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Porter’s Five Forces Model has been one of the models that is being used evaluate the attractiveness of entering a business like the movie rental business. The reason is that it is an excellent model to use to analyze a particular competitive environment of an industry. I would say it helps to determine where competitive advantage lies in a business situation. This would determine the attractiveness of a particular business and as such aid in the strategic decision making of an organization whether to go for it or not. According to Porter, the five forces are buyer power, supplier power, threat of substitute products, threat of new entrant and rivalry among existing competitors (Haag, Cummings 2013). Examples of movie rental businesses are Red box, Netflix, Blockbuster and other digital modes like Amazon, Hulu to mention a few.
With regards to these movie industries, ‘buyer power in the Five Forces Model is high when buyers have many choices from whom to buy, and low when their choices are few’ (Haag, Cummings 2013). In this case, buyer power is high due to the availability of different movie rental form. Buyers have the choice of going to a Red box kiosk or having Netflix deliver in the mail. With various satellite television providers having pay per view services to offer, buyers can decide to enroll in a subscription service with such providers. Buyer power can and will only be reduced in such instances as the introduction of a unique product or service to gain competitive advantage. According to Cummings and Haag, ‘they create a competitive advantage by making it more attractive for customers to buy from them than from their competition’.
Supplier power is the opposite of buyer power and in some instances, a company or organ...

... middle of paper ...

...as Netflix and Amazon Prime had been around a little earlier’ (Gross, 2014).
The movie rental industry is now moving from just DVD’s and getting into the streaming and movies on demand system which makes them to be marketable and have a firm corporate survival with profit maximization. By saying this, I believe this industry is a good industry to enter into using the right strategies to gain competitive advantage. With the use of business intelligence via effective CRM, the needs and preference of customers can be identified and capitalized on. This would enable movie rental industry to move from into a competitive advantage position by making available what customers are actually calling for and not what they think is good for the customers. An example would be the streaming of movies directly into customer homes which enables their service to be customer driven.

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