Shearwater Adventures Case Study
1. Dominant economic featuresMarket size and growth rate. It is estimated that the extreme andsporting industry is in the $100-500 million range worldwide. The growthrate is difficult to establish correctly, since some operators experience12% annual growth, while tourism in Zimbabwe is decreasing. ShearwaterAdventures’ growth was 39% in sales.Number of rivals. There are 250,000 operators worldwide. Zimbabwe isnot characterized by a large number of important operators, sinceShearwater has a 80% market share.Number of buyers. The customer base consists in individuals aged 40-50mainly. This means that the number of customers can be significantlyincreased by attracting younger categories of customers.Degree of product differentiation. Shearwater offers a very wide rangeof services, compared to its competitors that only provide three options atmost. However, competitors’ range of products could expand.2. Five forces model of competitionThreat of new entrants. The costs of market entry are various: theycan be low like $20,000 for small operations, or high like $200,000 forfull service operations. The United States market presents high entrybarriers, while the South African market presents low entry barriers.Overall strength: normal.Buyer bargaining power. The seller-buyer strategic partnerships takethe form of certain services provided by operators, determining buyers toreturn. The bargaining power of buyers is not very visible at a superficiallevel, but it is clear that sellers must adapt to the buying possibilitiesof buyers. Overall strength: moderate.Supplier bargaining power. The supplied items are not commodities. Thesize of suppliers varies from small local operators to large full serviceoperators. The number of suppliers reaches 250,000 worldwide. Given thenature of activity, there is little threat of supply shortage. There ishigh differentiation among suppliers. Overall strength: strong.Substitutes. There are no direct substitutes in this market. Overallstrength: fierce.Rivalry. There is a large number of competitors, but they vary fromsmall operators to large businesses. The price range and the services rangevaries in accordance with operators’ size. Overall strength: strong.The strongest force that has the greatest effect is competitiverivalry. This force basically establishes the market, the prices, the rangeof products, and the evolution of each player. The weakest force isrepresented by the substitutes force.3. Industry driving forces. The main driving force in this industry isrepresented by customers. Suppliers must adapt to customers’ preferencesand possibilities. Also, this industry in connected with tourism. Whentourism decreases so do the extreme sports industry. Other driving forcesin this industry are represented by macroeconomic factors, like inflationand prices. Even so, the industry is a promising one, as it is still in theemerging stage, with expansion and growth opportunities.4. Key success factors. Customer service capabilities are quitedeveloped and are expected to develop even more in the future. Customerservices are various, in accordance with prices. Product innovationcapabilities are quite elevated. The most important factor that caninfluence success in this industry is represented by advertising. A wellknown and respected brand name does not represent an important condition inthis industry.
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