Use Porter’s Five-forces model to help analyze the book publishing industry, simply based on the hypothetical information and data presented below.
The book publishing industry in Australia
- 20% of books are sold via independent retailers that tend to specialize in a particular genre or prefer unusual (not mainstream) books
- 70% of books are sold via large retail chains that only deal in mainstream books published by large or long-established publishers who also provide promotional dollars to support their books
- 10% of books are sold via the internet (e.g. Amazon) and this is expected to dramatically increase as they increasingly capture the time-poor or budget-conscious market segments
- Book sales have been fairly stable in this mature industry, however they are expected to decline in the future as internet and cable-TV usage increases
- Australia has one of the highest per capita magazine sales in the world
- There has been a dramatic increase in self-publishing over the past 10 years, however these books are typically not accepted by retailers and tend to have print runs of less than 1,000
- E-books would be in the early growth phase of their product life cycle. They currently have relatively low sales but are expected to steadily increase over time
- There is an increased number of authors in the marketplace, appearing to be driven by easy access to research material (via the internet) and by the increasing popularity of blogs
- Despite more authors available, there is only a small number of “brand” authors (such as Bryce Courtney) who can attract significant book sales on their name alone
- Excluding self-published books, there are around 500 new books available in the Australian market each month (including books published internationally)
- There is an increasing number of large book publishers, as the larger ones battle for market share by acquiring smaller publishing houses
- Assess the book publishing industry using Porter’s Five-forces model.
- What key insights have you gained by assessing this industry using this structured model?
- Therefore, what is your overall assessment of the attractiveness of the industry?
- How could a firm use Porter’s Five-forces model in their strategy and planning activities?