Of COURSE You Wonder What Porter’s Five Forces Are. Who Doesn’t?

hey there it’s David H Lawrence the 17th
today a fairly technical but I think
really fascinating look at competition
and potential profit and the
advisability of entering a particular
marketplace it’s called Porter’s five
forces analysis and what it is is a
Harvard professor in a Michael Porter
who created in the late 70s these five
kind of litmus tests for whether or not
companies should go into a market with a
new product to compete against other
products that either already exist or
might be coming to the marketplace to
begin with it’s kind of fascinating to
apply it to what we do because usually
the answer is I don’t care right when
you when you hear the five test you’ll
understand what I’m saying so what this
is designed to do is to help you judge
whether or not creating a new product or
service bringing it to market is going
to be profitable successful is even a
good idea worth doing so the first test
is is there a threat of new entrants how
high is the threat of new entrants so in
other words is there a barrier to entry
do you have some sort of magic formula
that others don’t have can’t copy can’t
reverse engineer or can anybody do it is
there a low barrier to entry so number
one threat of new entrants number two
threat of substitutes so whatever your
product or service does is there a
different thing that can do the same
thing that can solve the same problem is
there a high threat of substitutes or a
low threat of substitutes so for example
in terms of food you know you’re selling
a new meat or you’re selling a fake meat
well you know there’s vegetables you
know there’s fish landline phones mobile
phones right they both create you know
of
zoom Skype right the third one is the
bargaining power of customers in that
sector and that is can they put
pressures on you to lower your prices so
that they’ll buy your thing over
somebody else’s product that might be
higher priced might be more difficult to
get so threat of new entrants threat of
substitutes bargaining power of
customers then there’s the bargaining
power of suppliers you know are the
people that give you the raw materials
for what you do the tools that you need
to create what you do are they able to
control their prices and maybe make it
more expensive for you to buy from them
or not even sell to you at all because
they’d rather sell to a competitor they
have some sort of contractual deal with
competitors you can’t buy the raw
materials that you need to do this right
and then finally it’s competitive
rivalry this idea of just how
competitive and just how cutthroat and
just how genius
are your rivals like do you want to get
into the mobile phone business when
Apple and Samsung and Huawei and all
these others that are really good at
what they do are already there do you
want to get into the chip business do
you want you know so the question is how
does this apply to us as performers and
the answer is we have a constant threat
of new entrants and the question is is
this still worth doing if we know that
somebody could come along and maybe do
the job better than we are I say yeah it
doesn’t really matter that’s what this
this this this deals with business but
when you apply to what we do you can
think oh okay the threat of substitutes
the threat is high there’s gonna be a
lot of people who casting people can
grab without grabbing you and they do it
all the time so is that gonna stop you
from becoming performer nope the
bargaining power of customers well the
good news here is that there is a
marketplace and a union that kind of
stabilizes that if they want to by
anybody who can do what we do they have
to pay a particular price but if it’s
non-union or if it’s a new category the
bargaining power of customers can be
really high you know the or if
it’s a popular thing if if lots of
people can do it well I can get this guy
to do it for a hundred bucks as opposed
to 500 bucks so there is some bargaining
power is that gonna stop you from
becoming an actor
probably not bargaining power of
suppliers this one is kind of difficult
to lay along the terms of what we do but
then we still need to be on audition
sites we need to have head shots done we
need to have demo reels made we need to
take training in voiceover and in acting
and there you know the value of what
those suppliers provide is pretty clear
and so there is bargaining power on that
part but is that gonna stop you from
entering the market nope it sure isn’t
and then competitive rivalry is like
your customers your suppliers other
people in the business they all kind of
interact and the good news is we don’t
often look at this as a competitive and
we certainly shouldn’t look at what we
do as a competitive business I always
tell my clients it’s not a race it’s not
a sprint if anything it’s a marathon and
what you’re doing is competing against
yourself not against other people
because there’s no scorecard somewhere
you know there there’s there’s ways of
keeping track of your success but
there’s no scorecard somewhere where
somebody goes oh yeah I’m not gonna
consider anybody new because I only want
to go with the tried-and-true I want to
go with the the champion actors you know
that just doesn’t work anyway it’s
really interesting it’s called Porter’s
five forces and it’s worth looking up I
gave you the link for the Wikipedia
article I’d like to know how you think
this applies to what we do do you look
at it as a race do you look at it as oh
I’ll never get work because those other
people are so much better than I am or
they charge less than I do or or they’ve
got more experience than I have or
they’re prettier than I am you know all
those limiting beliefs you know does
that stop you I wonder I wonder I wonder
I wonder leave me a comment below let me
know hopefully I’ll be back soon from my
surgery so you can stop looking at the
stupid shirt if you’re seeing this every
day but I do thank you for paying
attention to these videos and I love
when you interact with him and give me
what you think I just really do I find
this to be a fascinating process if
you’d like to join my youtube channel
subscribe to it by clicking on my head
there if there’s no head there there’s a
subscribe button somewhere on the page
or if you want to see the latest video
I’ve done click on that frame and
YouTube will play it for you I’m David H
Lawrence the 17th I thank you so much
for watching and I’ll talk to you
tomorrow.