Fender

Analysis of the Industry FENDER

Porter’s Five Forces Analysis FENDER

Bargaining Power of Suppliers

Low power
Our multinational company is one of the biggest companies in the musical instruments business. The suppliers in Hungary need to adapt to the fender conditions because they can easy change the suppliers in another part of Europe or just onlyimport from United States or Mexico with cheaper prices

Economy of scale
We can produce a lot of guitars because are selling all around the world. Our prices are cheaper because we could buy from different suppliers around the world in large quantities.

Price of Suppliers (Based in GDP per capita)
We have a subsidiary in Slovakia where Euro is already introduced. Fender Inc. is a US basedcompany, primarily dealing with Dollars. If we would introduce Hungary to our financial, they will be new currency risk with the Forint as long as Hungary becomes a member of the Euro-zone.
On the other hand, resources and labor costs are slightly cheaper in Hungary. Our company in Slovakia is only responsible for distribution and there is no production and it is close to Hungary. We mightconsider setting up a factory in Slovakia, if further analysis shows that it is needed.

(The GDP per capita in Slovakia is $22,246 International Dollars and Hungary $18,730 International Dollars (estimated 2010).)

Although it still cheaper to produce in Mexico. A Mexican production represent a lower risk from the currencies point of view because EUR-HUF exchange rate is more volatile thanUSD-MXN. The GDP per capita in Mexico is $14,151 International Dollars (2010 estimate). We have more power in a country where the labor hand is cheaper like Mexico. But in Europe Hungary Still been one of the cheapest places.
Mexican production is still cheaper but high transport costs are added to the product.

Bargaining power of Customer

Our Fenders Guitars are focused in old Technology anddesigns. The guitars are more classical cooperated with another’s companies. Fender was founded in 1946 and since the customers have the idea that we are a very traditional, higher priced and quality instruments manufacturer. The prices of our guitars are higher because they have a lot of quality materials and specific know how involved.

The customers can change for cheaper products easily. Butthe focus market for us are the customer than know some history of modern music. Everyone from beginners and hobbyists to the world’s most acclaimed artists and performers have used our Fender instruments and amps, and legendary Fender instruments. That’s why Fender can maintain increased prices.

The customer can buy a guitar on Amazon US a from $129 dollars or one Fender Eric ClaptonStratocaster foore than $2,000 dollars.

A customer who knows about musical instruments would probably pay higher prices. It is necessary to focus on these specialized customers who would pay the price because they know what a Fender guitar is. On the other hand we have to spread this knowledge in the player’s community so we have more of the above mentioned customers. The history and quality of ourFender guitars are their best strength. Although some buyers have confidence in some brands, usually quality instruments are not bought on the net. Every instrument is different even if we speak about the same model because there are no two identical pices of wood in the nature. Music shops with skilled staff are part of the (Fender) service.

Thereat of new entrances

The industry is a old one.For new companies to enter in this industry is going to be easy in the government laws, production, selling. The globalization makes easier produce in one place and export all around the world. Sell a guitar in one place like Hungary could be easy (cheap ones) but have success is something different.

The companies in this industry has been the same, there is no a big company that has been...