The external environment of the subject park industry on the Gold Coast plays a important function in finding if the industry is profitable. Harmonizing to Hubbard. Rice and Beamish ( 2008 ) . the external environment is the factors outside the administration that influence scheme and is made up of two environments ; the macro-environment and the industry environment. The macro-environment includes the general factors that affect growing of an industry. whereas an analysis of the industry environment determines the profitableness of an industry.
An analysis of the Gold Coast subject park industry environment will find the industry’s profitableness by analyzing the strength of the undermentioned five forces ; the menace of new entrants. dickering power of providers. dickering power of purchasers. power of replacements. and the strength of industry challengers ( Hubbard. Rice & A ; Beamish 2008 ; Porter 1980 ) . Due to the strength of these forces being rather low. the analysis of subject park industry on the Gold Coast indicates a profitable industry.
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The menace of new entrants into the Gold Coast subject park industry is determined by the strength of the barriers to entry every bit good as the expected revenge. Such a barrier to entry is merchandise distinction which means that ‘established houses have trade name designation and client truenesss. which root from past advertisement. client service. merchandise differences. or merely being the first into an industry’ ( Porter 1980. 9 ) . Therefore. for a new house desiring to come in the Gold Coast subject park industry would necessitate to put in constructing a trade name name as a manner of seeking to get the better of bing client truenesss to the other subject Parkss.
This would necessitate big capital demands for up-front advertisement which would be irrecoverable and along with the unknown trade name name would bespeak a important barrier to entry ( Hubbard. Rice & A ; Beaming 2008 ) . The low menace of new entrants is besides strengthened by the fact that all the subject Parkss on the Gold Coast are owned by two companies. Dreamworld and White Water World are owned by Macquarie Leisure Trust Group and Village Roadshow owns Warner Brothers Movie World. Wet ‘n’ Wild Water World. Sea World. Australian Outback Spectacular. and Paradise Country ( Roller-Coaster 2008B. Online ) .
This efficaciously means that any possible new entrant would be viing against two companies who have the established resources which would enable them to seek and drive the new entrant out of the industry through increased advertisement or by take downing their monetary values ( Porter 1980 ) . The strength of the possible revenge every bit good as merchandise distinction and big capital demands determine that the barriers to entry into the Gold Coast subject park industry are rather significant and hence the menace of new entrants is rather low.
The bargaining power of providers could besides hold an impact on the profitableness of the subject park industry on the Gold Coast ( Hubbard. Rice & A ; Beamish 2008 ; Porter 1980 ) . One factor that influences the power of providers is the provider concentration comparative to industry concentration ( Hubbard. Rice & A ; Beamish 2008 ) . In other words if there are a little figure of providers so the providers are traveling to hold the power. In footings of subject Parkss. the chief input that needs to be supplied is the drives. These are the inputs that theme Parkss market their Parkss around and what attracts visitants to these Parkss.
The bargaining power these roller-coaster providers hold over the subject park industry on the Gold Coast is rather weak due chiefly to the big figure of roller-coaster makers that are located all around the universe. If a subject park requires a roller-coaster to be designed for their park. the house are able to take between over 40 makers to plan their drive so as a consequence the power of the provider is rather weak ( Coaster Gallery 2008. Online ) . Furthermore the bargaining power of providers in the subject park industry is weak due to theme Parkss being roller-coaster makers merely industry in which they can sell their merchandise.
Therefore for the roller-coaster makers. the subject park industry is an of import client and their lucks are ‘closely tied to the industry and they will desire to protect it through sensible pricing and assistance’ ( Porter 1980. 27 ) . For the subject park industry on the Gold Coast this low degree of power held by the roller-coaster providers means that any of the subject Parkss will be able to discourse their demands with a figure of makers due to the big figure available to take from and due to the providers trust on the subject park industry to sell their merchandises. monetary values will be sensible which will besides be helped by the fact that there is big competition between the providers due to their Numberss.
