Template - Porter's Five Forces Framework Boundaries of Industry Analysed :Fitness and health industry. | Date of Analysis:2014/1/19 | Geographic Boundary: | | Global | √ | Continental | | National | | Regional | | Local | MarketBoundary: | | All firms competing in all product/customer segments | √ | Only firms competing in particular product/customer segments |

THREAT OF SUBSTITUTES Reduces competition/improves profit potential for firms in industry | Increases competition/reduces profit potential for firms in industry | Relevant data/information about Industry being Analyzed | Which Products may be Substitutes for Products of this Industry? | Yoga，Kung Fu, Zumba, outdoor activities. | What products/services from other industries can satisfy a similar customer need?Products/services produced by other industries may be substitutes to the customer if the price or quality of products from one industry becomes unsatisfactory, and a close substitute is available from another industry and the customer can readily switch | | Availability of Close Substitutes for Products/Services | 1. Public fitness facilities 2. Gym at your apartment. 3. Beach public workout place. 4. Stadium (a place which can play basketball, football and so on.) | - No close substitutes for the main products/services of the industry so that customers are comparatively insensitive to price- Switching costs for customers are quite high | - Close substitutes exist: customers will switch to substitutes in response to price increases. Examples:- less expensive products that serve a similar purpose (e.g. plastic containers instead of aluminum) are available- used or refurbished products (e.g. refillable containers) instead of new are available- reusable alternatives (e.g. cloth diapers instead of disposables)- alternative delivery/distribution methods | | Conclusion about strength of this Force: | This is a positive force for profitability in this industry: structural factors tend to sustain or increase demand for the products/services of firms in the industry or support higher prices for their products/services ½ This is a somewhat positive force for profitability in this industry This is a negative force for profitability in this industry: structural factors tend to weaken demand or increase competition faced by firms in the industry or put downward pressure on prices that can be charged for their products/services | OVERALL RATING: () One | Low | Moderate½ | High | | | | | √ | |

BARRIERS TO ENTRY/THREAT OF ENTRY BY POTENTIAL COMPETITORS Reduces competition/improves profit potential for firms in industry | Increases competition/reduces profit potential for firms in industry | Relevant data/information about Industry being Analyzed | Capital Requirements | | - High start-up costs discourage new entrants, particularly small firms with limited access to financing (e.g. aircraft industry, commercial satellites) | - Industries that require modest or negligible capital for firm start-up (e.g. franchises, home-based, outdoor fitness) | | Economies of Scale | | - Large-scale operation is required to keep unit costs low. New entrants must enter on smaller scale & accept high unit costs, or enter on a large scale and bear costs of underutilized capacity while building market share (e.g. automotive manufacture) | - New entrants can start small and scale up operations as demand for firm’s product/market share increases (e.g. accounting services) | | Absolute Cost Advantage | | - Established firms have secure access to low-cost supply sources or enjoy “economies of learning” – they have amassed experience (capabilities) through early entry into the industry) | - New entrants are able to access supply arrangements at competitive prices- There are many suppliers of critical inputs/raw materials | | Product Differentiation | | - Products/services offered are highly differentiated – established firms have an advantage in brand recognition and customer loyalty - New entrants to the industry must spend disproportionately heavily on advertising and promotion | - Products/services are undifferentiated: commodities | | Access to Channels of Distribution | | - Established firms own or enjoy well-established access to distribution channels (e.g. shelf space, sales force, retail outlets, contractual relationships with downstream uses/wholesalers) | - Barriers to distribution can be circumvented by new entrants - Existing distribution channels have unused capacity or capacity can be added/acquired relatively quickly or at competitive cost | | Government & Legal Barriers | | - New entrants are barred or discouraged by high costs of compliance with regulations or restrictions (e.g. licencing requirements, ability to copyright or patent products, exacting environmental or safety standards) | - Few restrictions to industry entrants or regulations are relatively easy to meet | | Likely Retaliation from Established Firms | | - Established firms have defended against new entrants previously- Potential new entrants face aggressive price-cutting, increased spending on advertising/promotion, litigation from established firms | - Unserved or underserved (niche) markets/market segments of little or no interest to established firms allow small-scale entry for new entrants | | Conclusion about strength of this Force: | This is a positive force for profitability in this industry: structural factors tend to sustain or increase demand for the products/services of firms in the industry or support higher prices for their products/services ½ This is a somewhat positive force for profitability in this industry This is a negative force for profitability in this industry: structural factors tend to weaken demand or increase competition faced by firms in the industry or put downward pressure on prices that can be charged for their products/services | OVERALL RATING: () One | Low | Moderate½ | High | | | | | | |

