Use the  Porter five forces analysis and Value Chain Model to analyze WeWork company.
For Porter five forces analysis  Justify 3 characteristics per force by citing articles and other sources.
The file is Porter five forces analysis and its characteristics.
Five forces, every forces need three characteristics.Five Forces Model
Based on the Generic Strategies Grid
Barriers to entry: Target has a number of barriers to entry that protect it from potential
new players entering the market place. Essentially, the threats of new entries are low.
New entrants must comply with government regulations and trade restrictions on
multiple levels.
Economies of scale: Target specializes in many products, and that is the nature of their
business model. The greater the volume of Target locations the greater their advantage.
Mergers and acquisitions will have a long term positive impact on Target. This will lead
to an increase in volume of customer, which in return will lead to a larger revenue
Barriers and Access to Distribution: This is a significant problem for most new
companies that are coming into the market place. Target is already established and has
access to their distribution channels on multiple levels, but starting a company on this
scale would mean access to distribution channels abroad. This is not an easy task for a
new entrant.
Cost advantages and Capital Requirements: There is a massive capital requirement
among entrance to the supermarket retail industry. To acquire an ample work force, and
supplies to start the company it is inevitably very expensive. That is generally why a
high initial capital is needed. If a high initial capital is not present upon inception then
the newcomer cannot compete with the already established corporations such as Target.
Supplier Power: Target is one of the largest supermarket retailers in the world currently.
This means as an entity it has an enormous variety of merchandise on sale. This means
that no vendors have more that roughly 5% of the company’s sales. Therefore, supplier
power is low.
Number of Suppliers: There are many suppliers in the retail industry. Like the rest of
the retail industry has a large number of suppliers. They have suppliers for every item
that they bring into their locations. As previously stated in the Generic Strategies Grid
some of these suppliers are Target only suppliers by contract.
Switching cost: There is a low switching cost because of the large variety of retail stores
around the United States. Essentially, Target enjoys some leeway in negotiating
favorable terms due to their size. Target does have contract with certain designers, but
once again, because of the size of Target the switching cost is still low.
Ability to Substitute and Differentiation: Target differentiates themselves from the likes
of Wal-Mart and Costco by utilizing designer contract and appealing to younger crowds
than that of Wal-Mart and Costco. The designers have increased dependency on Target
to generate ample revenue, so the power lies with Target.
Buyer Power: Target operates in the “red” along with Wal-Mart and Costco. Due to
the nature of their industry buyers have a larger selection of retailers at their disposal.
These options include physical locations and online shopping. Bargaining power of
buyer is high.
Switching Cost: If a consumer needs a specific item and Target doesn’t carry it, then
they can just go to another retail or grocery store, and pick up these items. Buyers don’t
have much making them shop at Target locations over other markets.
Buyer Concentration and volumes: Although bargaining power is high, it cannot impose
much of a problem on this type of company. As previously stated in the Generic
Strategies Grid Target is the 2nd largest retail company in the world, so they have a
large volume of consumers visit their stores every day.
Price Sensitivity: As stated in the Generic Strategies Grid. Target markets itself on
having the lowest prices in a chicer version of a retail store. So, customers are price
sensitive. They are looking for deals. Products have little degree of differentiation, and
therefor Target is forced to keep prices competitive.
Substitutes: Products such as groceries and electronics are largely undifferentiated
among retailers. Therefore, customers can easily switch companies without added
switching cost.
Buyer Propensity to substitutes: Substitutes have a strong force because of their abilities
to carry the same products as Target.
Substitutes Available: There are many substitutes available to Target that aren’t
included in the rivalry category. These substitutes include grocery stores or discount
stores that carry the same items that Target carries.
Switching Cost: Target loses a lot of business to substitutes. There is little switching
cost for consumers, as they can make their purchases elsewhere.
Rivalry: Competitive rivalry in this industry are shaped by competitive demands made
by each player in the industry lobbying to get ahead of the other players within the retail
Industry Growth: There is a high rivalry in the Target store industry which in turn is a
threat to Target. This industry continues to grow rapidly, as it constantly reaches new
parts of the world. New online shopping capabilities have also reshaped the industry.
Intermittent Overcapacity: Intermittent overcapacity exists in this industry because the
industry has the same capacity all year and supply to a seasonal demand along with
year-round business.
Concentration and Balance: Target is a broad low cost company, so they are reaching
out to anyone and everyone that needs their products at a lower price. Their
differentiated model keeps them from going out of business.
Value Chain Model
The value chain model can help us understand how to add value to a company, attracting
more customers interested in travel products and generating more revenue. Value chain
It describes the categories of activities within and around an organization that together
create a product or service. The value chain emphasizes the importance of all aspects
of the operations manager engagement process, from supplier to customer.
Inbound logistics: As the leader of the hotel industry, Marriott is mainly about the