The profitableness of the subject park industry on the Gold Coast can besides be impacted by the bargaining power of purchasers ( Hubbard. Rice & A ; Beamish 2008 ; Porter 1980 ) . One factor where the bargaining power of purchasers is low is the industry concentration relative to purchaser concentration. The subject park industry on the Gold Coast is rather big with seven subject Parkss located within the part ; nevertheless these seven Parkss are owned by merely two companies ; Macquarie Leisure Trust Group and Village Roadshow ( Roller-Coaster 2008B. Online ) .
Therefore due to there merely being two companies within the part. the sum of competition between the Parkss isn’t every bit ferocious as it would be if each park had a different proprietor. For this ground the purchaser doesn’t have every bit much power against each park based on monetary value. This being said. the purchaser still has the power to take one company over another which provides the purchaser some grade of power but non every bit much as would hold been attributed to them with more than two companies. In the Gold Coast subject park industry. the determination makers’ inducements do give purchasers a grade of power ( Hubbard. Rice & A ; Beamish 2008 ; Porter 1980 ) .
Such inducements are prevailing in the industry and are aimed at luring clients to each company’s several subject Parkss. Village Warner offers “3 Park Super-passes” which provide clients limitless entry into Movie World. Sea World and Wet ‘n’ Wild for 14 yearss at a discounted rate. Besides Macquarie Leisure Trust Group offers a “World Pass” which provides customer’s entree to both Dreamworld and White Water World at a price reduction rate. These inducements offered within the Gold Coast subject park industry gives purchasers power to take between the companies based on the sensed benefits of which they are offering.
Therefore if one of these offers isn’t perceived to be every bit valuable as the other offer so the purchaser has the power to take one over the other which can hold an impact on the company’s profitableness either positively or negatively. The power of replacement experiences can besides hold an impact on the profitableness of the Gold Coast subject park industry ( Hubbard. Rice & A ; Beamish 2008 ; Porter 1980 ) . The strength of this power depends on a figure of factors which includes the comparative price/performance of the replacements ( Hubbard. Rice & A ; Beamish 2008 ; Porter 1980 ) .
This involves comparing the comparative public presentation of the industry to the available replacements every bit good as comparing the comparative monetary values. both of which can impact on whether the industry in inquiry or its replacements better run into the demands of the possible consumer. In relation to the Gold Coast subject park industry. the public presentation facet expected of their experience could be to hold “fun” . Therefore. the possible replacements of traveling to the beach. films or shopping most likely wouldn’t run into the public presentation desired in comparing to traveling to a subject park.
However. if the public presentation desired by possible clients was “thrill-seeking” . sky-diving may be a strong replacement. Along with public presentation. monetary value besides needs to be taken into consideration. Therefore. the replacements of traveling to the beach or films are rather inexpensive. which makes their monetary value public presentation rather strong. However. sky diving in comparing to theme Parkss is rather expensive so its monetary value public presentation is rather weak in comparing to go toing a subject park. Overall the power of the replacements is rather strong particularly with their monetary value public presentation and can hence hold an impact on the Gold Coast subject Parkss industry’s profitableness.
The degree of easiness in which purchasers can exchange from the industry merchandise to replacements can besides impact on the Gold Coast subject park industry’s profitableness ( Hubbard. Rice & A ; Beamish 2008 ) . This factor provides a batch of power to replacements because clients within the subject park industry can easy exchange to replacements such as the beach. films or sky diving because they can merely merely see those merchandises instead than travel to a subject park. there is nil keeping people back from making so. Due to this fact and the favorable result for replacements based upon public presentation and monetary value. the power of replacements is rather strong.
The concluding force which impacts on an industry’s profitableness harmonizing to Porter ( 1980 ) is the degree of industry competition. Industry growing rate is a factor that impacts on the degree of competition because if the ‘industry is turning fast. the sum of industry competition will be comparatively low. because there will be room for most or all administrations to prosper’ ( Hubbard. Rice & A ; Beaming 2008 ) . The subject park industry on the Gold Coast is still sing growing chiefly due to the overall Gold Coast touristry industry turning with domestic visitants increasing 6 % to 3.
