What are the Michael Porter’s Five Forces of Viad Corp (VVI)?

Welcome to our latest blog post on Viad Corp (VVI). In this chapter, we will delve deep into Michael Porter's Five Forces analysis and explore how they apply to Viad Corp.

As a leading corporation in its industry, Viad Corp faces a multitude of competitive forces that shape its strategic decisions and performance. By applying the framework developed by renowned Harvard Business School professor Michael Porter, we can gain valuable insights into the dynamics of Viad Corp's market and competitive position.

Without further ado, let's dive into the world of Viad Corp and analyze the five forces that shape its industry landscape.

Bargaining Power of Suppliers

The bargaining power of suppliers is an important aspect of Michael Porter’s Five Forces analysis for Viad Corp. Suppliers can exert pressure on companies by raising prices or reducing the quality of goods and services. In the case of Viad Corp, the bargaining power of suppliers can significantly impact the company’s profitability and competitiveness in the market.

• Supplier Concentration: The concentration of suppliers in the industry can influence their bargaining power. If there are only a few suppliers dominating the market, they can dictate terms to companies like Viad Corp, making it difficult for them to negotiate prices.
• Switching Costs: High switching costs can give suppliers more power as companies like Viad Corp may be reluctant to switch to alternative suppliers. This can give suppliers the ability to dictate prices and terms.
• Unique Products: If a supplier offers unique products or services that are essential to Viad Corp’s operations, they may have more bargaining power, as the company will be heavily reliant on them.
• Threat of Forward Integration: Suppliers that pose a threat of forward integration, or moving into Viad Corp’s industry, can also have significant bargaining power. This is because Viad Corp may be at the mercy of the supplier if they have few alternative sources of supply.

The Bargaining Power of Customers

In Michael Porter’s Five Forces analysis, the bargaining power of customers is a critical factor in determining the competitive intensity and attractiveness of an industry. For Viad Corp (VVI), understanding the bargaining power of its customers is essential for strategic decision-making.

• Size and concentration of customers: The size and concentration of Viad Corp’s customers can significantly impact their bargaining power. Large, well-established customers may have more leverage in negotiating prices and terms, while a diverse customer base can mitigate this power.
• Switching costs: If the cost of switching from Viad Corp to a competitor is low, customers have more power to demand better deals. However, if there are high switching costs, such as proprietary technology or strong brand loyalty, the bargaining power of customers may be limited.
• Price sensitivity: The degree to which customers are price-sensitive can influence their bargaining power. If Viad Corp’s products or services are seen as commodities with little differentiation, customers may have more power to demand lower prices.
• Information availability: The availability of information to customers, such as pricing and product details, can impact their bargaining power. In today’s digital age, customers have access to more information than ever before, giving them greater leverage in negotiations.
• Ability to integrate backwards: If customers have the ability to integrate backwards and produce the product or service themselves, they may have more power to dictate terms to Viad Corp.

The Competitive Rivalry

When analyzing Viad Corp (VVI) using Michael Porter’s Five Forces framework, the competitive rivalry within the industry is a crucial aspect to consider. The level of competition within the industry can directly impact the company’s profitability and overall success.

• Level of Competition: The level of competition within Viad Corp’s industry is high, with several well-established players vying for market share. This intense competition can lead to price wars, aggressive marketing tactics, and a constant battle for customer loyalty.
• Market Saturation: The market for Viad Corp’s products and services may be saturated, with numerous companies offering similar solutions. This can make it challenging for the company to stand out and differentiate itself from competitors.
• Industry Growth: The growth rate of the industry can also impact competitive rivalry. A slow-growing industry may intensify competition as companies fight for a larger piece of the pie, while a rapidly growing industry may create more opportunities for all players.
• Product Differentiation: Companies within the industry may have similar offerings, making it difficult for Viad Corp to differentiate itself and create a unique value proposition for its customers.
• Strategic Moves: Competitors within the industry may make strategic moves such as mergers, acquisitions, or partnerships to gain a competitive advantage, further intensifying the competitive rivalry.

The threat of substitution

One of the important forces in Michael Porter’s Five Forces model is the threat of substitution. This force looks at the possibility of other products or services being able to fulfill the same need as the company’s offerings, thereby posing a threat to its market position and profitability.

• Substitute products and services: Viad Corp operates in the events and exhibitions industry, where there is always a possibility of substitute products or services. For example, virtual events and online exhibitions could pose a threat to the traditional physical events organized by Viad Corp.
• Switching costs: Customers may consider switching to substitute products or services if the cost of doing so is low. Viad Corp needs to consider the ease of switching for its customers and work on building loyalty and barriers to entry for potential substitutes.
• Quality and performance: If substitute products or services offer similar or better quality and performance at a lower cost, customers may be inclined to switch. Viad Corp needs to continuously innovate and improve its offerings to stay ahead of potential substitutes.

The threat of new entrants

When analyzing Viad Corp (VVI) using Michael Porter’s Five Forces framework, it is important to consider the threat of new entrants into the industry. This force examines the potential for new competitors to enter the market and disrupt the existing competitive landscape.

Barriers to entry: One of the key factors affecting the threat of new entrants for Viad Corp is the barriers to entry in the event and exhibition services industry. The capital requirements for setting up event and exhibition services can be significant, as it involves investments in infrastructure, technology, and skilled personnel. This can act as a deterrent for new players looking to enter the market.

Brand loyalty: Viad Corp may also benefit from strong brand loyalty and customer relationships, making it more difficult for new entrants to attract and retain customers. The company’s established reputation and track record in the industry can serve as a competitive advantage against potential new competitors.

Economies of scale: Another factor to consider is the economies of scale that Viad Corp has achieved. As an established player in the industry, the company may benefit from cost advantages that new entrants would find challenging to replicate. This can make it harder for new competitors to compete on price and quality.

Regulatory barriers: The event and exhibition services industry may also be subject to specific regulations and licensing requirements, which can pose additional barriers to entry for new players. Viad Corp’s compliance with these regulations and its understanding of the legal landscape can provide a competitive edge against potential new entrants.

In conclusion, while the threat of new entrants is always a consideration for any industry, Viad Corp (VVI) appears to have several factors working in its favor to mitigate this force within the competitive landscape.

Conclusion

In conclusion, Viad Corp (VVI) operates in a highly competitive industry, and Michael Porter’s Five Forces framework provides a comprehensive analysis of the company’s competitive environment. By examining the forces of rivalry among existing competitors, the threat of new entrants, the bargaining power of buyers, the bargaining power of suppliers, and the threat of substitute products or services, it becomes clear that Viad Corp faces significant challenges in maintaining its competitive position.

• Rivalry among existing competitors: The intense competition within the industry puts pressure on Viad Corp to differentiate itself and continuously improve its offerings to stay ahead of the competition.
• Threat of new entrants: The barriers to entry in the industry may deter new players from entering the market, but Viad Corp must remain vigilant to potential new entrants who could disrupt the industry dynamics.
• Bargaining power of buyers: With a strong focus on customer satisfaction and value delivery, Viad Corp can mitigate the bargaining power of buyers by building strong relationships and offering unique value propositions.
• Bargaining power of suppliers: Viad Corp’s ability to maintain strong relationships with its suppliers and manage its supply chain effectively will be crucial in mitigating the bargaining power of suppliers.
• Threat of substitute products or services: Viad Corp must continue to innovate and adapt to changing customer preferences to minimize the threat of substitute products or services.

By addressing these forces and strategically managing its competitive environment, Viad Corp can position itself for sustained success and growth in the industry.