External Analysis to analyze the
competitiveness of ___ industry
for _____
Introduction of company
• Clear description of company, list their major
business units
• Is the subject of this analysis a specific
business unit?
• Scope
{Please refer to
• What industry is this business(unit) competing
business
within
references to
complete this}
Industry
• provide a clear description/positions and
names of key players in that industry including
scope, size, growth forecast, What is the stage of the
business lifecycle? Emerging, growth, declining, mature
• (use graphics here if you can)
• Current/Future trends
{I should be able
to get a complete
picture of the
industry}
Industry
• Identify the main competitors (direct, indirect)
– Market share
– Other relevant info
– Basis of competition
• (use graphics here if you can)
Background of Company
Mission statement of company
Macro environment Analysis: PEST
– Use a template explore a few factors: each factor will have
an impact on your business: they can give you opportunities or pose a threat
– Apply the PEST to your business
• (select at least three factors: for each force, evaluate its impact on
the business, is it an opportunity or threat?)
Source:
– https://www.mindtools.com/pages/article/newTMC_09.ht
m
– http://www.whatmakesagoodleader.com/supportfiles/strategic-planning-template-macro.pdf
– http://pestleanalysis.com/how-to-create-pestle-analysistemplate/
Takeaways from PEST
• List any opportunities or threats found after
PEST was conducted
• You can use the format of the worksheet
found on mindtools
– https://www.mindtools.com/pages/article/newT
MC_09.htm
Summary of PEST analysis
• Use a table/list to summarize the
Opportunities & threats to might influence
your business
• Role of IS
• Action Steps- just writing down is not good enough
Industry Analysis: Porter’s five
forces
Purpose of Porters
Forces 1
• Conclusion from effects of force 1 (e.g. high or 5)
– Reasons to validate your conclusion ( provide a list
of concrete facts)
• Opportunities ( to negate the effect of the
force)
• Role of Information Systems
{your reasons
must be factual, I
will validate}
Forces 2
• Conclusion from effects of force 2 e.g. high or
5
– Reasons to validate your conclusion
• Opportunities ( to negate the effect of the
force)
• Role of Information Systems
You need at least one slide for each of
the five forces
Summary of Porters analysis
• Use a table to summarize the forces (all 5
must be included)• Role of Information Systems
Summary of Porters analysis
• Use a table/list to summarize the
Opportunities ( do not confuse threats with opportunities, see examples
below)
–
–
–
–
–
Alliance with suppliers
Increased customer service
Acquisition
Improved products
Grow product offering
(Alternatively one can use next slide as sample)
• Role of IS
Sample table summarizing threats and listing opp.
Analysis of Porter’s analysis
• Which forces pose the greatest threats?
-what threats should the company focus on?
• Where are the company’s greatest
opportunities?
Analysis of Porter’s analysis
• What are the main drivers of competition
within the industry?
– (Innovation , price, technological changes)
• What can you leverage to gain market share?
– how do you see the company being competitive
Motivation for competitive strategy
• Results of PEST
+
• Results from Porter
+
• Basis of competition in Industry
Competitive Strategy(ies) – (opportunities should signal strategies
you should explore, threats you need to monitor or eliminate)
Recommendations
References
NAME OF THE BUSINESS: Christian Dior S.A
Christian Dior is a remarkable company that has dominated the fashion industry for more
than fifty years. It is the world's best luxury goods and Fashion Company with very competent
management. This luxurious fashion house was founded in 1946 by a French fashion designer
with the same name. The most known products of Christian Dior include ready-to-wear fashion
clothes, men and women accessories, Haute couture, cosmetics, and perfumes. The brand has
about 235 cosmetics and fashion houses all over the globe that keeps helping people showcase
their sense of fashion and style ( Plunkett, 2006). The central pillar of the brand’s success is the
fact that it has been managed by Bernard Arnault as the chair since 1987.
