Metropol Base-Fort - 1. The Security Industry/Market and...

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1. The Security Industry/Market and its Impact on Metropol The security market in Canada is characterized by increasing industry demand for security. Growth in this market will attract new competitors to an already flooded industry. Because startup costs are low, new competitors enter the market easily. Increased competition threatens Metropol’s potential client-base as customers often view the security industry as homogenous. The compatibility of products and services between security companies increases the ease with which customers can switch to competing firms. Firms attempting to penetrate the market by undercutting industry prices cause the industry to be typified by low pre-tax margins. Therefore, cost control is necessary to maximize profits. Most buyers are influenced by the lowest-price offering, while some are willing to pay extra for quality and reliability. Low-price and high-quality orientation effect Metropol’s market opportunity as it is difficult to offer reliability and quality at a competitive low cost. ESD sales are projected to triple in the security market in the next three years, overshadowing security guard demand. If Metropol does not offer ESDs and hardware, it will lose a significant market share because customers prefer firms that provide comprehensive security coverage. Metropol’s market reputation will suffer for not providing current products and services. ESD sales would increase Metropol’s product portfolio and customers perceive advantages in one firm coordinating total security coverage. Lease and service contracts from ESD sales would provide Metropol with additional sources of revenue and increased customer switching costs. Realizing that ESD products can replace the presence of security guards in some situations, Metropol can 1
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exploit this trend – rather than fall victim to it – by entering the ESD market. The profit margin on ESDs is also larger while they incur fewer costs than security guards do. The Ontario market is significantly larger than that of western Canada. Metropol’s reputable levels of quality and reliability should attract a portion of the corporate market. Although the market is difficult to penetrate, establishing a presence will increase revenue for Metropol. Growing without a presence in this market will be difficult. The security industry is projected to become more formalized and standardized with respect to security training. Formalized standards may cause a perceived differentiation to customers seeking quality-driven firms compared to the lowest-priced firm. Metropol has the opportunity to differentiate itself and more effectively meet customer needs by yielding to this trend. Because Metropol is already further established as a trainer/educator, standardization costs will be lower than comparable firms. The crime rate in Canada is increasing and government protective services are not
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This essay was uploaded on 03/18/2008 for the course COMM 204 taught by Professor Williams during the Fall '05 term at University of Saskatchewan- Management Area.

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Metropol Base-Fort - 1. The Security Industry/Market and...

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