An Introduction of Porter's Five Forces

I. An introduction of Porter's Five Forces:

Porter's Five Forces is a marketing toolkits for business analysis. Furthermore, this model also provides business strategies for development or improves the performance of the company.

Bargaining Power of Suppliers: Every business must require supply. With the high quality and unique supply, the suppliers can drive the price up, which will influence to the business.

Bargaining Power of Customers: According to the demand of the market, Bargaining Power of Customer affect directly to the business because of the ability of the customer to set the price up or down.

Threat of Substitute Products: Threat of Substitute Products occurs when a product is affected by the price changes of substitute products and this constrain the ability of firms to adjust the price in business.

Threat of New Entrants: A profitable market will attract a lot of new entrants; this will affect the profitability in current market. However, every business has strategies to protect their profit in the marketing.

Competitive Rivalry: this term described the intensity of completion of each business in certain marketing. Every business must try hard for a competitive advantage over their rivals to survive in the market.

II. The Five Forces Application to Ainsley United:

Have been founded since 1951 with a lot of vicissitudes, now Ainsley United is going to play at the final match of the season after win League One on May 2010. This is a big challenge for Ainsley United, be success in the Championship and equally in the football business. Porters Five Forces analysis will identify the key issue for them.

• Bargaining Power Of Suppliers

Players is the main supplier in Ainsley United, they play for money, passion, reputation. These are three suggestions that we should take on to satisfy them and reduce their supplier's power:

- Improve the current football team: Hire a better coach and construct a new football field for Ainsley United are the effective way to improve our player's morale and experience but the cost is quite high. Thus, If we have finance problem, there are second options which less expensive for Ainsley United: buy better equipment, Periodic health examination, provide more effective training exercise or fitness program.

- Satisfy the good one: Good player is very important to the success of Ainsley United. To keep the good player, we should persuade them to sign long-term contract with us. Furthermore, high salary will make them satisfy while playing in Ainsley United and bonus money for their goal is also motivate them.

- Looking for new players in youth team: looking for new player in youth team, especially in Ainsley town, will reduce the cost the we buy professional player from other clubs, help us to build the trust with our hometown fans. Furthermore, after training them, we can offer them to another football club with a better price, which will also increase our budget.

• Bargaining of customers

Our most important customers is our fan. How the customers help our business? They buy ticket for watching Ainsley United play, the more fan we have, the more money we het from the every match we play and we can attract more sponsor.

If Ainsley United have a large fan club and all fan attempt all of Ainsley match, it will strongly improve the morale of our team. Furthermore, large fan club also makes the government pay attention on Ainsley and if we play good, they maybe encourage our team with a sum of money.

• Threat of Substitute Products:

Football is the king of the sport, more than 40% people in the world like football, because you can practice football much more easily than other sport, you can play football, it does not matter if you are short or tall and more, football is less expensive than the other games such as: tennis, golf, et cetera.

However, in Britain, there are a lot popular games like: cricket, lawn tennis, golf, and rugby. These games are also popular as nearly same as football and this also slightly reduce our fan. Avoid screening our match at the same time with another game will reduce the threat of substitute products. To performance this action, we should contact to some popular sport channel such as: Star Sport, ESPN, so on.

• Threat of New Entrants

New Entrants always bring a high risk to our championship and also to our business. If they play well, they will attract our current sponsor, take the curious of our current fan. Sponsor also do business, they are looking for high profitable place. Thus, if the new team plays better than us, they might cancel the contract with us and looking for a better team.

Everything has pros and cons. We have been matched with every team in the league one for several times, the new entrant will bring us an opportunity to experience with them. Furthermore, new entrants also have some good players, we can transfer their good players and potential player which less expensive than transfer with another big team.

• Competitive Rivalry

This is the first time that Ainsley United play in the final match ground. There are a lot of big football team such as: Manchester United, Chelsea, Liverpool, et cetera. We should not compare them with us, we should carefully analysis and learn how they train their team, what is their strategy, how they run their business effectively and efficiency. Find out their strength and their weakness is the big step to help Ainsley United winning the Championship and also winning the business.

Section 2

I. P.E.S.T.L.E:

PESTLE is a useful method to understand the external business environment. When the Five Forces analyze each elements of the micro-environment, PESTLE more focus on the macro-environment. PESTLE is standard for: Political, Economic, Sociological, Technological, Legal and Environmental.

Political: Political is the factors which affect directly to the survival of the business base on the government regulations, legal issue. For examples:

• Tax policy

• Employment laws

• Environmental regulations

• Trade restrictions

• Political stability

Economic: Economic is the element with include the economic growths, interest rates, exchange rates, inflation rate. Economic is affecting the buying power of the customer. So, business should careful analyze the economic situation to avoid the economic risk.

Sociological: Sociological is the factor which comprise the demographic, population growth rate and cultural aspects of the external environment. These factors influence the customer needs and purchasing behavior of the customer.

Technological: Technological factor can help the business enter the market easier, which reduce the minimum efficient production level and affect the outsourcing decisions. Some examples for technological factors:

• R&D activity

• Automation

• Technology incentives

• Rate of technological change

Legal: Legal factors require business must operate within the law, there are 2 main sector of the law that the business must consider: employment law and consumer protection.

Environment: the environment factors comprise the weather or climate change, which can affect directly to some business interests such as: tourism, insurance.

II. How to apply P.E.S.T.L.E on Ainsley United:

Political: in the macro-environment, government plays an important role in football business. The elections inter-country relationships/attitude will help Ainsley United a lot in the business. When the election's day coming, we will encourage our football team and Ainsley United's fan to vote for candidate who like football and especially, like Ainsley United. When he wins the election, he will appreciate our team, our fan a lot and that make sure he will help Ainsley United in the business.

Economic:

Base on the chart, the current interest rate in UK is very low but it will rise in near future. So, loan money from the bank to expand Ainsley's business is very risky. There is some more safety way to expand Ainsley's