According to Porter, there are five forces: Threat of new entrants, Bargaining power of buyers, Threat of substitutes, Bargaining power of suppliers and industry competitors. These five forces can be used to analyze any industries, such as aircraft industry, fashion industry, automobile industry, supermarket industry and etc.
Just use fashion industry as an example. Threat of new entrants is really depends, if it is luxury then threat of new entrants will be low as most luxuries have long history and they have loyal customers. While if it is a normal brand, threat of new entrants will be serious. Because it is easy for people to join this industry is you have enough capital, ability and ambitions. Bargaining power of buyers is high, most people buy products depend on price and quality. As there many many stores, they have many choices. Consequently, if they think that they can accept the price then they will buy it. To be honest, it is really subjective. Next comes threat of substitutes which is extremely low nearly none. Everyone needs clothes and shoes, nobody can live without them. Therefore, fashion industry can not get threat of substitutes. There is nothing in the world can take place of it. In terms of bargaining power of suppliers, there are hundreds of thousands suppliers in fashion industry which result in low and weak power in bargaining. In order to attract customers, suppliers have to decline the price , organize promotional activities or use advertising. Therefore, suppliers can not get as many profit as they want. Last but not least, industry competitors in fashion industry are many. To be honest, it is difficult for one company to account for much market share quickly. You can not imagine how many competitors are there and how much progress you have to make. As the products are similar, customers can swatch supplier quickly.
Porter’s five forces can help new entrants to clear understand the particular industry such as if it is good or not, attractive or not. What’s more, it can help to timely change company structure or strategies.
You show sound subject knowledge throughout your blogs and the written style is pleasing although some creativity could be used to improve the impact of them - maybe a video link,logo,chart or a web page link.
ReplyDeleteAbove you could have been specific in your comments - for example - suppliers of what?Examples of competitive businesses etc.
This point is key to achieving higher level marks - if you can quote spefic figures or decisions/plans from business you have researched (only one website required here!) and comment on how the week's topic has affected it in more detail you will recieve high level marks. You could do this with analysis one PESTEL factor this week from your group's presentation
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