Clouds on the horizon Identify an industry that has been att

Clouds on the horizon. Identify an industry that has been attractive but that you think might change dramatically due to shifts in the five forces of competition model. If you were a CEO, what would you do?

Solution

.Let us the consider the industry of Ridesharing services. It is one of the most attractive businesses today with companies like Uber, Sidecar, Lyft, Didi ruling the worldwide markets. However, this industry may change drastically over the years due to the impact of the five forces of competition model.

1. Threat of new entrants: The concept of the current ride-sharing service companies is relatively easy to be copied to new entrants. Further, new entrants may provide their services at much lower prices. Customers would find it easy to swipe services and to go for the new entrants for their cheaper prices and freebies. As the ride-sharing industry is booming right now, there is a high chance of new entrants coming into it and disrupting the industry.

2.Threat of substitutes: With technology advancement, other options would soon provide a good replacement for Ridesharing services. The abundance of Taxi services with lower prices and new features would become a strong substitute in the years to come. Other options like Trains, buses would also be substitutes for the customer to choose from. With better features and prices, customers could be willing to opt for such options more frequently.

3. Bargaining power of supplier: Drivers are the biggest suppliers for the ride-sharing service industry. Since most ride-sharing services do not own many cars, they are heavily dependent on drivers who own cars. Hence, Drivers have the upper hand and they can keep negotiating with the ride-sharing company. If some other industry offers them higher prices, they would be often ready to leave the ride-sharing company. Further, the supplier of Gasoline/Diesel also has a high bargaining power, as prices of Gasoline/Diesel keep on fluctuating and there is a level of uncertainty involved.

4. Bargaining power of Buyers: The customers using Ride-sharing services are generally very price sensitive. With growing competition and more options available, customers would be quick to go for the cheapest options as the switching cost won\'t be high. That means customers would readily move from an Uber to a Lyft to some other service provider, in no time if they get a better deal. With growing competitionIns, the bargaining power of buyers is only going to increase.

5.Industry rivalry: Industry rivalry is very high is the ride-sharing service industry. Uber, is one of the dominant players but faces stiff competition from Lyft and Curb. The case is same across the globe. Uber was not successful in China because of the presence of Didi. In India, Uber faces very strong competition from local provider Ola. With each operator providing new features and attractive prices, the competition would keep on increasing day by day, making it very difficult for any particular company to be on the top.

A CEO of any ride-sharing service company should plan not just for the short term but also for the long term. With rapidly changing dynamics of the industry, the CEO has to ensure that his company provides most technologically advanced services at attractive prices. The CEO should always be aware of what his competitors are up to and should plan accordingly. He should make any investment wisely so that it doesn\'t hurt the company in the long run. He has to do a careful analysis if he wants to enter any new geographical area.To conclude, the CEO should have a strong planning, be very cognizant of industry happenings, keep his company\'s products technologically superior. These would be required for the company to be successful over the years.