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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