The Five Forces Model of Competition are: competitive pressures from buyer bargaining power, companies in other industries trying to win buyers over with substitute products, supplier bargaining power, the threat of new entrants into the market, and rivalry among competing sellers to attract customers. In the printing industry the buyer has strong bargaining power, because the companies offering products are similar and therefore they have to offer their products and services at lower prices to entice buyers. Buyers are in the market for the most cost effective products and services to meet their needs, which put them in a position to shop the market and bargain with companies to receive the best price. As cloud services become more readily available and more affordable, buyers are leaning towards those services because they are more environmentally sustainable and more secure. In essence, buyers want the most bang for their buck. The competitive pressure of potential substitutes would be moderate, because companies are leaning towards cloud services and that could impact the bottom line for companies that are not focused one expanding their cloud services. Supplier power is high, because there are limited suppliers and the companies are using similar products which require the same products.
Suppliers for cloud services are limited as well, so the supplier can charge higher prices which would impact the revenue generated and the price at which they can offer the services to their buyers. The threat of new entry is weak, because there aren’t any apparent needs in the industry that a new entrant could profit from. The major names in the industry like Canon, Xerox, HP, Konika Minolta, and Ricoh are established and well known for their products. It would be difficult to enter the market and take business from them.
The rivalry between the companies in the printing services industry is high due to the number of key players competing for business with similar or identical products. Due to the similarities between products and services, this could cause price wars and increase competition between the companies to try to take business from each other. The companies are also competing to merge with other companies in the industry to gain leverage over their rivals and corner the market on printing and cloud services, because the market is expecting to shrink by 3 percent by 2019. Given the information found during this analysis, I think this would be a tough industry to work in.
The fact that the industry is changing and it expected to shrink would make it competitive and potentially make it hard to stay in business and continue to be profitable. Strengths• Acquisition of IKON• Strong focus on Customer Service and Customer Satisfaction• Strong brand-name image• Strong professional and technical services• Wide geographic coverage Weaknesses• High turnover in Management • Lack of clear strategic direction• Lack of management depth • Not providing products and/or features that compete with rivalsOpportunities• Offer cloud services• Offer B2C like competitors• Expanding product line to meet the needs of customers• Hire dedicated and knowledgeable staff and management• Focus on training Threats• Changing needs of customers• High turnover• Lack of innovation• Increasing intensity of competition • Low focus on training• Growing bargaining power of customers and suppliersI think Ricoh Canada can create a competitive market position by expanding their product line to include the cloud services that customers are leaning towards and by entering the business-to-customer market like their competitors. They also need to spend the time and resources to train their employees and managers and create a clear strategic direction. They have the resources available, but they need direction on how and where to spend them to get the biggest return on their investment. By training their staff and investing in them, it will create a more satisfied workforce and in turn they will be more productive.
The management that they have hired are knowledgeable and just need to focus on a new and innovative opportunities to compete with their rivals and generating revenue opportunities.