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Porter’s Five Forces Model of GoPro

GoPro is an American company founded in 2002 for the purpose of developing digital camera technologies with specialization in action cameras. The company also deals in video editing software and other related applications but the core product of the company is action-based digital cameras. Despite the presence of global competitors, the company has earned a name. to stay competitive. It is important to analyze different factors from the industry which is presented through Porter’s five forces analysis.

Competitive Rivalry

The competition in the digital camera industry is high because of multiple established players of global presence. The companies have the technological and financial capacity to continuously innovate which makes it difficult for the players to compete. The total number of sales for the digital camera units is 5.55 million pieces in 2018 with Canon leading the market by grabbing 43.4 percent of the market share.  GoPro has earned a revenue of 1.15 billion USD in 2018 at a global level which shows the competitiveness of the company (Statista, 2019). Nikon has a market share of 19.1 percent while Sonya has grabbed 17.7 percent of the total market share of digital cameras. Fujifilm has also seen an increase of 1.3 percent making it a total of 5.1 percent of market share. Olympus has a global market share of 2.8 percent and it has become a strong competitor (Cade, 2019). All of these competitors are strong in their technological and financial capabilities making the competition intense. It has made it difficult for GoPro to sustain itself in the market as the competitors continuously focus on developing technologies.

Bargaining Power of Suppliers

The bargaining of suppliers is moderate as the suppliers for the digital camera require technology and skills. The reliable suppliers are not in abundance but it is a major decision to select the supplier. The companies are reluctant to change the supplier because it can damage or change the whole scenario of their operations in the digital camera industry. This reliance on the companies on their suppliers makes the suppliers in the dominant position. From the perspective of suppliers, they are also depending on the companies as there are few companies that are the major manufacturers of such a camera (Ferguson & Souza, 2016). This neutralizes the dominant position of the supplier in the digital camera industry. Therefore, the bargaining power of suppliers is moderate.

Bargaining Power of Buyers

The bargaining power of buyers is moderate for the digital camera industry as the number of sellers is limited. The number of buyers exceeds the number of sellers but still, the buyers have few options to choose from. This benefit to both sides makes the bargaining power moderate as both try to get to a win-win situation.  The digital cameras are not something that the buyers would be buying from nearby corner manufacturer but the buyers are relying on the international level companies due to their strong branding and high level of reliability (Ferguson & Souza, 2016).

Threat of New Entrants

The threat of new entrants is low because of the expertise and capital required in the digital camera industry. Complex technologies, talented workforce, and different types of equipment are required to manufacture the highest quality cameras. The action-based digital cameras are high involvement product and it is a major issue for a new entrant to convince the customers to buy it from a new company. The reliability is a major factor that is a hurdle for the new entrants for the digital camera industry (Kang and Song, 2017). The presence of these hurdles makes it difficult for the investors to make the decision in favor of the digital camera industry which keeps the threat of new entrants’ low.

Threat of Substitutes

The threat of substitutes for the digital camera industry is high because the overall market share of digital cameras has gone down by 22 percent due to advancements in technology. The technology is developing multiple substitutes for digital cameras such as cameras in mobile phones and other technologies.  The evolvement of different substitutes is the reason for the decline of 22 percent in the global market share of digital cameras (Cade, 2019). It is important for the companies to continuously look at the emerging trends to innovate radically and keep on giving high value to the customers.

References

Cade, D. (2019). Canon Increased Market Share in 2018 But Camera Market Continues to Bleed. Peta Pixel. Available at: https://petapixel.com/2019/07/08/canon-increased-market-share-in-2018-but-camera-market-continues-to-bleed/
Ferguson, M., & Souza, G. C. (2016). Reuse and Recycling in the Motion Picture Industry. In Closed-Loop Supply Chains (pp. 178-197). Auerbach Publications.
Kang, H. and Song, J., 2017. Innovation and recurring shifts in industrial leadership: Three phases of change and persistence in the camera industry. Research Policy, 46(2), pp.376-387.
Statista. (2019). GoPro – Statistics & Facts. Available at: https://www.statista.com/topics/2713/gopro/

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