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Our group is going to apply the Porter’s Five Forces model and PESTEL method to develop a deeper analysis of Afterpay in the US market.PESTEL MethodThe first is political factor, Americans prefer debiting money rather than saving, and the U.S. hasa pretty good Corruption Perception Index which the rank is 22 and the score is 71 out of 100 (Transparency International, 2018). Moreover, Index of economic freedom of US is also shows it’s easy to make business in US with the world rank 12 and the score is 76.8 (the Heritage Foundation, 2019).The next is socio-culture factor, research found that Millennials in US are more dissatisfied with traditional credit payment methods, such credit card mainly because of student debt problems (Business Wire, 2019), that is good for Afterpay. However, Americans also have high credit problems, because minimum wages in the U.S. is lower than Australia, so that card default rates are much higher.Technologically, Afterpay is one kind of new payment innovation in recent years (Stuart, 2017), and it has its own system to evaluate customers’ repayment capabilities and potential fraud, which is good for both customers and sellers.However, Afterpay has high attrition rate in workforce means they have to pay more when someone left company due to the employment law in US. For example, in most states in US, when an employee worked more than half a year, they can receive unemployment benefits even they are voluntary resignation (Shareamerica, 2019). And data protection also is a big challenge
for Afterpay, because US law is very serious about their citizens’ privacy, if customers’ information leak.The Five Forces AnalysisThe threat of new entrants is medieum. The economies scale is difficult to achieve in the industrythat Afterpay operates. A cost advantage benefits large companies easier to enter while diminishes the threats of new entrants. The initial capital requirements and the cost of research and development is also high, that makes the another barrier for new entrants. However, distribution channel is easy to access, any company could easily set up their distribution channelsand put their products on the shelves. The threats of substitute is high. No switching cost to substitutes counts for the threat of substitutes. One company offers a value proposition that is uniquely different from present offerings of the industry. Bank of America offers P2P technology, and issues debts to millennials;whereas, AMEX offers multifunctional financial services. Sometimes, Substitute product is even cheaper than industry products.The bargaining power of suppliers is from medium to high. Most of companies in the industry buy their raw material from numerous suppliers. Therefore, companies can easily switch suppliers from one to another. But startup companies like Afterpay are new to the industry, so they are not price sensitive and well-educated about the product which weakens the bargaining power of suppliers.The bargaining power of buyers is also medium-high. There are many buyers relative to the number of firms in the business and do not face any cost in switching suppliers.The smaller and more powerful the customer base is, the higher the bargaining power of the customers. The