“We Sell Everything in Software” (WSES) is an IT firm that tailors customized software

solutions to companies belonging to a wide spectrum of industries. When it first came into being,
it was able to capitalize on a huge unmet customer need and milk large amount of profits though
a consistent focus on growth and relationship building with clients, which allowed it to expand
geographically into other lucrative markets and increase revenue from $2bn to $8bn from 2012
to 2015.

However, WSES’s first mover advantage was short-lived as other competitors quickly realized
the huge market potential and entered the market with their own portfolio of products. The
industry eventually became saturated and pressurized management to cut on margins which hurt
overall profitability of the industry. Investors are now expecting the company to cut down on its
operational costs to drive profits, however each option must be weighed carefully to fully
analyze its repercussions on the future growth strategy of the company. The following analysis
would help us understand the current situation of the industry in better detail:

Porter Five Forces Analysis

The porter five forces framework is instrumental in breaking down an industry into its main
constituents and analyze them each in detail (Exhibit 1).

Degree of Industry rivalry

Rivalry between industry players in fierce since the industry landscape is quite saturated now and
which is causing competitors to decrease prices to drive sales.

Threat of new entrants

Threat of new entrants is quite high since new competitors are constantly entering the market and
subsequently driving down margins. As the company expands geographically into new countries,