Assignment : Umuc Haircuts Stage 1

Porter's Five Forces is a simple but powerful tool that consist of 5 different forces to understand the competitiveness of your business environment, and for identifying your strategy's potential profitability. The five forces are degree of rivalry, threat of entry, threat of substitutions, buyer power, and supplier power. Each force is helpful in their own way to get to know your rivals a lot better and get to know what can happen in your market.

I see my weekly client come in and sit on my chair. “The usual”, he tells me casually. I nod my head and begin to pick up my clippers. Before I know it I see a line of eager people anxiously waiting to hear the words “Who’s next?” Yeah, it’s a tough job but somebody has to keep the clients looking their best. That is why I decided to become a hairstylist. The idea of cutting hair has always been a dream for me ever since I was a small child growing up. I would take my Barbie dolls and pretend I was a hairstylist and created all sorts of peculiar and weird hairstyles. I mean lets face it; my motive for cutting hair is to revamp people so they can feel confident about themselves on the outside as well as in the inside.

Michael Porter's Five Forces analyze the external and internal environment of a company to increase the awareness of threats and structure of the industry that company competes within. Thus, the Five Forces is an ideal tool which can help companies to maintain their competitiveness with a higher profitability.

Porter's five forces analysis is a framework that attempts to analyze the level of competition within an industry and business strategy development. It draws upon industrial organization economics to derive five forces that determine the competitive intensity and therefore attractiveness of an industry from the perspective of profitability. The five forces it focuses on are: competitive rivalry, supplier power, buyer power, threat of substitution and threat of new entry.

The company first ran into trouble in the mid-1920s when it was unable to sell many hair accessories due to the “in” hairstyle changing from long to short. (Grant, 2004)

Before you begin this assignment, be sure you have read the “UMUC Haircuts Case Study” and be sure to take a look at the “Walmart Example.”

Porter 's five forces analysis is a framework for industry analysis and business strategy, consisting of five rules: Threat of new competition, Threat of substitute products or services, Bargaining power of buyers, Bargaining power of suppliers, and Intensity of competitive rivalry. By apply this model to the Apple company, we may know if the competition in this field is vigorous or not, and if Apple is safe in terms of being an attractive industries or not.

5) Rivalry among Existing Competitors. Under the circumstances customers have several choices for these services making the area very competitive. Students as well as individuals who work in the area will use these services. The focus will be to not only address what UMUC Haircuts is offering (customer service and quality services) but, to stay abreast of what the customers want.

Porter’s Five Competitive Forces Analysis is a framework developed by Michael E. Porter of Harvard Business School for study of industry analysis by analyzing five competitive forces which define industry and its business strategy. These five competitive forces determine the competitive advantages, disadvantages and attractiveness or profitability of industry.

Porter Five Forces Model illustrates tools used to effectively analyse businesses within the industry with regards to their profitability strategies in the economy. It is a powerful and useful because it helps you get a thorough understanding of both the strengths and weaknesses of the current competitive position, and the strength of a position you are considering moving into. These tools:

Their supplier power has a negative impact on the business, as UMUC Haircuts has only one supplier that is raising prices frequently. It is also affecting the strategy selected because it is very hard to keep costs low when the supply price is constantly going up.

Porter‘s 5 competitive forces model is starting point for strategic analysis that is used for assessing the attractiveness of an industry (Johnson,et al , 2008) and discovering a desirable strategic innovation that improve the industry and company profitability (Wit and Meyer,2005)

Porter’s five –forces model describes the competitive environment in terms of five basic competitive forces:

Five Forces Model framework developed by Professor Michael, E. Porter of Harvard Business School in 1979, is a powerful strategic business assessment tool useful in strategic assessment of business position in a volatile competitive market situation to understand where the business competitive power positions and analyze both the current competitive strength and the position which the business is intended to move into to gain profitability while and customer’s desirability’s.

Porter’s Five Forces Framework Model analyses the competitive forces within the environment in which a company operates, to assess the potential for profitability in an industry. Porter consists of threat of new entrants, threat of substitute, buyer power, supplier power, and rivalry among existing competitors. The change in any forces normally requires firms to observe the market and make the decision in overall change of industry information. Firms are able to apply their core competencies, business model or network to achieve a profit above the industry average.