Dynamic Communication dominates a segment of the consumer electronics industry. A small competitor in that segment is Wade Goods & Co. Wade has just introduced a new product, the Carrycom, which will replace the existing Wade product line and could significantly affect the industry segment. Mike Brandreth is preparing an industry research update that focuses on Wade, including an analysis that makes extensive use of the five competitive forces. Wade’s President, Toby White, makes the following statements:
• “Wade has an exclusive three- year production licence for Carrycom technology from the patent owners of the new technology. This will provide us a window of opportunity to establish a leading position with this new product before competitors enter the market with similar products.”
•“A vital component in all existing competitive products is pari-copper, an enriched form of copper; production of pari copper is limited and is effectively controlled by Dynamic. The Carrycom is manufactured with ordinary copper, thus overcoming the existing dependence on paricopper. All other Carrycom components can be purchased from numerous sources.”
•“Existing products based on paricopper are designed to work in a single geographic region that is predetermined during the manufacturing process. The Carrycom will be the only product on the market that can be reset by the user for use in different regions. We expect other products within our industry segment to incorporate this functionality at the end of our exclusive licence period.”
•“The Carrycom and similar, competitive products have recently added the function of automatic language conversion. This elevates these products to a superior position within the broader electronics market, ahead of personal digital assistants, personal computers, and other consumer electronics. We expect that the broader electronics market will not be able to integrate automatic language conversion for at least one year.”
•“We intend to replace Dynamic as the market leader within the next three years. We expect ordinary copper- based products with automatic language conversion to be the industry standard in three years. This will result in a number of similar products and limited pricing power after the three- year licence expires.” Brandreth has adequately researched two of Porter’s competitive forces the bargaining power of buyers and the bargaining power of suppliers and now turns his attention to the remaining competitive forces needed to complete his analysis of Wade. Identify the three remaining competitive forces. Determine, with respect to each of the remaining competitive forces, whether Wade’s position in the industry is likely to be strong or weak, both one year and five years from now.