consumer goods that customers need to purchase after they enter the hotel. In general,
Marriott has entered into all contracts with suppliers, including food and beverages,
laundry and other services, and inventory management and inventory collection for all
parts of the hotel. Marriott can create cost advantages by reducing the cost of individual
value chain activities or reconfiguring the value chain. Once the value chain is defined,
cost analysis can be performed by evaluating the cost of the value chain activity.
1. Based on the strategic model x-axis analysis, Marriott needs to reduce its cost as
much as possible to ensure that it is beneficial to compete with economic hotels.
2. Based on y-axis analysis, then “Marriott” will product Or the service is upgraded to
meet the new needs of customers to adapt to the expanding hotel market.
3. Because of the increase in competitors, Marriott needs to maintain the quality of
basic materials to stabilize residents.
Outbound Logistics: Marriott’s outbound logistics can be a way to deliver services and
end products to different outlets and different guests. In order to achieve customer
satisfaction, the company requires and relies on the goods and services provided by
external suppliers in a timely manner. Marriott is trying to segment the brand to meet
the needs of different consumers, from high-end products to low-end products.
Marriott’s value is added and created by people investing time, knowledge, equipment
and systems to serve guests and customers. This will determine Marriott’s typical
1. Marriott’s growing industry makes it unnecessary for Marriott to keep their value
chain efficient.
2. Marriott will have overcapacity during the offseason, which requires Marriott to
enhance its value chain to maintain business operations.
3. Marriott has basically no distribution barriers because of his strong capital chain and
company specifications.
Produces: Compared to their rival Hilton, two large hotel management companies
operating globally have been working hard to add value to their products. For the
hospitality industry, its products are mainly the number of hotel rooms, and Marriott
International Hotel has 4,424 hotels worldwide. With the support of all advanced
equipment and tools, the products produced can bring economic benefits to Marriott.
1. Based on the analysis of alternatives, Marriott needs to ensure that it meets the
material needs of all customers, which requires Marriott to ensure that his room is safe
and clean.
2. Because consumers are sensitive to price, Marriott needs to develop low-priced
hotels that can compete with budget hotels.
3. For Marriott, customers with points have relatively high conversion costs.
Marketing and Sales: All activities are designed to make customers and people
interested in the hotel’s rooms, conferences, restaurants, and for the promotion of the
hotel and the price of the competitors. Marriott’s profit depends on its effectiveness in
effectively performing these activities, so the amount customers are willing to pay for
the product exceeds the cost of activities in the value chain. It is in these activities that
Marriott has the opportunity to produce superior value. Now, Marriott has not only
concentrated its development on the domestic market, but has also begun to broaden its
overseas market.
1. The competitive pressure of strong low-cost hotels makes Marriott have to consider
different levels of consumption and develop new products in different price areas.
2. There are many ways for customers to choose hotels, so that Marriott needs to
develop some special competitive advantages to attract customers.
3. Based on the analysis of the y-axis, Marriott still has certain disadvantages in entering
the overseas market.
Services Offered: Hospitality services are the key to their success. Quality of service is
created by a certain number of employees based on the capabilities of the hotel and the
corresponding training. Good service will increase the value of the product and is of
the utmost importance to the guests as they have to choose among the many hotels.
Hilton and Marriott can offer the same rooms, the same room equipment, and the same
facilities. Hilton’s price may be more competitive, but the service offered will be
different from Marriott. Travelers may also choose Marriott for this reason.
1. Marriott does not have a big advantage in price. The excellent introduction of hotel
services to front desk staff is likely to bring added value.
2. Because the reservation system is perfect, it can enhance Marriott’s value chain.
3. Marriott’s check-in and customer service at check-out are important factors in
increasing the Marriott value chain.
Firm Infrastructure
Human Resource Management
Technology Development
and Sales
Primary Activities
Five Forces Model of Competition
Supplier Power
• Determination of inputs
• Switching costs of suppliers
• Presence of substitute inputs
• Supplier concentration
• Importance of volume to supplier
• Cost relative to total purchases
impact of inputs on cost
• Differentiation
• Threat of forward integration
Barriers to
Barriers to Entry
• Economies of scale
• Proprietary product differences
• Brand identity
Buver Power
• Switching costs
Bargaining leverage
• Capital requirements
• Buyer concentration
• Access to distribution
Buyer volume
• Absolute cost advantages
Buyer switching costs
• Government policy
• Buyer information available
• Expected retaliation
• Ability to backward integrate
• Substitute produces available
• Pull-through
Price sensitivity
Buyer Power
Price total purchases
• Product differences
• Brand identity
• Decision makers’ incentives
• Impact on
Degree of

Degree of Rivalry
• Industry growth
Threat of
• Fixed (or storage) costs/value added Substitutes
• Intermittent overcapacity
• Product differences
• Brand identity
✓ Same Goal
• Switching costs
✓ Same Product
• Concentration and balance Same Industry
• Informational complexity
Diversity of competitors
Corporate stakeholders
• Market positioning

Threat of Substitutes
• Substitute products available
• Relative price performance of substitutes
• Switching costs
Buyer propensity to substitute
Same Goal
Different Product
Different Industry

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