Porter’s five forces

This is an analysis that highlights the competitive forces that every company is likely to face. It helps in identifying the strengths and the weaknesses a company may be experiencing in the efforts of laying a shaping ground for the success of the business (Garanti  & Berzina, 2013). The five forces comprise of the competition within and outside the industry, power of the suppliers, the power of the customers and the substitute products.

In my analysis about how the market for the athletic footwear, I was able to deduct several concerns about my newly established business. This was done using the porter’s five forces analysis.

Competitive rivalry

The competition was seen to be so stiff from the dominant companies such as Adidas and Nike. These two companies were found to have too many resources at their disposal. The stiffness of the competition has been there considering that there are only very few competitors and so customers have only two choices to choose from. The competition I have faced has made the maintenance costs such as advertising and attracting customers expensive (Garanti  & Berzina, 2013).

Bargaining power of suppliers

In this recent analysis of 2012, it was found that there were 27 producers who manufactured the same products as mine. This ran across 14 countries. Ten of the producers dominated the market by 49 percent of the total supplies of all the manufacturers. The main challenge in this sector is the fact that suppliers share the costs of raw materials which has recently doubled (Garanti  & Berzina, 2013).

Bargaining power of the customers

In this case, the bargaining power of the customers is lower compared to the past years. The bargaining power however is seasonal because during the end of the year, sport shoes are always on demand and so the power of customers is relatively low (Garanti  & Berzina, 2013). However, low seasons are really challenging because the customers bargain to their satisfaction hence forcing the prices to go down. My wholesale customers have become the stronghold of the customers unit because their bargain lies within certain limits. This makes the assurance of maintenance live even during the low seasons.

Threat of new substitutes

Sport shoes cannot be substituted by any other type of shoes because of their unique purpose of use. This means that there is no threat of a substitute for my company.

Threat of new entrants in a company

The cost of stating a footwear industry is very high. Other expenses such as marketing of the products, building a brand image and other expenses are also very high. These costs limit the chances of a new company being opened and so this comes to my favor. The threats to new entrants being introduced are of less impact (Garanti  & Berzina, 2013).

Reference

Garanti, Z., & Zvirbule - Berzina, A. (2013). REGIONAL CLUSTER INITIATIVES AS A DRIVING FORCE FOR REGIONAL DEVELOPMENT. European Integration Studies, (7), 91-101. doi:10.5755/j01.eis.0.7.3677

Response to Lisa’s

The summary of the Porters five has been properly outlined only that the methods have not been put in details. The strategies in which she shall put to compete with her competitors should also be specific. For instance, she can decide to improve the quality of the services offered and offer them at a low cost. I also think that there are substitute threats that may affect her travelling industry. If she is in the airline, the threat maybe the road transport means which people may prefer because it is cheap.

Response to Michael’s Discussion

 The discussion is well detailed and he has incorporated all the elements of the Porter’s Five. Indeed the chances of having new entrants would be low and so he would be able to operate in a worry free environment. The issue of competition is a threat that needs to be monitored over time because the cruise line is also growing at a faster rate than before. It is also with great appreciation in they way he has presented the threat of substitute products because cruise services cannot be substituted with anything of a cheaper price. This is a strength he has in his strategy and so other areas of concern can be addressed.

 

 

Case study analysis for Louis Vuitton Company

Synopsis of the situation

Louis Vuitton is a worldwide producer of luxury bags. The company is run by Japanese despite its location in French. For the past few years, the company has experienced a significant drop in the number of sales made. This has come to the company’s attention that they need to start a new strategy that would be used to improve the conditions of the company. Some of the external key issues that have led to this reduction include the overall Japanese economy drop down. This made the customers to stop buying the luxurious products and limit their budgets to only the essentials. Since Louis Vuitton Company was over depending on the Japanese market, it had to suffer the consequences.  The second issue that shall be addressed is the customer’s preference and the different tastes that changed.

The company has failed in various areas of operations that are not dependent on the external forces. They have been unable to attract new niche markets and they have also accepted the selling of forged or counterfeit products. The company has also been slow to adapt reinvestment brands as the market demands. These are just but very few among a long column of factors that has contributed its failure in the recent years.

Alternative solutions

1. The most effective solution would be lowering the prices of commodities. This would gather many customers who opted for low price products. However, this strategy may not be fully effective because the current prices are proportional to the quality of products offered.
2. The other solution would be establishment of new markets in the third and second world countries. This would save the company from the local financial crisis that comes about as a result of economic variation.
3. The company can also choose to expand the variety of the products such as clothes and jewelry. This would ensure that those that choose to buy different products in place of the luxury bags can find them at their disposal.

The selected solution

The best solution that fits this company is that of establishing new markets in other countries. This would save the company from suffering from local economic drop down. The market and the economic crisis have generally affected the company due to the overdependence of the Japanese market.  Opening other stores outside japan would protect such a tragedy that has recently faced the company. Other markets may include the Chinese market and any other market in the second and third world countries.

 

 

SWOT analysis

Strengths

1. The brand is well known
2. High quality luxury products
3. Cooperation of the human resource

Weaknesses

1. High costs for their products
2. Limited distribution channels
3. Very poor in their after-sales services

Opportunities

1. Ability to lower their prices
2. Ability to expand their markets into other country
3. Most of its competitors have no their own stores

Threats

1. Economic imbalance
2. Political instability
3. Counterfeit products might cause problems

 

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