Five Forces Analysis Example Retail Fashion Industry

Strategic Management Essays, Term Papers & Presentations

Porter Five (5) Forces Analysis is a strategic management tool to analyze industry and understand the underlying levers of profitability in an industry. Specialty Fashion Group Limited managers tin can utilise Porter Five Forces to understand how the v competitive forces influence profitability and develop a strategy for enhancing Specialty Fashion Group Express competitive advantage and long term profitability in Retailing manufacture.

Brief overview of Specialty Fashion Grouping Express

What are Porter Five (v) Forces

In his revolutionary commodity in Harvard Business Review (HBR) - "Five Forces that Shape Strategy", Michael Porter observed the v forces that take pregnant impact on a business firm'south profitability in the manufacture it operates in. The Porter Five (5) Forces are -

• Threat of New Entrants
• Bargaining Power of Suppliers
• Bargaining Ability of Buyers
• Threat from Substitute Products
• Rivalry amongst the existing players.

Porter V Forces is a holistic strategy framework that took strategic decision away from just analyzing the present contest. Porter Five Forces focuses on - how Specialty Fashion Grouping Express can build a sustainable competitive advantage in Retailing industry. Managers at Specialty Fashion Group Express can not only use Porter V Forces to develop a strategic position with in Retailing industry but as well can explore profitable opportunities in whole Retailing sector.

Specialty Manner Grouping Express Porter Five (5) Forces Assay for Retailing Manufacture

Threats of New Entrants

New entrants in Retailing brings innovation, new ways of doing things and put pressure level on Specialty Fashion Group Express through lower pricing strategy, reducing  costs, and providing new value propositions to the customers. Specialty Fashion Group Limited has to manage all these challenges and build constructive barriers to safeguard its competitive edge.

How Specialty Way Group Express can tackle the Threats of New Entrants

• Past innovating new products and services. New products not merely brings new customers to the fold only also give quondam customer a reason to buy Specialty Fashion Grouping Limited 's products.
• By building economies of scale so that it can lower the fixed cost per unit.
• Edifice capacities and spending money on research and development. New entrants are less likely to enter a dynamic industry where the established players such as Specialty Fashion Group Limited keep defining the standards regularly. It significantly reduces the window of extraordinary profits for the new firms thus discourage new players in the industry.

Bargaining Power of Suppliers

All almost all the companies in the Retailing industry buy their raw material from numerous suppliers. Suppliers in ascendant position can decrease the margins Specialty Manner Group Express can earn in the market. Powerful suppliers in Retailing sector use their negotiating power to extract higher prices from the firms in Retailing field. The overall impact of college supplier bargaining power is that it lowers the overall profitability of Retailing.

How Specialty Fashion Group Limited tin tackle Bargaining Power of the Suppliers

• Past edifice efficient supply concatenation with multiple suppliers.
• Past experimenting with product designs using different materials so that if the prices become upwardly of one raw material then company can shift to another.
• Developing defended suppliers whose business depends upon the business firm. One of the lessons Specialty Fashion Group Express can larn from Wal-Mart and Nike is how these companies developed third political party manufacturers whose business solely depends on them thus creating a scenario where these 3rd party manufacturers have significantly less bargaining power compare to Wal-Mart and Nike.

Bargaining Ability of Buyers

Buyers are often a demanding lot. They want to buy the all-time offerings available by paying the minimum price as possible. This put pressure on Specialty Fashion Group Express profitability in the long run. The smaller and more powerful the customer base is of Specialty Style Group Limited the college the bargaining power of the customers and higher their power to seek increasing discounts and offers.

How Specialty Fashion Grouping Limited tin can tackle the Bargaining Ability of Buyers

• By building a large base of customers. This volition be helpful in two ways. Information technology volition reduce the bargaining power of the buyers plus it will provide an opportunity to the firm to streamline its sales and production procedure.
• By rapidly innovating new products. Customers often seek discounts and offerings on established products so if Specialty Fashion Group Express go along on coming up with new products and so information technology can limit the bargaining ability of buyers.
• New products will too reduce the revolt of existing customers of Specialty Fashion Group Limited to its competitors.

Threats of Substitute Products or Services

When a new product or service meets a similar customer needs in unlike ways, industry profitability suffers. For example services like Dropbox and Google Drive are substitute to storage hardware drives. The threat of a substitute product or service is loftier if it offers a value proposition that is uniquely different from present offerings of the manufacture.

How Specialty Style Grouping Limited can tackle the Treat of Substitute Products / Services

• By being service oriented rather than but product oriented.
• By understanding the core demand of the client rather than what the customer is buying.
• By increasing the switching cost for the customers.

Rivalry amongst the Existing Competitors

If the rivalry amidst the existing players in an industry is intense and then it will drive down prices and decrease the overall profitability of the industry. Specialty Way Group Limited operates in a very competitive Retailing industry. This competition does have toll on the overall long term profitability of the organisation.

How Specialty Fashion Grouping Limited tin can tackle Intense Rivalry amongst the Existing Competitors in Retailing industry

• By building a sustainable differentiation
• By building scale so that information technology tin can compete better
• Collaborating with competitors to increment the market size rather than simply competing for small marketplace.

Implications of Porter Five Forces on Specialty Fashion Grouping Limited

By analyzing all the 5 competitive forces Specialty Fashion Grouping Limited strategists tin can gain a complete picture of what impacts the profitability of the organization in Retailing manufacture. They can place game changing trends early on and can swiftly answer to exploit the emerging opportunity. By understanding the Porter Five Forces in smashing detail Specialty Mode Grouping Limited 'due south managers tin shape those forces in their favor.

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