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Ultimate Fighting Championship (UFC) is the largest company in the world that promotes mixed martial arts. It hosts the most famous fighters of the world. It is based in the United States and offers worldwide events that are viewed globally. However, the company has been facing some problems due to increased competition among other related factors in the recent past. Using the Porter’s five forces, it is possible to analyze some of the problems facing the company.
Entry of Competitors
Notably, the company introduced the criteria of pay-per-view. This enabled them to be featured in reality television series as well as in various American casinos. However, this offered an avenue for entry of other companies in the market. For instance, Fertitta Brothers joined the market and developed the idea of UFC in having their own reality series (Justin, 2007). Eventually, the Ultimate Fighter (TUF), MMA-promotion Strikeforce among other companies emerged causing more pressure for the performance of the UFC. This has resulted into its surging popularity.
Bargaining Power of Consumers
Bargaining power of consumers has affected the company in that consumers have varieties of products and services, among which they can choose. Today, there are various types of sports that are aired on television as well as through cable television networks (Stefano, 2009). Although UFC events were covered by ESPN, other competitors such as Super Sports attract a large audience, drawing the earlier UFC’s audience and reducing their impact on their consumers. As a result, their popularity has surged remarkably.
Bargaining Power of Suppliers
Bargaining power of suppliers has also affected the company. Virtually, there are strict rules that emerged recently, concerning how various fights were carried out. In early 1980’s, there were no rules regarding the game. However, the company was limited by rules as it was forced to phase out some of the tournaments because they could not comply with the new rules (Aiden, 2010). In this case, suppliers involve the fighters as well as the authority responsible for regulating the company. This was necessary to reduce damages that affected the fighters. However, these rules had adverse effects on the company.
Availability of Substitutes
The company has been threatened by availability of substitutes. This includes companies that offer similar sports. For example, World Extreme Cage fighting is one of the emerging companies that have been able to organize largest sports in the world (Stefano, 2009). Indeed, it held the first WEC events in 2007. This has also contributed to the reduced popularity of UFC in the world of sports.
Rivalry among the Existing Firms
Rivalry, among the existing firms in the entertainment, scene has also affected the stability of the company. Virtually, similar companies offering the same services with the same target audience end up being rivals. The main rival of UFC was MMA-promotion Strikeforce (Aiden, 2010). Despite the fact that UFC purchased the company, rivalry is still heightening as more companies are joining the market causing more rivalry as they all have the same interest.
As analyzed above, it is evident that, by the use of Porter’s five forces, it is possible to analyze the challenges facing UFC and how the company has been affected by these challenges.