.

Consumer behavior on saving also plays a part for choosing substitute products over spending it on hard-copy books and materials, adding to the other factor of consumers turning to the internet for reading.

Lastly, Intellectual Property Rights are weakly implemented in the country, thus, piracy is highly tolerated.

D. Bargaining Power of Supplier - Strong
The bargaining power of supplier for NBS is strong since, its core business is on trading office and school supplies. Hence, in dire need for reliable suppliers is promoted.

Supplier concentration is very high because NBS is highly dependent on them. The input of supplier to NBS is also high since majority of the merchandise were provided solely by suppliers alone.

There is also a threat of forward integration because book publishers can directly sell to the end customers through the internet instead of having to pass through the book retailers like NBS.

E. Bargaining Power of Buyer - Moderate
The bargaining power of buyer of NBS is rated moderately since buyers can easily buy from other suppliers. They can also interact directly from the supplier through the internet just like what has considered on the supplier's power over NBS.

Moreover, buyer switching cost to substitute product are low. It is also evident that the web has significantly increased buying access to information about products and suppliers. The Internet greatly increases customer's bargaining power.

On the contrary, the strong branding and customer loyalty has been an advantageous factor for NBS.

4.2 Summary
The genetic heritage of Filipinos having an innate love for reading and learning is an opportunity for NBS to maximize its product and service offerings. Since most of the Filipinos were wage earners, they tend to but in retail purchase rather than in bulk (as revealed on research on Chapter 3). Thus, NBS is continually growing and expanding by focusing on goods retailing and school supplies offering.

Relatively, Filipinos value education and is more willing to invest on it. The NBS presence has been enduring all over the decades through providing the needs and demands of its countrymen.

4.3 External Factor Evaluation
Key External Factors | Weight | Rating | Weighted Score |
Opportunities |
1. Philippine economy soars but no jobs created | 0.05 | 3 | 0.15 |
2. Philippine economy post 7% GDP growth in the Q3 of 2013 | 0.03 | 2 | 0.06 |
3. Social networking influence on purchasing decisions | 0.07 | 4 | 0.28 |
4. Implementation of K-12 educational system | 0.08 | 4 |...

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