The mission said statement of the company is “To propel its iconic style into the 21st
century”. Christian Dior himself also said that whatever one does, be it for work or pleasure
should be done with passion. The company is therefore aimed at doing its best every single day
to ensure that it provides quality services and products. The two most important divisions in
Christian Dior are LVMH and Christian Dior Couture. The LVMH division is an empire of
luxury goods, with wines and spirits, watches and jewelry, fashion and leather goods, selective
retailing, perfumes and cosmetics. LVMH under Bernard Arnault holds the grease percentage of
the company, but Christian Dior couture is the main flagship ( Sterlacci & Arbuckle, 2009). He
Christian Dior couture, on the other hand, deals with fashion and designs itself. I am analyzing a
unit of the company, the LVMH unit.
The Competition in Fashion Industry
The LVMH of Christian Dior falls under the Luxury fashion industry; LVMH has
worked so hard and managed to offer its customers classic designs of products that mix heritage
and luxury. Through Christian Dior's exhibitions, their iconic process can be seen by millions of
people all over the world. Christian Dior has been able to make a name for itself, but it does not
mean that they do not try to face the market competition. One of the things the brand has
invested in is the marketing platforms which include exhibitions, advert videos, social media,
celebrity endorsement and many others (Ranchhod, 2007). The key players in the luxury fashion
industry include kering Chanel at 4.2% Gucci at 5.3% and of course LVMH a 9.3%.
The luxury fashion industry is one that will never lack competition; LVMH and Christian
Dior have had to find ways to say on top of the game. Their dominance in the industry was not
handed to them on a silver platter, their strategies, planning and experienced management have
been the key. The glamour of the fashion industry has attracted some players who have kept the
few companies dominating the industry on their toes. The changing trends call for more
creativity, decoration, uniqueness and customer satisfaction from the competing companies
involved. Among others, competition for Christian Dior is Chanel, Kering and Gianni Versace.
Chanel is also a French luxury fashion company that has been impressively growing, its
competitiveness towards LVMH and Christian Dior is a significant one. This is the same trend
with another luxury fashion groups Kering and Gianni Versace who have released impressive
accessories and luxury fashion in the market.
The Porter’s five forces
The threat of new entrants
The threat of new entrants is low
This is because the industry is dominated by a few strong companies hence it is hard for the
new ones to break in (Bush, 2016)
There is a very slim opportunity for new comers which will take years but the companies
already in the industry can up their game. To break in his industry, a company needs to have a
a history and culture and have the favor of many factors including a fan base (Lu, 2011).
Information system allows the companies to gain competitive advantages should a new entrant
break through.
Threat of substitution
The threat is low
This is because It is hard for people to stop using make-ups and clothes. No because here are
no fashion products out here but their class is not the same as that from the brands (Wilkinson
& Kannan).
There is however an opportunity for substitution, clothes can be bought anywhere. Clohes
cannot be substituted but can be bought from another supplier who is not in the industry
(Graham, 2005).
Information system in this case will be used to entice people o keep using he designer products
Competitive rivalry
He intensity of competitive rivalry is very high
This is because the players in the industry are able to produce similar products but only
separated by the brand name. These brands depend on each other so they have to be keen on
what the other does. They keep off new brands from the industry and also keep customers
from the others (Alanoui & Karami, 2003).
There is a slim opportunity for companies to survive these
He information system comes in handy for the competitive rivalries to outdo each other
Bargaining power of the suppliers
He supplier power is not significant
This is because there are too many suppliers and a few brands. They can be easily substituted,
if a supplier decides to increase their prices, the company can easily get another (Kneer, 2009).
Their input is critical but can be found form the many suppliers.
There is a very slim opportunity for suppliers, the brand shave more purchasing power.
The information system is no helpful in his situation.
Bargaining power of customers
The bargaining power of the customer is high.
This is because customers are very influential especially when buying collectively. Also, they
can easily move to the other competitive brand. Customers are sale intermediaries and their
influence is considered high when few large suppliers dominate the industry (Orlovic, 2003).
Here is a high opportunity for a customer to use collective bargaining power
Information system can be used as a form of bargaining power through the power of social
media.
