Coach Inc. Case Preparation:
Key Facts:
Low cost provider strategy
Focused on matching key luxury rivals in quality and styling while beating them on price by 50 percent or more; competitive advantage
Multichannel distribution model (indirect wholesales to third-party retailors vs. direct-to-consumer sales.
Priorities increase global distribution and improve same-store sales productivity
Build market share in NA, Japan
Raise brand awareness and build share in underpenetrated markets
Increase sales of products targeted towards men
Create an online marketing presence using coach.com, etc
4.2 billion in sales in 2011 (20 percent annual increase)
63 percent were handbags, 27 percent accessories, 10 percent other products
16.7
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What are the underlying drivers of change, and how can these forces change the industry?
The market doesn’t seem to be changing very much, maybe expanding as more money and other countries are becoming wealthier (India). Drivers of change are new internet capabilities and applications, product and marketing innovation, changing societal concerns, attitudes, and lifestyles
Different wants handbags for the more on the go lifestyle, environmentally friendly bags/processes.
4. What key factors determine the success of makers of fine handbags and leather accessories?
KFSs are: diverse products, ahead of trends (fashion), marketing research, lower price point than competition, brand loyalty/recognition/awareness
5. What is competition like in the industry? Which of the five competitive forces is the strongest? Which is the weakest? What is the industry’s potential for profitability?
Many competitors in the luxury goods industry.
Strongest of the five forces I believe is rivalry, competitive pressures come from other firms in the industry, competitors numerous equal size and competitive strength, face high exit barriers, diverse countries of origin
Weakest of the five forces I believe is potential new entrants, because brand recognition is so important in the industry
Industry’s potential for profitability is high, markets are large and expanding, their sales are already high etc.
6. What does your strategic group map of the
Michael Porter wrote about five forces affecting the profitability and viability of companies. The five forces are existing competitors, new entries into the market, substitute products, bargaining power of customers, and the bargaining power of suppliers. (quickmba)
Which of these forces and factors are the most important to the corporation and to the industries in which it competes at the present time? Which will be important in the future?
The threat of new entrants is moderate. It is relatively easy for a company to enter this market because there are not a lot of legal barriers. But a smaller company that has just entered the market would have a tougher time competing with some of the larger companies – an obvious reason being that larger companies can have larger inventories. Another reason is that larger companies can do things to weaken the smaller companies, such as offer discounts, sales promotions, and increase spending on advertising. Since most of the companies in this industry are competing on
Discuss the strategic decisions that firms in this sector may be facing. What future strategies can firms pursue to try to secure their competitive advantage and long term survival?
In the five forces model by Porter, four forces will influence the fifth one (see the model on the right). The bargaining power of suppliers, the bargaining power of customers, the threat of substitute products and the threat of new entrants will influence the fifth force: the level of competition in the industry (S.Clegg, C.Carter, M.Kornberger, & J.Scheitzer, 2011).
As we begin to strategically plan for our business, it is important for us to take a deep dive into our competitive environment to understand where we are strong competitively and where we are weak competitively. An analysis of the forces driving industry competition using M.E. Porter’s Five Forces Model will assist us in determining where the power lies in a business situation as we begin to plan. We must understand how they work in our industry and how they affect our particular situation. Whatever the collective strength of these forces is, our job as the strategists of the organization is to
Opportunities include huge market, no competition for at least three years, potential huge margin, good marketing strategy.
the five forces in this industry as high, medium or low and then explain briefly why
Porter 's five forces framework assesses the competitive pressures a company faces within the industry. The five forces of competitive pressure include: competition from rival sellers, competition from potential new entrants to the industry, competition from producers of substitute products, supplier bargaining power and customer bargaining power. The model helps us determine the strength of competitive pressures and profitability of an industry. [3]
Coach has a very strong brand image. They continue to gain new customers and because of devotion and loyalty they are able to keep repeat customers. Brand image can be considered everything to customers when searching for a handbag. Industries that manufacture handbags must be able to provide what is considered a “chic service”, while continuing a “thriving business” (Foster, 2006). Due to the brand image that Coach has they are able to introduce new and more risky handbags with the confidence that most current consumers will continue to purchase their
Q2: What kinds of competitive forces are industry members facing? The most powerful and widely used tool for identifying competitive forces and assessing the strength and importance of each is the five-forces model of competition which is typically described as follows: (Thompson, Strickland and Gamble 2008)
The Porter`s five forces are threats of new entrants, the bargaining power of buyers ,product substitution and intensity of rival of rival among competitors .These forces measure the competitiveness of the market and also helps the company to identify strategies to use to penetrate such and gain market share.
Porter's Five Forces can be applied to particular companies, market segments and industries with the step-by-step analysis of market structure and competitive situation. First of all, when implementing this module in organizations, it is necessary to determine the scope of the market to be analyzed. Following, all relevant forces for this market analyzed and key forces are identified (Gerry and Kevan, P.117). Actually some organizational strategy and the longer-term goals are mainly based on or consistent with the key forces. Hence, it is not necessary to analyze all elements of all competitive forces with the same depth. Moreover, the key forces in the competitive environment will vary in different industry. Different forces take on prominence in shaping competition in each industry (Porter,
Porter’s five forces are used to determine the competitive intensity and attractiveness of a market. These are close forces that affect a company’s ability to make a profit and serve customers. If any of these forces change, a company must reassess its marketplace. The five forces include: the threat of substitute products, the threat of the entry of new competitors, the intensity of competitive rivalry, the bargaining power of customers and the bargaining power of suppliers.
In 2013, 36% sales in the US, 21% sales in Europe, 16% sales in Japan, 11% sales in China