Through segmenting the Coo’s general environment framework, and conducting an environmental analysis outlining Porters five forces model of competition an educated prediction Is concluded. The general environment Is a collection of dimensions influencing an industry and the firms within it (Hanson et al, 2014 p. 38). These dimension are made up of the Demographic, Economic, Political, Socio-cultural, Technological and Global, all of which heavily impact the SO. The political dimension of the SO is strongly correlated with the large amount of support by the government through heavy funding.The economic environment of SO Is positive, having Hanson et al. 2014 p. 421).
Apart from government funding, 65% of the revenue earned by the SO was generated through profits. The Socio-cultural and demographic dimensions on the other hand, are inevitably linked with the location of Sydney and its unique features. Sydney is often regarded as one of the most livable cities in the world possessing a large population of 4. 5 million. The residents are economically well off, enjoying a high per capita Income with a large middle class who are able to afford expensive Inner city housing.A ticket to a SO concert Is ricer between $50 and $71, and is considered affordable for many. Technology another segment of the general environment, has heavily impacted the profitability of music with websites such as Youth and Pirate Bay offering free music on demand.
Thus, reducing the incentive for people to pay for live concerts, as recorded music is free and readily available. However, technology has opened up new mediums in which the SO can utilities to reach larger audiences.Porter’s five forces model of competition provides additional Insight Into the music Industry, contributing to the verbal understanding of the future prospects for the SO.
This model ‘allows long- term profitability of any industry to be understood’ through the diagnostics of five forces (Porter, 1 998, p. 14). Firstly, new entrants pose threats to existing market share, therefore product differentiation is a vital tool, which evidently is utilized by the SO as they only employ the very best first-rate musicians.
In the music Industry, it Is important to also consider substitute products such as live pop and rock concerts, existing to music at home, online music videos, and many other forms of replacement, which may be a cheaper option to attending the orchestra. Additionally, the power of suppliers also affects the music industry as an increase in costs such as venue and instruments may reduce profitability. Another key factor is the degree of rivalry among firms.
In this industry, it is the rivalry between the SO and other et al. (201 1), intense rivalries are common when an industry has many companies.As there are numerous chamber groups in Sydney that supply the same type of music s the SO, it can be argued that the intensity of rivalry strong within this industry. Buyers in the music industry can easily access different types of live music without incurring high switching costs.
On the contrary, the SO are renowned for their quality and the unique experience provided is not considered easily substitutable. When analyzing the general environment and the industry surrounding the SO a strong survival in the future is expected.This is evidently portrayed, through a strong general environment, particularly, a sturdy economic position. However, technological advancements pose a threat to the music industry as a whole, potentially having a negative impact on the profitability of the SO in the future. However, technological development may provide opportunities the SO can utilities. When exploring Porters five forces model of competition, a competitive industry sector is elucidated. This is as a result of the numerous chamber orchestras and other live performers in Sydney.
Also, it is clear, the bargaining power of buyers is relatively strong.