Forces
ratings
Role of IS
Threat of new entrants
low
Marketing
Threat of substitution
low
Convincing buyers
Competitive rivalry
high
Advertisements to outdo the
other
Power of suppliers
low
Not useful
Power of customers
high
Collective bargaining
Threat of new entrants
low
Marketing
Threat of substitution
low
Marketing
Opportunities
Competitive rivalry
low
marketing
Power of suppliers
low
Nil
Power of consumers
high
Collective bargaining
The great thereat is the rival companies and customer’s reviews. The greatest opportunities is
being supplied with the products and less entry of new businesses. The main driver of
competition is rivalry.
The best competitive strategy is marketing, good customer care and quality services.
References
Alanoui F. Karami A. (2003), Strategic Management in Small and Medium Enterprises:
Cengage Learning.
Bush T. Five Forces Analysis of the Fashion Retail Industry: Pestle Analysis
Retrieved from pestleanalysis.com/five-forces-analysis-of-fashion-retail-industry
Graham G. (2005), Exploring Chain Management in he Creative Industries: Emerald
Group Publishing.
Kneer C. (2009), The Wal-mart Success Story: GRIN Verlag.
Lu X.P. (2011), Elite China: Luxury Consumer Behavior in China: John Wiley & Sons
Orlovic M. (2003), Strategies and Structure of the Luxury Clothing and Accessories Sector:
A Critical Analysis Based on Porter’s Five Forces Model: Diplom.de
Plunkett W.J. (2006), Plunkett’s Retail Industry Almanac 2006: Plunkett
Research Ltd.
Ranchhod A. (2007), CIM Coursebook 04/05 Strategic Marketing in Practice: Routledge.
Sterlacci F. Arbuckle J (2009), The A to Z of the Fashion Industry: Rowman & Littlefield
Wilkinson J.T. Kannan R.V. (2013), Strategic Management in the 21st Century (3 Volumes):
ABC-CLIO.
Dior-Porter’s five forces analysis.docx
PEST analysis (political, economic, social, technological) Market assessment of Christian Dior
Political factors analysis
Political instability is a dangerous state for any business, in times of war and conflicts,
people become disorganized to safeguard their lives, and won't have time to engage in trade.
Apart from the security of the of the customer, the businesses are also at risk here from loss of
property. For a company like Christian Dior S.A that has chains in different countries, it would
significantly lose in this political environment. Political instability is, therefore, a problem that
affects an international business, It doesn't matter if your home is safe, when your customers are
fighting, sales will automatically drop.
Government term affects businesses because a new authority is likely to come with new
rules and regulations. The fashion industry which hosts the likes of Christian Dior also get
affected by political changes especially taxes and restrictions. For example, the government
might decide to restrict importation of specific raw materials. Reading policies are also as a
result of the political administration, sometimes they might impose trade regulations that affect
the business. Global chain suppliers like Christian Dior face adverse effects when leaders make
radical changes that hinder international deals. However, most policies like the removal of
barriers promote trade (Fogel, 2016).
Economic analysis: seasonality issues, taxation specific to products and services,
distribution trends.
Seasonality issues in luxury fashion industry are a factor that has always been
manipulated for the benefit of the company. For instance, when it is winter, the Dior collection
would offer accessories, clothes, footwear and other services that suit the situation. The only
problem here is when things run out of fashion; the company has to know how much is enough.
Taxation is an excellent price regulator, the state of the economy has seen taxes on products and
services increase which means prices also have o go up. Sometimes this issue shifts to materials
where some are highly taxed than others. Distribution trends in the fashion industry are an
exciting process. For Christian Dior, this entails knowing how to get the products and services to
the right people locally and globally. The distribution process can be easily achieved through
proper management, planning, and investment.
Social factors: lifestyle, consumer buying patterns, media views
A luxury fashion company like Christian Dior depends on the lifestyle of a person to
convert them into a customer. That is, the power of a person to see the beauty of a designer
depends on their lifestyle. Also, the wealthy, celebrities and politicians consist of the most
substantial Dior-products and services users. But as we all know, this percentage is low. The
consumer buying patterns are also a concern; it becomes hard to approximate sales as this curve
is never predictable. Some people buy things because of special occasions only; it is, therefore,
an unstable factor (Spilsbury, 2014). The media is a very vital tool in business growth; it can kill
or build you. Media comprises of some social connections and comes in handy when one wants o
market. Christian Dior has been made famous by the media especially through celebrities when
they grace occasions their products.
