Strategic Management through Market Analysis

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[1]. 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[2]. The second reason would be that many organizations would anticipate threats and opportunities wherein they are required to control threats and explore opportunities[3]. 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[4].

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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Porter’s Five Force Analysis

Bargaining Power of Suppliers

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.

Bargaining Power of Buyers

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.

Threat of Substitutes

There has been an increasing interest in terms of trying out something really new and innovative than what is presently available in the market. 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. [Hope You Enjoy reading article, If you are genuinely searching for the company who can write topics of strategic management. Order, Master thesis Strategic Management Help]

Competitive 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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Reference

1. https://www.amazon.in/Exploring-Strategy-Cases-Gerry-Johnson/dp/1292145129
2. https://www.amazon.in/Strategic-Management-Richard-Lynch/dp/1292064668
3. https://faculty.wharton.upenn.edu/wp-content/uploads/2012/05/Concept-of-Strategy-40-Years-Later-Introduction_1.pdf
4. https://hbr.org/1979/03/how-competitive-forces-shape-strategy