Porter's Five Analysis and SWOT Analysis Essay Example

Porter's five forces refer to the competitive environment in which business operations occur. These forces are supplier power, the threat of entry, threat of substitutes, buyer power as well as competitive rivalry. Rocket Internet like any other business operates within a completive environment under porter's five forces. First of all the threat of new entry is low in the advertising industry (Turban et al., 2018, p.377). There is a trend of long-term contracts with advertising companies and clients will use the same advisor provided that the outcomes are positive. The advertising space is expensive and limited leading to difficulties for new players to access space. Also, the establishment of a market hold is not easy for newcomers because large Companies have long-term engagements with well-established advertising companies and with many clients. For instance, in 2007 during the establishment of Rocket Internet, it was difficult to penetrate to famous and well-established advertising companies because huge Companies like Amazon had bonded with advertisers (Kohler & Baumann, 2016, p.37).

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Power of suppliers is higher in the advertising industry with a limited advertisement space that leads to high demand for advertising space from services and goods. Products require enough space, a situation that causes suppliers to have more power (Turban et al., 2018, p.381). Suppliers used in the advertising industry are mainly entertainment channels, OOH advertising as well as public ad spaces. In most cases, product concentration is high with readiness to pay higher for the available premium spaces. Advertisers have high demands during events like elections or sports events. About the cases study, Rocket Internet utilizes the Bundesliga soccer events in Germany to adverse its product of online startups (Kohler & Baumann, 2016, p.39).

Power of buyers exists because every product requires advertising for their purpose of increasing market reach to clients. Companies are ever advertising every product with the aim of creating an impact on their buyers (Turban et al., 2018, p.373). For the case of Rocket Internet, the company is advertising its product in Indonesia, Singapore as well as Singapore with the aim of creating an impact on buyers in Southeast Asia. Advertising in Southeast Asia has created an impact on buyers in the region in spite of the presence of the dominant online business entrepreneurs like Zalora of Singapore as well as FPF Corp of Vietnam. Moreover, Rocket Internet is using Lazada as its leading e-commerce platform to advertise its product in Southeast Asia as a way of having an impact on buyers (Kohler & Baumann, 2016, p.33).

The threat of Substitutes is minimal due to the absence of other alternatives for carrying out advertisement when promoting products. There are various mediums used in the promotion of advertising. The close substitutes include radio, television, paper or any other channel that may be used to reach customers (Kohler & Baumann, 2016, p.40). The most used alternative method by Rocket Internet is paper in case electronic mediums fails or are unavailable.

The intensity of rivalry amongst competitors is high since there are no dominant players. Advertising companies have an equal share to compete with one another in the sharing of advertising space. As a result, companies that rely on advertisers have a competitive advantage. For instance, in 2013 Rocket Internet advertised through Ogilvy & Mather and its internet entrepreneurship business gained a higher rivalry intensify, a situation that led to an increase of 15% in the coverage of clients (Kohler & Baumann, 2016, p.31).

SWOT Analysis

SWOT analysis of an industry or a business refers to the strength, weaknesses, opportunities as well as threats to the business environment. Rocket internet, as an online entrepreneur business, has strengths, weaknesses, opportunities as well as threats. The first strength of the company is wider coverage of market (Turban et al., 2018, p.387). Wider coverage of the company in building online startup has led to its rapid expansion to regions of Africa, Latin America, Asia Pacific, Middle East as well as Europe, Asia Pacific. Moreover, having the strength of a wider coverage has enabled the company to utilize market in the e-commerce sector at the global level. The company started from Berlin, and after one decade...