1. Applied Business Project – Module V Five Force Analysis Presented By Charlotte ForeRunner Integrity | Quality | Consistency Market Planning Market potential Forecasting Market Assessment

2. Applied Business Project – Module V ForeRunner Integrity | Quality | Consistency Market Planning Market potential Forecasting Market Assessment Threat of Entry Capital Requirement Economies of Scale Government Policies Retaliation from Existing Competitors Threats of Substitutes Availability of Substitutes Switching Cost Buyer’s Propensity to Substitutes Bargaining Power of Buyers Customized Service High Service Quality Demand Switching Costs Bargaining Power of Suppliers Lodging providers Venue providers Restaurants and similar establishments Rivalry among Existing Competitors Potential Competitors in Macau Outsider Competitors Barriers to Entry and Exit Differentiation in the Industry Porter’s Five Force Analysis

3. Five Force Analysis – Threat of entry ForeRunner Integrity | Quality | Consistency Market Planning Market potential Forecasting Market Assessment Capital Requirement Initial Capital Requirement: Macau Tourism Industry Net Set-up Capital Requirement: set-up cost much lower than that of retailer Economies of Scale Little fixed cost incurred, not practical to pursue economies of scale Existing companies does not have advantages Government Policies Government has allocated tremendous resources Retaliation from Existing Competitors Professional Liability Insurance guarantee MOP 700,000 Bank guarantee MOP 500,000 Min. Set up Cost Mop 1,500,000 Mop2.7 million 152 incentive travels held last year Industry Partner Program

4. Five Force Analysis – Threat of Substitutes ForeRunner Integrity | Quality | Consistency Market Planning Market potential Forecasting Market Assessment Availability of Substitutes Macau Convention & Exhibition Association (MCEA) statistics: 11 travel agencies collaborate with the association main substitutes of ForeRunner’s business Switching Cost Contracts for incentive services granted on project basis default risk is small Buyer’s Propensity to Substitutes Client companies are quality sensitive rather than price sensitive, tailored program distinguishes itself buyers’ propensity to substitutes is low

5. Five Force Analysis – Bargaining Power of Buyers ForeRunner Integrity | Quality | Consistency Market Planning Market potential Forecasting Market Assessment Customized Service To help customers increase employee loyalty, incentive services companies destined to differentiate from each other through customized services High Service Quality Demand Customers are quality oriented Switching Costs Appeared switching costs to the buyers are extremely low Switching cost increases in two scenarios: 1. Buyers establish deep relationship with current incentive service providers 2. switching from specialized incentive service providers to traditional travel agencies potential low service quality

6. Five Force Analysis – Bargaining Power of Suppliers ForeRunner Integrity | Quality | Consistency Market Planning Market potential Forecasting Market Assessment Lodging providers 91 lodging establishments with unsaturated occupancy rate (DSEC, 2009) Venue providers Hotel establishments: dominate market share abundant hotel establishments ensure the supply of incentive meeting venues Non-hotel establishments Restaurants and similar establishments Ample restaurants and similar establishment

7. Five Force Analysis – Rivalry among Existing Competitors ForeRunner Integrity | Quality | Consistency Market Planning Market potential Forecasting Market Assessment Potential Competitors in Macau Number of establishments of conference & exhibition organizing services and increasing rate of those establishments are not large (DSEC,2009) Outsider Competitors Delta region has matured market and intelligent incentive planners Other considerations Low barriers to Exit: we are service company High differentiation in the industry: customized service Rivalry in the Industry Out-of-town Competitors Macau Competitors Conference & Exhibition Organizing Services Travel Agencies

8. Five Force Analysis – Conclusion ForeRunner Integrity | Quality | Consistency Market Planning Market potential Forecasting Market Assessment Summary 1 Threat of entryRelative low 2 Threats of substitutesRelative low 3 Bargaining power of BuyersRelative low 4 Bargaining power of SuppliersModerate 5 Rivalry among existing competitorsModerate