INTENSITY OF RIVALRY AMONG ESTABLISHED FIRMS Reduces competition/improves profit potential for firms in industry | Increases competition/reduces profit potential for firms in industry | Relevant data/information about Industry being Analyzed | Concentration in the Industry | | - A single firm dominates in market share, or there are relatively few leading producers in the industry and these firms control the market (generally over 50% of the market by 4 to 8 firms) | - The industry is “fragmented”: there are a large number of small- or medium-sized firms – no one firm or any small group of firms controls the market | | Diversity of Competitors | | - Dominant firms are similar in terms of origins, objectives, cost structures, top management mindsets and strategies- There is a price-setter and/or firms are “disciplined” in avoiding price competition | - Firms in the industry differ in terms of national origins, cost structures, management styles, and strategies- Firms in the industry engage in competitive pricing | | Product Differentiation | | - Industry products/services are highly differentiated (e.g. perfumes, pharmaceuticals, management consulting services) so that price competition tends to be weak, even though there may be many firms competing | - Industry products/services are highly similar: customers are willing & able to switch between rival products so that rival firms are induced to cut prices in order to boost sales- Industry products/services are a commodity: price is the sole basis for competition | | Excess Capacity & Exit Barriers | | - Demand for major products/services is growing or stable- Established firms are able to idle capacity to offset cyclical demand- Barriers to exit are low: capacity tends to adjust during prolonged downturns in demand | - Life cycle for major products/services is mature or industry life cycle is reaching or at decline phase- Unused capacity encourages firms to offer price cuts- Barriers to exit are high: assets are specialized, contractual or legal commitments make it costly to withdraw, owners have emotional attachment to this industry | | Cost Conditions: Scale economies & ratio of fixed/variable costs | | - Unit costs are relatively low or firms are able to produce efficiently at low volumes(e.g. small production runs can be scheduled without encountering considerable downtime to switch or adjust equipment) | - Fixed costs are high relative to variable costs, leading firms to take on marginal business at any price that covers variable costs- Large volumes required to achieve economies of scale encourage firms to compete on price to achieve critical mass | | Conclusion about strength of this Force: | This is a positive force for profitability in this industry: structural factors tend to sustain or increase demand for the products/services of firms in the industry or support higher prices for their products/services ½ This is a somewhat positive force for profitability in this industry This is a negative force for profitability in this industry: structural factors tend to weaken demand or increase competition faced by firms in the industry or put downward pressure on prices that can be charged for their products/services | OVERALL RATING: () One | Low | Moderate½ | High | | | | | | |

BARGAINING POWER OF THE BUYERS OF INDUSTRY PRODUCTS/SERVICES Reduces competition/improves profit potential for firms in industry | Increases competition/reduces profit potential for firms in industry | Relevant data/information about Industry being Analyzed | Who Buys the Products/Services offered by this Industry? | | Consumers generically or by demographic; Wholesalers; Manufacturers (producers, processors, semi- or finished-goods); Retailers (discount retailers/mass merchandisers; superstores); Governments; Businesses generically or by sector; Public organizations (hospitals, schools, social services) | | Buyers’ Price Sensitivity | | - Buyers are less price sensitive because: * Product/service provided by industry firms is important to the quality of the buyer’s product/service * There is strong brand loyalty | - Buyers are sensitive to prices they are charged because: * Product/service provided by industry firms is important in proportion to total cost (e.g. a large component cost of finished goods) * Products/services are components in the products/services of buyers who are competing on price in highly competitive markets-Products/services are undifferentiated: buyers are more willing to switch suppliers on the basis of price | | Relative Bargaining Power | | - There are many buyers and they are not organized- Buyers have limited information about suppliers or upon which to make price or quality comparisons- Buyers will incur high costs to switch who they purchase from- Firms in this industry are a credible threat to displace the buyers of industry products or services through forward integration | - There are a small number of buyers and/or buyers purchase in large quantities- There are low or no switching costs for buyers- Buyers of industry goods/services are a credible threat to displace firms in this industry through backward integration | | Conclusion about strength of this Force: | This is a positive force for profitability in this industry: structural factors tend to sustain or increase demand for the products/services of firms in the industry or support higher prices for their products/services ½ This is a somewhat positive force for profitability in this industry This is a negative force for profitability in this industry: structural factors tend to weaken demand or increase competition faced by firms in the industry or put downward pressure on prices that can be charged for their products/services | OVERALL RATING: () One | Low | Moderate½ | High | | | | | | |

BARGAINING POWER OF SUPPLIERS OF INPUTS TO THE INDUSTRY Reduces competition/improves profit potential for firms in industry | Increases competition/reduces profit potential for firms in industry | Relevant data/information about Industry being Analyzed | Who Supplies Inputs to this Industry? | | Growers; Resource extractors; Labour unions; Processors; Semi-finished goods manufacturers; Import/Export agents; Component manufacturers; Wholesalers; Business service and business goods providers | | Ease of Changing Input Suppliers | | - Inputs required to produce industry products/services are commodities: firms in this industry can easily switch input suppliers without penalty- Inputs required to produce industry products/services have a low unit cost: input suppliers compete on price | - Input suppliers provide complex, technically sophisticated or specialized components that are important to industry product/service quality- Firms in the industry are to a great extent “captive” to their current input suppliers: switching costs are very high | | Relative Bargaining Power | | - There are many input suppliers who are relatively small in size and who are not organized- Established firms in the industry are able to offer to purchase large volumes or quantities- There are few alternate markets for the inputs purchased by this industry- Firms in this industry could readily displace their input suppliers through backward integration | - There are a small number of input providers- Input providers are able to control the volume or quantity of inputs they offer to firms in the industry- Input suppliers are a credible threat to displace firms in this industry through forward integration | | Conclusion about this Force for this Industry | This is a positive force for profitability in this industry: structural factors tend to sustain or increase demand for the products/services of firms in the industry or support higher prices for their products/services ½ This is a somewhat positive force for profitability in this industry This is a negative force for profitability in this industry: structural factors tend to weaken demand or increase competition faced by firms in the industry or put downward pressure on prices that can be charged for their products/services | OVERALL RATING: () One | Low | Moderate½ | High | | | | | | |