Companies are affected by internal and external factors; the Australian media industry is undergoing numerous transformations. Companies in the media industry need to be vigilant and updated with the transformations taking place if they have to remain competitive. Porter’s five forces are external environment analysing tools used to gauge company’s competitiveness and market position (Fred, 2008). This paper undertakes an industrial environment analysis of Fairfax media.
Threat of new entrants
The media industry is undergoing fast developments with new way giving information being invented. The way newspapers, magazines, radios and digital media are produced has accelerated competition in the industry. When trying to adopt new forms of information disbursing, Fairfax faces numerous challenges which include patent rights, copy rights, and trademarks acquisition challenges.
When the rights are granted, they come with a cost to the company; there has been challenges of print media from free press media in Australia thus Fairfax faces the challenge to handle the situation (Fred, 2008).
Bargaining power of suppliers
In contemporary media industry there are national and international suppliers; they include suppliers information and physical materials used in the production.
Fairfax media has numerous journalists mandated with the task of collecting information and supplying it to the company in good time, the challenge facing the company is fast development and adoption of Internet where its journalists seem to get unauthenticated information. In current moves to conserve the environment, the company is having a challenge getting printing papers; they are found at high cost forcing it to pass the cost to its customers (Hitt, Hoskisson and Ireland, 2003).
Bargaining power of buyers
Bargaining power of buyers is the ability to influence prices or the products made. Australia youthful population is influencing the nature and style that media houses are doing their businesses. Generation Y and the millennium generation are repelling against the print media; they are more interested in free press media that is cheap, and fast (Haberbeg and Rieple, 2001).
Generation Y is fulfilling their surveillance needs in the most efficient manner in terms of access, costs, and availability; with the above characteristics, free news media has seen a niche market where it can sell its products and services. Fairfax is finding its business being pushed to the production of free news articles that are less profitable to the company (Blackhurst, 2003).
Power of substitutes
The main substitute that Fairfax is getting comes from the free news media; free news media offers news in simplified form that is formatted to attract the attention of its target market. Australian youthful generation is more willing to use free news Medias’.
Companies in the print industry are finding it hard to compete with free news media houses. On the other hand, Fairfax media has maintained the conventional news presentation format that seems to give preference to national and international news on different matters, the nature of the news fails to meet the needs of the people (Bakker, 2002).
Intensity of industry rivalry
The media industry is highly influenced by emergence of technology; the Internet has enabled free and fast flow of information. Although Fairfax Media has accomplished significant growth in market capitalization, the rate is slow compared to the potential that the industry has. The main hindrance to fast growth is competition from free news media that have news targeting the youth. Apparently the youth are the majority in Australia favouring the free news media (Hitt, Hoskisson and Ireland, 2003).
Table 4.1 Evaluation of Porters Five Forces
ForceThreat to profit
Threat of new entrantsLow
Power of supplierLow
Power of buyersMedium (its growing)
Power of substitutionLow High
Intensity of industry rivalryMedium to Low