Competitive Analysis of a San Rafael Company

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Technological Factors

It will be vital to be aware of what technological innovations are likely to pop up and affect the market structure. An important data is that people are increasingly connected by networks. So, there are many Advantages for being promoted through a website and social networks where you can have all the updated information of the company. In addition, San Rafael offers a quiet place away from the technology and the daily routine, but there are other resorts that implement wireless service so as long as people manage the Internet today may prefer them.

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Legal Factors

Are there any current legislations that regulate the industry or can there be any change in the legislations for the industry? There is Illegal intervention in the teachers’ fund and the deletion of the contribution for retirees. These two factors mean that people have less money to invest probably on vacation. Inheritance and Capital Gain’s laws seek for the surplus wealth redistribution which discourages investment and endangers business goods of the owners of the business as Isabel Noboa. There is also 40% off on the price of fuel for new airlines wanting to fly to Ecuador. An excess of profits from $ 8,160, that goes directly to the IESS: something illegal and against the rights and laws of 15%. Labor legislation changed by the eviction bonus (25% of salary for each year) in the case of quitting the job. The fixed contract is cleared by the undefined. Finally, Refund of Value Added Tax (VAT) for foreign tourists who have purchased domestic products during their visit, as well as hosting services, when bills will report no less value than $ 50 dollars.

Environmental factors

The environmental concerns for the industry are all regulations for the management of air, water and soil that are taken correctly. The coming of the current El Niño that would affect the infrastructure of the place as well as the flow of tourists and the climate of the area is an advantage to the resort.

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Michael Porter 5 Forces

Michael Porter 5 forces are the following:

- Threat of new entrants

- Threat of possible substitute products

- Bargaining power of suppliers

- Bargaining power of customers

- Rivalry among existing competitors

The market analysis using Michael Porter 5 forces covers the company’s closer environment by which we can obtain decisive criteria for the formulation of competitive strategies.

First of all, we have found that San Rafael’s main and direct competitor is Danesa Ranch. Its main suppliers are local suppliers that offer them dairy products, meats, vegetables. San Rafael’s target is people, teenagers and adults, from Guayaquil. There are some substitute products: Recreational Fishing, Nightly Camfires, Swimming Pools, among others. We have also determined that its potential competitors are Paraiso Hostel Olympus Hostel and Casa de Piedra.

1. Threat of new entrants

All companies must keep clear that by offering a different service it will be very difficult for a new entrant to compete against others that are already established in there. Bucay is a sector in which the return on investment exceeds its cost due to the incentives in the touristic sector. The fact of being the first in the market makes San Rafael obtain costs advantages which means an impediment for those businesses that want to enter. New companies will have entry barriers such as the lack of experience, customers’ loyalty, huge capital required, lack of suppliers in the zone. Despite entry barriers are low, there are well positioned companies that put into risk the success of the new entrant business. The experience that San Rafael has acquired is not get from the overnight, it is a process that covers important aspects such as management, technology, quality and services. Huge amount of capital is required in the areas of infrastructure, research and development, publicity and advertisement, in the case of San Rafael, Nobis Group has the capital.

2. Threat of substitute products

San Rafael has to be aware of those services that can replace the ones produced by them. In Bucay exists substitute services that are accessible to all tourists, what makes them different is the quality of service provided. The price between a substitute service and the one offered is competitive when as San Rafael offer low prices that customers can afford. San Rafael ensures that the benefits they give must be better than what they pay. Performance and quality compared between the offered product and the substitute can make the customers change their preferences. San Rafael always keep the quality that’s is one of the pioneers in this area.

3. Bargaining power of suppliers

Bargaining power with suppliers that have Bucay is not of great impact. Being located in a strategic part between the coast and the mountains make many food vendors handle overall prices. Besides the number of suppliers there exist, their bargaining power depends on purchase volume, the amount of resources and terms of payment. San Rafael obtained the provision of inputs or resources for its activity tourist industry through few and small businesses and at the same time San Rafael contributes to the development of SMEs in the zone. Input that suppliers offer to San Rafael are of the highest. There is already trust build with their partners what makes the farm acquire the first products that arrived and have some days of credit.

4. Bargaining power of customers

“In markets there are two factors that influence the determination of the bargaining power of a company towards its customers; those are price sensitivity and bargaining power as well.” For San Rafael the concentration of customers is vital. It allows them to identify potential customers specifically of Guayaquil that demand most of the services. Brand identification is another important factor to note. It is the association that makes the customer with existing brands on the market because of the service, quality and experience provided

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