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Title:
Porter’s Five Forces Analysis of
“The Outfitters”
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Contents
Introduction:...............................................................................................................................3
Porter’s five forces:................................................................................................................3
Five Forces Model Analysis of “The Outfitters”.......................................................................3
Background of the company:.................................................................................................3
Fashion Retail Industry in Bangladesh:.................................................................................3
Porter’s Five Forces Model Analysis for “The Outfitters”:...................................................4
Competitions among the sellers:........................................................................................4
Buyer Bargaining Power:...................................................................................................4
Bargaining power of the suppliers and seller-supplier collaboration:................................5
New Entrants:.....................................................................................................................5
Substitute products:............................................................................................................5
Conclusion:................................................................................................................................5
Recommendations:.....................................................................................................................5
References..................................................................................................................................6
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Introduction:
Porter’s five forces:
Introduced by Michael Eugene Porter, the five forces model is a tool that helps us analyze the
business industry from a competitive point of view. The five forces model is commonly used
to identify the strength and weaknesses of a business as well as to measure competition
intensity, appeal, and viability of an industry or market.[ CITATION Inv21 \l 18441 ] The five
forces are;
1. Competition among the sellers: Refers to the competitive pressure that incurs from
the rivalry among the sellers in the same industry.
2. Buyers: Refers to the competitive pressure associated with the power of the buyers to
bargain with the price assigned by the seller.
3. New entrants: Deals with how easy it is for a new entity or business to enter the
industry. The competitive pressure arises from the entry of a new rival into the
industry.
4. Suppliers: Pressure due to the bargaining power of the suppliers and seller-supplier
collaboration.
5. Substitute product: Competitive pressure associated with the attempts of other
companies to win over the customers with their substitute product.
If we analyze our business on the basis of these five forces, we may very well find out our
strength and weaknesses. Now we will try to make an analysis of my own organization based
on these five forces.[ CITATION Art \l 18441 ]
Five Forces Model Analysis of “The Outfitters”
Background of the company:
“The Outfitters” is a fashion retail start-up based in Dhaka and helmed by Md. Kaysar Wahid.
It is an online fashion retail shop which produces its own products and sell it online. The aim
of the company is to establish a solid base for the business and acquire a sustainable customer
base while operating online and then, open outlets gradually within 5 years of operation. The
ultimate target of the company is to obtain success as a prominent fashion retailer in the
dynamic fashion retail industry in Bangladesh.
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Fashion Retail Industry in Bangladesh:
The fashion retail industry is enjoying a growth in Bangladesh thanks to the rapid cultural
change and growing purchasing power of the masses. Technological advancements and the
rise of social media has opened the doors of the world for a developing economy like
Bangladesh and the fashion industry is playing a key part in it. Although recent COVID-19
pandemic may pose a threat to the overall economy, the fashion industry remains promising.
According to some estimates, the total market size in retail is around Taka 1,500 crore and it
is growing at a rate of 15% for the last 3-4 years, which is projected to endure well into the
coming years that would witness the market grow around 15 times. So, we can see that retail
industry can be a promising business to be in and also it means there may be hard
competitions.[ CITATION App20 \l 18441 ]
Porter’s Five Forces Model Analysis for “The Outfitters”:
As a new and small player at the fashion game, the business may face various challenges and
obstacles as well as tough competitions from the existing big names. As Bangladesh has a
favorable economic policy for the entrepreneurs and SMEs there are some advantages for the
new players. Here follows an analysis of the business based on Porter’s Five forces model:
Competitions among the sellers:
The fashion industry in Bangladesh is highly competitive due to the existing brands which are
strong, big and well established and also availability of the international brands. So, for a
business that is relatively small and new, it will surely face immense challenge to make a
mark on the industry. Although the slow pacing strategy of operating only on the internet and
at a small scale may provide some advantages, the challenges will surely be greater.
Buyer Bargaining Power:
As there are lots of well-established brands such as Tanjim, Yellow, Sailor, Ocode, Arong,
Freeland and many more, which are also backed by large business entities, the customers
enjoy relatively higher bargaining power in this fashion industry. There are many prices,
quality and offers to choose form and it situates a substantial threat to new business as they
try to compete against the existing giants. As “The Outfitters” aims to enter the market with a
value proposition strategy, it may help the business to set a competitive pricing while
providing the customer with a substantial quality product.
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Bargaining power of the suppliers and seller-supplier collaboration:
Most of the fashion brands in Bangladesh has their own vendors and suppliers for raw
materials and the market for independent suppliers is highly rigid and syndicated as they have
their regular buyers. As a new entity “The Outfitters” may face various challenges finding a
suitable and reliable supplier for the raw materials needed. So, we can say that it may come
as a weakness for the business.
New Entrants:
As Bangladesh is experiencing the advantages of technological advancements and
globalization, the fashion industry is also experiencing a high tide. New brands, retailers,
manufacturers are entering the market frequently, thanks to social media, f-commerce and ecommerce. It is now very easy to enter the business even with skeleton resources and capital.
So, the competitive pressure is very high for a new business, like “The Outfitters”.
Substitute products:
As there are huge numbers of fashion brands in Bangladesh, the number of substitutes for the
products that the brands offer is also huge. To shine among the competitions and attract the
customer, a brand needs to differentiate their products while maintaining quality and pricing
the products very competitively. As a new brand, “The Outfitters” aims to provide reasonably
low-priced substitutes for the popular big brands while maintaining the standard quality. This
may act as a strength for the business.
Conclusion:
In conclusion, we can say the Five Forces Model analysis is a helpful tool for a business to
learn its strength and weaknesses. Although we should consider how strict laws and
regulations are in an industry, what the primary roadblocks to enter are, and how much
interest there is from outsiders to join before analyzing the business.[ CITATION Lyd21 \l
18441 ]
Recommendations:
Here are 5 recommendations based on the analysis:
1. As competitions among the seller is very high in the fashion industry, “The Outfitters”
should not focus solely on profiting from the get-go but take a slow process towards
profiting and follow the value proposition strategy.
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2. Bargaining power is high for the customer in this industry so, it is recommended that
the business target lower-middle to higher-middle class customers who usually prefers
value over brand image and offer them good products at a cheap price.
3. Use local independent suppliers and try to source the materials as cheap and
conveniently as possible.
4. As it is very easy to enter in this industry now a days, many businesses start but
cannot sustain in the long run. So, “The Outfitters” should take it steady and try to
sustain for a long time even if the profit is low.
5. The main advantage of the online based business is the low operating cost. While the
big brands have to bear the cost of big warehouses, outlets, factories, employees etc.,
small online business can easily cut of these costs and offer a value substitute to the
customers. “The Outfitters” should take this advantage and use it as a strength to
establish the business.
References
Arthur A. Thompson, J. (n.d.). In J. Arthur A. Thompson, Crafting and executing strategy.
Resources, A. (2020, March). Retrieved from Apparel Resources:
https://bd.apparelresources.com/business-news/retail/bangladesh-industry-emergingfashion-retail/
Roth, L. (2021). Alexa Blog. Retrieved from https://blog.alexa.com/industry-analysis/
Team, I. (2021). Investopedia. Retrieved from
https://www.investopedia.com/terms/p/porter.asp
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