7 million in the twelvemonth stoping June 2007. and international visitants increasing 3. 5 % to 858. 000 in twelvemonth stoping June 2007 ( Tourism Queensland 2007. Online ) . As a consequence Sea World. Movie World. and Wet ‘n ‘ Wild increased attendings 17 % . 4. 3 % and 22 % severally. while Dreamworld’s attendings decreased somewhat by 2 % ( Roller-Coaster 2007A. Online ) . Due to there still being strong growing in the Gold Coast subject park industry the competition isn’t every bit intense as it would with small to no growing and will hence hold small impact on profitableness.
Industry profitableness can besides be impacted if administrations within an industry have undifferentiated merchandises ( Hubbard. Rice & A ; Beaming 2008 ; Porter 1980 ) . By holding uniform merchandises competition would be utmost due to administrations aiming the same markets. whereas if merchandises were differentiated the administrations within the industry would aim different market sections. The subject park industry on the Gold Coast has traditionally been rather differentiated with a H2O park. movie-themed park. thrill-ride park and a marine-life themed park.
As a consequence the different subject Parkss were able to aim differing market sections which meant the competition between the Parks was apparent but non that strong. Today nevertheless the competition between Macquarie Leisure Group Trust and Village Roadshow has intensified due to Macquarie Leisure opening a H2O park called White Water World which is in direct competition with Village Roadshow’s Wet ‘n’ Wild. This has lead to strong advertisement runs and price reduction offers by both administrations in an effort to derive market portion.
Due to the gap of the new H2O park which has created two uniform merchandises in the industry. the overall industry profitableness could be impacted because both Macquarie Leisure and Village Roadshow are traveling to be viing ferociously to seek and carry possible clients to come to their several H2O park which could hold been avoided if they have differentiated merchandises with different mark markets. By analyzing the Gold Coast subject park industry utilizing Porter’s ( 1980 ) five forces it is apparent that the industry is profitable due to an overall low degree of power attributed by most forces.
The low menace of new entrants is apparent due to the barriers to entry of established merchandise distinction and the expected revenge of Macquarie Leisure and Village Roadshow. Besides the power of providers is low due the big figure of viing roller-coaster makers and their trust on the subject park industry. moreover the power of purchasers is low due to two companies having all the subject Parkss on the Gold Coast which reduces the degree of competition between the Parkss and limits possible nest eggs for purchasers and helps the industry’s profitableness.
However. profitableness in the industry can be impacted by the considerable strength of replacements based upon monetary value and the easiness of which clients can exchange to these replacements. Furthermore. profitableness will be farther impacted by the increasing competition between the two H2O Parkss in the industry as they fight for market portion. Despite the presence of these forces on industry profitableness. there strength is rather weak and the Gold Coast subject park industry will stay profitable due to the other forces outweighing any negative impact on industry profitableness. Reference List.
Coaster Gallery 2008. ‘Roller Coaster Manufacturers’ . Roller Coaster Information ( online ) . Available: hypertext transfer protocol: //www. coastergallery. com/Manu. hypertext markup language [ Accessed 13 April 2008 ] . Hubbard. G. . Rice. J. & A ; Beamish. P. 2008. Strategic Management: Thinking. Analysis and Action. 3rd edn. Prentice-Hall. Frenchs Forest. Porter. M. 1980. Competitive Scheme: Techniques for Analyzing Industries and Competitors. The Free Press. New York. Roller-Coaster 2007A. ‘Attendance Up Across the Board’ . Roller-Coaster Theme Park News ( online ) . Available: hypertext transfer protocol: //www. roller-coaster. com. au/article. php? aid=143 [ Accessed 14 April 2008 ] .
Roller-Coaster 2007B. ‘Theme Park Performance Drives Village Profits’ . Roller-Coaster Theme Park News ( online ) . Available: hypertext transfer protocol: //www. roller-coaster. com. au/article. php? aid=142 [ Accessed 14 April 2008 ] . Tourism Queensland 2007. ‘Business and Leisure Drives Gold Coast’s $ 2. 6 Billion Domestic Tourism Industry’ . Tourism Queensland News ( online ) . Available: hypertext transfer protocol: //www. tq. com. au/destinations/gold-coast/news/news_home. cfm? col2Includes=infopieces. dsp_story_full & A ; obj_uuid=0195C856-CDFC-D308-72CF-6DC3FA3B4C62 [ Accessed 13 April 2008 ] .