Assessment of the Current Business Environments - Nestle - Essay Example

Firms use various marketing mechanisms to gain leverage. Porter’s five force analysis is one the most powerful tool that greatly facilitates the evaluation of internal and external factors that impact performance (1980).

The emerging new trends in the travel industry vis-à-vis travel destination, special interest packages, integrated services for corporate customers with high spending potential, etc. have given a significant boost not only to the industry but to national economies also (UNWTO, 2006; Dwyer, 2002). MICE package has been developed for global firms that want to mix business with leisure activities to rejuvenate their workers. They are also designed to address the need of the international business community by organizing global meet for corporate buyers and sellers so as to exploit new opportunities for expanding business across the globe (Spiller, 2002). The huge potential of MICE has increasingly become the driving force for the success of the tourism industry. Porter’s five force analysis hugely facilitates in assessing market forces that can be exploited by the MICE firms and other tourism agencies. It evaluates the five forces: the threat of new entry; buyer power; supplier power; the threat of substitute; and competitive rivalry.

The threat of new entry is always a critical issue as it significantly reduces the economy of scale for big businesses. Technology and globalization have provided new entrants with huge opportunities and local agencies have emerged as major threats for tourism agencies. Differentiation, networking capability, financial backing, brand loyalty, etc. become major factors to overcome the threat posed by new entrants. Buyers’ power is huge as technology has hugely enabled small family businesses to enter the tourism industry with success. There are also more global players in this field which makes switching easier. The industry firms, therefore, must focus on cost differentiation, brand equity and quality of service to gain leverage.

The firms also face suppliers’ power as the industry relies on collaboration and sharing of resources across the globe. Global and domestic firms must use benchmarking and ethical measures to win customers’ trust and loyalty. The credible image of the firm hugely increases its negotiating powers.
The threat of substitute in tourism and MICE firms are always present. But strong brand position and credibility of the firms help to overcome the competition vis-à-vis price sensitivity, variety in tourism and MICE products and quality of service.

In the era of globalization, competitive rivalry is a vital aspect for differentiating products through constant analysis and evaluation of customers’ changing preferences (Kotler et al., 2007). Firms that can customize their products timely and efficiently to suit the changing preferences of the customers are better equipped to maintain or gain leverage in the market.

Thus, a critical assessment of Porter’s five forces helps MICE and tourism firms to gain a competitive advantage in the cut-throat global business environment. The analysis equips them with necessary knowledge which is creatively exploited to compete and survive. Read More