Premium Outwear Industry Porter’s Five Forces Analysis

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LYYBZ

Business Finance

Description

I want you to do some research on premium (designer) outerwear industry, especially on five forces. Examples for premium outerwear industry are Canada Goose, Moose, Rudsak, Mackage. etc. Please have reference attached. It is very important to have every link you used.

Here's some links to help you.

http://fernfortuniversity.com/term-papers/porter5/analysis/674-canada-goose-holdings-inc-.php

http://fernfortuniversity.com/term-papers/swot/nyse/674-canada-goose-holdings-inc-.php

https://www.just-style.com/analysis/outerwear-faces-up-to-the-challenge-of-climate-change_id127039.aspx

Porters Five Forces – content, application, and critique

  • Based on the insight that a corporate strategy should meet the opportunities and threats in the organizations external environment => understanding of industry structures and the way they change

1. Bargaining Power of Suppliers

  • All input sources that are needed in order to provide goods/services
  • High when:
    • Market is dominated by few large suppliers
    • No substituted for that particular input
    • Suppliers' customers are fragmented, so their bargaining power is low
    • Switching costs from one supplier to another are high
    • Possibility that supplier integrate forward in order to obtain higher prices and margins
      • Buying industry has a higher profitability than the supplying industry
      • Forward integration provides economies of scale for the supplier
      • Buying industry hinders the supplying industry in their development (e.g. reluctance to accept new releases of products)
      • Buying industry has low barriers to entry
  • Buying industries face high pressure on margin from their suppliers in the situations
    • Dependence on powerful suppliers can reduce strategic options for the organization

2. Bargaining Power of Customers

  • Determines how much pressure customers can impose on margins and volumes
  • High when:
    • They buy large volumes/ There's a concentration of buyers
    • Supplying industry comprises of a large number of small operators
    • Supply industry operates with high fixed costs
    • Product is undifferentiated and can be replaced by substitutes
    • Switching to an alternative product is relatively simple and is not related to high costs
    • Customers have low margins and are price-sensitive
    • Customers could produce the product themselves
    • Product is not of strategical importance for the customer
    • Customer knows about the production costs of the product
    • There is the possibility for customer to integrate backwards

3. Threat of New Entrants

  • Always a latent pressure for reaction and adjustment for existing players in the industry
  • Level of threat from new entrants depends on the extent to which there are barriers to entry:
    • Economies of scale (min. size requirements for profitable operations)
    • High initial investment and fixed costs
    • Cost advantages for existing players due to experience curve effects of operation with fully depreciated assets
    • Brand loyalty
    • Protected intellectual property like patents, licenses, etc.
    • Scarcity of important resources
    • Access to raw materials is controlled by existing players
    • Distribution channels are controlled by existing players
    • Existing players have close customer relations
    • High switching costs for customers
    • Legislation and government action

4. Threat of Substitutes

  • Potentially attract a significant portion of market volume => reduce potential sales volume for existing players
  • Also relates to complementary products
  • Treat of substitutes is determined by factors like:
    • Brand loyalty
    • Close customer relationships
    • Switching costs for customers
    • Relative price for performance of substitutes
    • Current trends in technology, customer preferences, etc.

5. Competitive Rivalry Between Existing Players

  • High competitive pressure leads to pressure on prices, margins, and profitability for every single company in the industry
  • Competition likely to be high when:
    • There are many players of the same size
    • Players have similar strategies
    • There is not much differentiation between players and their products, hence, there is much price competition
    • Low market growth rates (growth of a particular company is possibly only at the expense of a competitor)
    • Barriers for exit are high (e.g. expensive and highly specialized equipment)
    • Customers are price sensitive and/or have low switching costs

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Explanation & Answer

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Running head: PORTER’S FIVE FORCES

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Premium Outwear Industry Porter’s Five Forces Analysis
Name
Institution

PORTER’S FIVE FORCE

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The Canadian Premium Outwear Industry Porter’s Five Forces Analysis
Keeping warm during the winter months in Canada is the drive behind the flourishing
premium outwears industry. Giant companies like Canada Goose, Moose Knuckles, Mackage
and Rudsak have made considerable efforts in disposing of quality fashion wear in the
market. Canada Goose Jackets is a preference for Hollywood famous stars and professional
athletes (Harris, 2018).
It is essential for companies operating in the premium outwear industry to make
industry analysis based on profits and market attractiveness using the porter five forces to
make strategic decisions (Gander, 2017).
The Premium outwear industry Porter's five force ana...


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