STRATEGIC MANAGEMENT
THROUGH MARKET ANALYSIS
An Academic presentation by
Dr. Nancy Agnes, Head, Technical Operations, Tutors India
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Today's
Discussion
Introduction
Bargaining Power of Suppliers
Bargaining Power of Buyers
OUTLINE
Threat of New Entrants
Threat of Substitutes
Competitive Rivalry
Conclusion
INTRODUCTION
According to strategy, everything would revolve around the
market environment and entities that are outside the scope
of an organization like; prominent organizations like local
and national governments, customers, suppliers as well as
competitors.
Strategists in the past have agreed and accepted that
acquiring information about the competitive environment in a
market could prove to be a vital element that allows the
development of strategic management.
It is not just essential but it is also logical to study the
environment in the market for an organization, mainly
keeping three reasons in mind. One main reason would the
several organizations competing with each other .
The second reason would be that many organizations would anticipate threats and
opportunities wherein they are required to control threats and explore opportunities.
The third reason being that there could be opportunities within networking or linkages that
could lead to sustainable cooperation.
In order to acquire a detailed knowledge about the competitive environment, it is
imperative to execute a Porter’s Five Forces analysis.
Keeping these factors in mind, this report would attempt to execute a Porter’s Five Forces
analysis for an apparel manufacturer (XYZ) that is keen to enter the high end apparel
segment in India.
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BARGAIN IN G
POWER OF
SUPPLIERS
PORTER’S FIVE FORCE ANALYSIS
Every organization has their own raw materials or services
suppliers.
In the garment sector, the bargaining power of supplier is
relatively low, keeping in mind that a large number of
suppliers traditionally are made up of apparel manufacturers
who venture into new markets to safeguard their businesses
from other competitors that can eat into their profits.
In the case of XYZ, bargaining power of suppliers would be
less as it is a product that has been initiated by XYZ which
already has a presence in India and they would be having
their own tie-ups and networks.
BARGAIN IN G
POWER OF
BUYERS
PORTER’S FIVE FORCE ANALYSIS
As far as XYZ is concerned, buyers would be having a
superior level of bargaining power as the business model
of XYZ is buyer-centric.
As a result, XYZ would naturally be very sensitive to any
manner of qualitative or quantitative modifications in
terms of demand by buyers.
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THREAT OF
NEW
ENTRANTS
While evaluating the competitive environment for
XYZ, an aspect that has come out very clear is that
they will be confronted with threat on the part of new
entrants that make a foray into the market in India.
Many global fashion houses are now making an entry
or have already entered into the high end apparel
segment across the world which presents the threat
of competition to XYZ.
With technological breakthroughs occurring almost
every day several garment manufacturers are keen
to tap the high end fashion segment globally.
Therefore, threat of new entrants is high.
There has been an increasing interest in terms of trying
out something really new and innovative than what is
presently available in the market.
THREAT OF
SUBSTITUTES
Therefore, there is every possibility that the apparel
products that XYZ intends to offer might be provided by
another apparel manufacturer.
For instance, if XYZ plans to sell a pair of high-end denims
for Rs.5000/- in the Indian market however, if a similar
type of denim that offers the same fitting, same level of
comfort as that of the XYZ denim, is available to
customers at comparatively cheaper rates for example –
Rs.3,500/-, the customer will not think twice before making
the switch to a product being offered by a competitor.
Therefore, XYZ does face high level of threat from substitutes.
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COM PETITIV
E RIVALRY
When XYZ enters into the high-end fashion segment
within the Indian market, they will have to deal with other
global industry players who already have a presence
within the Indian market.
These would include; Dolce & Gabbana, Yves Saint
Laurent, Versace, Tommy Hilfiger other than the
indigenous fashion houses such as; Manish Malhotra,
Rohit Bal etc.
However, each of the said industry players serve a
different clientele for instance, D&G, YVL, Versace and
Tommy Hilfiger serve the super-rich clientele while
indigenous brands serve the next level of customers.
XYZ on the other hand focuses on capturing a share of market segment that
is presently dominated by indigenous brands.
Definitely, competitive rivalry would be high considering the number of
already existing established players.
CONCLUSION
This report has executed a Porter’s analysis for a high-end
fashion giant ‘XYZ’ that is keen to enter into the fashion
segment in India.
On the basis of the analysis, it has emerged that the
market environment for XYZ in India is just right.
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