Technology analysis: consumer buying mechanism, global communications,
competing for technology development.
Technology is the most useful invention in the luxury fashion industry. Consumer buying
mechanisms are the means by which customers can buy goods without physically visiting the
shop, or without carrying money around. This has benefitted the company and customers alike
and made shipping very easy. Global communication is also more accessible, contact with the
chain distributors around the globe improves management and customer care. Lastly, the
competing technology development has made work more efficient in the manufacturing sector.
The processes are now faster and efficient. However, the main problems associated with
technology are maintenance expenses when they appliances and machines break down
(Alessandra, 2017).
The threats and opportunities available for my business after his analysis is the
knowledge that every situation is two-faced. Some are factors, however, more beneficial than the
others and other woes cannot be avoided. It is, therefore, relevant o always make good plans,
study the market and go for every opportunity that presents itself.
References
Alessangra V. (2017), Advanced Fashion Technology and Operations Management:
IGI Global.
Fogel S.D. (2016), Strategic Sustainability: A Natural Environment Lens on Organizations and
Management: Routledge.
Spilsbury R. (2014), Hi-Tech Fashion: Raintree
External Analysis to analyze the
competitiveness of Christian Dior
industry.
Introduction of company
• Christian Dior is a renown company in the
fashion industry.
• The company offers the best luxurious goods
and services in terms of fashion .
• This company is a very competitive company
which has been operating for 50 years.
Industry
• Christian Dior has been able to build its brand
name effectively. The company however faces
some competition.
• One thing that makes it stay relevant is the
marketing platform through social media,
exhibitions and celebrity endorsements.
• The key players in the luxury fashion industry
include kering Chanel at 4.2% Gucci at 5.3%
and of course LVMH a 9.3%.
Industry
• The company has stayed relevant in the
market due to its proper strategies in
management.
• Competitor companies include Kering, Chanel
and Gianni Versace.
• These competitors have grown tremendously
and giving this organization a stiff
competition.
• The competitors have come up with more
impressive fashion.
Background of Company
• The company has been operating for the last 50
years.
• The company was developed by Christian Dior
after he failed to complete college.
• The company started like a freelance distributer
of hats and other small gowns.
• The company grew gradually and it developed to
a big company which is known worldwide.
• The company currently has more than 600
subsidiaries globally.
Mission statement of company
• We strive to create the environment that is
fun , welcoming and that encourages
customers to tap into creativity and explore
their personal styles.
Macro environment Analysis: PEST
• PEST is an acronym for political, economic, social
and technological – external factors that
commonly affect business activities and
performance.
• Political factors include political stability, trade
rules and employment laws.
• Economic issues also play a role in company
success.
• Social factors analyze the cultural aspects of
people who affects the business.
Takeaways from PEST
• PEST is a very important tool.
• It helps an individual to spot a business
opportunity and identification of possible
threats.
• It gives the direction of change in the
business.
• It helps an organization to avoid projects that
can fail for reasons which are beyond control.
Summary of PEST analysis
Opportunities
1. Technological advancements can help the organizational growth.
2. Stable political environment will help the organization to operate
efficiently
3. Favorable competition will make a business grow fast.
4. Favorable social cultural differences may affect the organization
positively.
Threats
1. Expensive technological advancements.
2. Political instability.
3. Strict government regulations.
4. Stiff competition form rivals.
5. Job market trends.
Industry Analysis: Porter’s five
forces
Introduction
Purpose of Porters
• This is a tool used to analyze competition in a
business.
• It creates understanding of the presence of
competitiveness in a business .
• The tool is also used to create strategies that
can be used for identifying profitability in an
organization (Alanoui & Karami, 2003).
• The tool presents 5 forces that can affect the
profitability in a competitive environment.
Forces 1
• The first force is competition rivalry.
• This force looks at the number of the competitors and
their strength in the business.
