The 5 forces type of Porter (1980) is a superb tool to gauge industry attractiveness. Within the following, each one of the five competitive forces is going to be examined.
Threat of recent Entrants
To be able to compete in the market, much capital is required. The least expensive option is a helicopter beginning at 200.000 Euros for any smaller sized aircraft. A differentiated system costs around a million Euro’s, material usage only. In addition, to be able to operate scalping strategies, specialized understanding is required. Finally it may be stated that status is of crucial importance within the offshore access industry. Caused by all this is really a high entrance barrier what results in a low threat of recent entrants.
Threat of substitutes:
Substitutes from the differentiated system such as the helicopter and also the jack-up platform continue to be frequently used within the conservative offshore gas and oil industry. Nevertheless the offshore access system includes a competitive advantage due to its fast installation on location. In this manner the offshore access companies can offer longer working hrs of engineers around the platform, than helicopters. It is therefore figured that threat of recent and existing substitutes is medium.
Bargaining position of consumers
Clients generally should you prefer a safe method of offshore access even at greater cost, so cost plays a small role. The majority of the clients within the offshore access industry are highly-lucrative firms that can afford a vertical integration. Switching pricing is low, but customers refer on personal expertise. The bargaining position of consumers is medium high, mainly due to the very couple of customers.
Bargaining power Suppliers
The amount of suppliers is restricted. Materials are highly customized for systems. Each supplier provides merely a couple of components for that system but don’t only depend about this industry. Vertical integration isn’t interesting for that suppliers. First of all, they’d still need to purchase a lot of components, that makes it complicated and costly. Next, the offshore access market is much differentiated towards the ones from the suppliers and demands specialized understanding. Overall, the arguments reveal that the bargaining power suppliers is high the depends strongly on their own supplier’s performance.
The couple of companies within the offshore access industry develop a structure as oligopoly. Nevertheless the companies face exit barriers. The service and also the products the provides are highly specialized. The investments for his or her goods are very specific for this industry. It’s unlikely that firms exit the to be able to gain profit in another industry. Competition between similar products or services plays a small role, because of the fact from the growing market. It is therefore figured that competitive competition is quite low.
Everything considering, the presently has high attractiveness. Even though it is very difficult to compete for brand new entrants because customers are cost insensitive and materials are highly customized. It’s expected that industry attractiveness will decrease. The reason behind this decline may be the launch of substitutes such as the offshore access system. Therefore the industry serves an increasing market even though the attractiveness of the profession will decline.