STRATEGIC MANAGEMENTTHROUGH MARKET ANALYSIS

An Academic presentation by Dr. Nancy Agnes, Head, Technical Operations, Tutors India Group  www.tutorsindia.comEmail: info@tutorsindia.com

Introduction

Bargaining Power of Suppliers

Bargaining Power of Buyers

Threat of New Entrants

Threat of Substitutes

Competitive Rivalry

Conclusion

OUTLINE

Today's Discussion

INTRODUCTIONAccording to strategy, everything would revolve around themarket environment and entities that are outside the scopeof an organization like; prominent organizations like localand national governments, customers, suppliers as well ascompetitors.

Strategists in the past have agreed and accepted thatacquiring information about the competitive environment in amarket could prove to be a vital element that allows thedevelopment of strategic management.

It is not just essential but it is also logical to study theenvironment in the market for an organization, mainlykeeping three reasons in mind. One main reason would theseveral organizations competing with each other .

The second reason would be that many organizations would anticipate threats andopportunities wherein they are required to control threats and explore opportunities.

The third reason being that there could be opportunities within networking or linkages thatcould lead to sustainable cooperation.

In order to acquire a detailed knowledge about the competitive environment, it isimperative to execute a Porter’s Five Forces analysis.

Keeping these factors in mind, this report would attempt to execute a Porter’s Five Forcesanalysis for an apparel manufacturer (XYZ) that is keen to enter the high end apparelsegment in India.

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BARGAININGPOWER OFSUPPLIERS Every organization has their own raw materials or services

suppliers.

In the garment sector, the bargaining power of supplier isrelatively low, keeping in mind that a large number ofsuppliers traditionally are made up of apparel manufacturerswho venture into new markets to safeguard their businessesfrom other competitors that can eat into their profits.

In the case of XYZ, bargaining power of suppliers would beless as it is a product that has been initiated by XYZ whichalready has a presence in India and they would be havingtheir own tie-ups and networks.

PORTER’S FIVE FORCE ANALYSIS

BARGAININGPOWER OFBUYERS

As far as XYZ is concerned, buyers would be having asuperior level of bargaining power as the business modelof XYZ is buyer-centric.

As a result, XYZ would naturally be very sensitive to anymanner of qualitative or quantitative modifications interms of demand by buyers.

PORTER’S FIVE FORCE ANALYSIS

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THREAT OFNEWENTRANTS

While evaluating the competitive environment forXYZ, an aspect that has come out very clear is thatthey will be confronted with threat on the part of newentrants that make a foray into the market in India.

Many global fashion houses are now making an entryor have already entered into the high end apparelsegment across the world which presents the threatof competition to XYZ.

With technological breakthroughs occurring almostevery day several garment manufacturers are keento tap the high end fashion segment globally.Therefore, threat of new entrants is high.

THREAT OFSUBSTITUTES

There has been an increasing interest in terms of tryingout something really new and innovative than what ispresently available in the market.

Therefore, there is every possibility that the apparelproducts that XYZ intends to offer might be provided byanother apparel manufacturer.

For instance, if XYZ plans to sell a pair of high-end denimsfor Rs.5000/- in the Indian market however, if a similartype of denim that offers the same fitting, same level ofcomfort as that of the XYZ denim, is available tocustomers at comparatively cheaper rates for example –Rs.3,500/-, the customer will not think twice before makingthe switch to a product being offered by a competitor.

Therefore, XYZ does face high level of threat from substitutes.

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COMPETITIVERIVALRY

When XYZ enters into the high-end fashion segmentwithin the Indian market, they will have to deal with otherglobal industry players who already have a presencewithin the Indian market.

These would include; Dolce & Gabbana, Yves SaintLaurent, Versace, Tommy Hilfiger other than theindigenous fashion houses such as; Manish Malhotra,Rohit Bal etc.

However, each of the said industry players serve adifferent clientele for instance, D&G, YVL, Versace andTommy Hilfiger serve the super-rich clientele whileindigenous brands serve the next level of customers.

XYZ on the other hand focuses on capturing a share of market segment thatis presently dominated by indigenous brands.

Definitely, competitive rivalry would be high considering the number ofalready existing established players.

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CONCLUSIONThis report has executed a Porter’s analysis for a high-endfashion giant ‘XYZ’ that is keen to enter into the fashionsegment in India.

On the basis of the analysis, it has emerged that themarket environment for XYZ in India is just right.

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