• The force also identifies who are these competitors and
what is the quality of the products they offer (Kneer,
2009).
• When the competitive is intense, the company can cut
down the prices to lure more customers (Bush).
• On the other hand, if there is no competition, healthy
profits will be gained.
• Information systems are used to gather all these data.
Forces 2
• Force two is supplier power.
• This determines how easy it is for suppliers to
increase their prices.
• This tool also determines the uniqueness of
suppliers and their products.
• The cheaper the supplier the more the profits the
business is likely to make.
• The business will use information systems to
research on the trend of the market and its
suppliers.
Force 3
• The other force is buyer power.
• The purchasing power of the buyers are likely to
influence the profitability of the business.
• The number of buyers also affects the profits of
the business.
• If the power to purchase is strong enough, it will
lead to increased profits. If the business has
buyers who adapts to price changes, then it will
be easy for the business to operate (Kneer, 2009).
• Information system in this case is helpful in
researching on customer demands.
Force 4
• Threat of substitution.
• This is a threat on the possibility of customers finding
for a way of doing what the business does differently.
• For example if the supplier has automated some
processes, others might use outsourcing services to
do it manually.
• An easy substitution can collapse your business.
• Therefore the business must research on the possible
substitutions by the use of information systems
(Alanoui & Karami, 2003).
Force 5
• Threat of new entry .
• If a new investor enters the market, a business
might be affected.
• If you have little protection in the market, it could
be challenging to stay relevant in the market.
• This force evaluates how easy it is to penetrate
into the existing market.
• The information is helpful in this case in that it
will help one to research on the new ventures in
the business and adapt to the changes effectively.
Summary
Summary of Porters analysis
Ratings
Role of IS
Threat of new entrants
Low
Marketing
Threat of substitution
Low
Convincing buyers
Competitive rivalry
High
Advertisements to outdo the
other
Power of suppliers
Low
Not useful
Power of customers
High
Collective bargaining
Sample table summarizing threats and listing opp.
Strengths
High customer power
Product diversity
Weaknesses
Opportunities
• Extensive market
• Effective
advertisements.
• Effective management
• Wide market.
• Threats of substitution.
• Strict governments
regulations.
• Cultural differences.
Threats
• Competition
• Technological
advancements
• Collective bargaining
• High power of supplier
• Competitive rivalry
• Employee retention.
• Low value of currency
Analysis of Porter’s analysis
• The strongest forces include competitive rivalry and
bargaining power.
• If the competition is very high , the company will be
required to invest heavily on the other mechanism of
marketing.
• This force will make the business to spend a lot in
making advertisements and value addition to
products to encounter the competitor.
• There is a slim opportunity for companies to survive
these.
Analysis of Porter’s analysis
• Innovation price and technological advancements
are the major drivers of competition in an
organization.
• If the competitor cuts the prices, customers will
rush to get the cheap products.
• Technology can lead to a very stiff competition in
an industry. If the competitor is using updated
technologies, then the business I likely to succeed
more than the other competitor.
• Innovative businesses are likely to compete fairly.
Motivation for competitive strategy
• The great threats to many companies is
competition and customer reviews.
• The main driver of competition is rivalry.
• If a business fails to cope with competition
from the other companies, definitely the
business will fail. Threats like political
instability can make a business to fail.
• Another threat is a new entry into the market.
Recommendations
• Businesses should adopt new technologies in the
production lines.
• Competition should be used as a positive
challenge to the business.
• The company should utilize the five forces to
gauge its competitive status in the market.
• The companies should use the best methods to
attract customers through promotions and
advertisements.
• This approach will balance the competition
equilibrium.
References
Alanoui F. Karami A. (2003), Strategic Management in Small and
Medium Enterprises: Cengage Learning
Bush T. Five Forces Analysis of the Fashion Retail Industry: Pestle
Analysis Retrieved from pestleanalysis.com/five-forcesanalysis-of-fashion-retail-industry
Graham G. (2005), Exploring Chain Management in he Creative
Industries: Emeral Group Publishing.
Kneer C. (2009), The Wal-mart Success Story: GRIN Verlag.
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