Porter’s 5-Forces Industry Analysis Assignment Help for National Basketball Association (NBA)

Basically our assignment help experts says that the porter’s five force model examines the buyers, suppliers, substitute products, rivalry among existing firms, and potential threat of new entrants in a firm’s industry (Daft, 2011). Industry Rivalry: As per Porter, major forces increasing rivalry between the firms in an industry are the market maturity, equally-balanced competitors, high fixed costs and high exit barriers. All focuses are also present in teams in NBA.  For instance, the market growth is measured by the attendance at NBA games (Lipsey, 2006). It means the competition is also increasing among the teams for a static number of fans. Additionally, the industry is constructed by NBA, because the distribution of ability across teams must be relatively equal in order to maintain game suspense and thus to attract fans (NBA Brand keys 2012). NBA also encourages competitive balance with different measures such as: salary caps, reverse-order draft choices, revenue sharing, and maintaining authority over league expansion.  The fixed costs for the teams are labor contracts and physical assets that are very high. Finally, the NBA prohibits firms from exiting the industry at will. The mixtures of these four factors develop high rivalry among teams (Daft, 2011).

Customer Power: Porter suggests that customers are the powerful relative to firms in an industry. Basically, there are three customers for NBA teams such as: fans, media outlets, and corporations. All these customers have different degrees of power (SRS plus. 2012).

Fans: More than 35% revenue of NBA teams comes from the gate receipts. These fans are the local residents who frequently buy seasonal tickets and watch or listen to the games.  For instance, basketball fans are more attractive to advertisers than are fans of other sports. It is because they are younger and more racially diverse than baseball and football fans (NBA Sports Ticket Price and Game Expense Guide. 2012).

Media Outlets: The second customer group for the NBA consists of media outlets who bid for the rights to broadcast games. Additionally, the price for such rights has grown. For instance, currently, the team is collecting about 35 percent of its total annual revenues from broadcast fees (Harris Interactive Sport Attainment. 2012).

Corporations: These are customer of NBA teams, because they buy season tickets and skybox seats. They also participate in sponsorships programs. In this way, approximately 15 percent of the average NBA team’s annual revenue comes from corporate-related venue fees (NBA Revenue Ranking. 2012). On the basis of above discussion, it can be stated that the buying power of customers is medium in the industry.

Supplier Power: The extent of a player’s power depends on different factors like other teams’ interest in the player as well as the player’s performance, free agent status, and star power.  However, the general rule is that most suppliers hold relatively low power with the exception of a few superstars (SRS plus. 2012).

Substitute Products: It is interpreted that substitute products strongly affect the professional basketball industry. It is because 70 percent of NBA fans are casual entertainment seekers rather than die-hard fans. Additionally, fans of basketball also have very low switching costs as compared to fans of other sports such as football, baseball, or hockey. Apart from this, only football has a higher average ticket price than basketball (NBA Sports Ticket Price and Game Expense Guide. 2012).

New Entrants: Since, the NBA League approval, new entrants into this industry are rare. Additionally, the NBA would put several obstacles into an entrepreneur’s path: such as:  massive capital costs, lack of brand reputation & TV revenue and steep competition for talent NBA (Revenue Ranking, 2012).

Main Successes of Firms within the NBA The main successes that are attained by the teams in the NBA are brand value, home market size and effective targeting of the casual fans. For example, the main success of firms (teams) within the NBA is home market size. In this, teams have developed a large fan base and numerous corporate sponsors. Furthermore, it is beneficial for teams in order to generate the revenue (NBA Brand keys. 2012). Additionally, teams are also able to effectively target the casual fans that also support them to strengthen their financial position. Additionally, some firms are more successful as compared to other. It is so, as they implement brand value, home market size and effectively targeting as a success factors in an effective manner.   References Daft, R.L. (2011). Management. USA: Cengage Learning. Harris Interactive Sport Attainment (2012). http://www.harrisinteractive.com/news/allnewsbydate.asp?NewsID=312 Lipsey, R.A. (2006). The Sporting Goods Industry: History, Practices and Products. USA: McFarland. NBA Brand keys (2012). Retrieved from http://brandkeys.com/awards/sports05.cfm NBA Revenue Ranking (2012). Retrieved from http://www.thesportsroadtrip.com/nbafavorites.html NBA Sports Ticket Price and Game Expense Guide (2012). Retrieved from http://www.sportsbusinesssims.com/sports.ticket.prices.htm#NBA SRS plus (2012). Retrieved from http://www.georgelapides.com/view.php/id/83 Avail quality and original business assignment help services from our US,UK and Australia experts. We assure you that you will get complete and according to your assignment requirements.