Five forces framework introduced by Porter (1980) has been acknowledged as an effective tool used in strategy formulation. Application of the framework is associated with analysis of five separate factors determine the overall level of competitiveness in the industry.
Warner Bros. Porter’s Five Forces Analysis can be illustrated in the following manner:
Threat of new entrants in film, television, and music entertainment industry has been traditionally moderate due to high levels of cost barriers. However, internet and rapid developments in information technology have increased the threat of new entrants to the industry through providing opportunities to lower cost barriers.
Bargaining power of buyers is immense as there are no switching costs for the customers of Warner Bros. Buyer bargaining power is also fuelled by abundance of offers in films and manufacturing industry.
Threat of substitute products for products offered by Warner Bros. is significant. Substitutions for Warner Bros. products include a wide range of video games, as well as, increasing popularity of major social networking websites such as Facebook, YouTube and Twitter.
Bargaining power of suppliers is greater in films and entertainment industry compared to many other industries. Due to the unique nature of this industry famous actors can be classified as suppliers at the same time as serving as human resources.
According to this approach, the success of sequels of famous Warner Bros. franchises such as Lord of the Rings, Batman, Harry Potter and Hangover is possible only through attracting A-list actors and actresses who have great bargaining power.
Rivalry among existing competitors in global entertainment industry is intense and major companies competing in the industry along with Warner Bros. include Paramount Pictures Corporation, The Walt Disney Studios, Fox Filmed Industries and others.
Porter, M. (1980) “Competitive Strategy” Free Press