Porters Five Forces Of New Entrants

For the industry, suppliers have a moderate level of power, as they are able to switch distribution channels quite easily; such as Country Road's change to Myer after 30 years with David Jones. Suppliers can also become self sufficient by selling online. For David Jones' sector, supplier power becomes lower. Suppliers battle with each other for exclusive placements in high end stores, and stores such as

Porter’s Five Forces is defined as threats of new entrants, bargaining power of suppliers, power of buyers, the threat of substitutes and rivalry among existing competitors. New entrants into the industry aim to gain market share from rivals, so the intensity of competition may require to make changes on current strategy of marketing to maintain existing market share. The bargaining

In this instance, consumers would spend a greater amount of time researching the various competing brands before settling on a purchase. Products that fall into this category are computers, hand-phones, refrigerators etc. For me, this would be for skincare. If I had to switch from Brand A to Brand B,

Dependence on Imports - The large majority of clothes sold in US stores is made abroad by low-cost manufacturers. Tariffs, quotas, foreign exchange risk, and other import restrictions can affect the supply and cost of clothing. Purchasing typically requires long lead times, limiting a company 's ability to react quickly to fashion trends

With H&M’s many strengths come many weaknesses. Although buying in large amounts keeps prices affordable, it can also lead to overstocking, and later the lowering of an already affordable price, as well as a lack of control over product production. Uncontrollably, their target customer base is highly affected by the changing macro economic conditions. They are new to the United States online store compared to their competitors (Gap, Zara, Forever 21). Their clothing is usually not original due to how they follow the trends of luxury brands on

Threat of New Entrants: The threat of new entrants is very low in this industry. Most of the companies have over a hundred year’s history and their brands are based on their heritage and tradition. Even a new company with a large amount of initial

Introducing a new product or service into a marketplace requires more than just a great idea. Companies are often enamored with new product ideas that would appear to be unlimited in its ability to capture a market. However, limits do exist and failure to properly conduct market research could lead to a failed product introduction. Enabling analysis of a market to determine the level of competition requires the use of Porter’s five industry forces; the character of rivalry, the threat of new entrants, the threat of substitute products or services, the bargaining power of suppliers, and the bargaining power of buyers (Williams 2017).

The threat of new entrants refers to the threat posed by new competitors within an industry. If it is easy for new firms to enter the industry barriers to entry are low and the threat of new entrants is high. A profitable industry attracts more competitors. Economies of scale, learning curve effects and other macro factors impact the nature of an industry 's

3.2 High Price-High Quality Fashion ClothingPreviously, for quite some years, Top Shop had to experience low revenues and even lower profits primarily because of its excessive focus on price competitiveness. Later a shift its strategy helped the bottom line to sore up. The major factor contributing to such a result was the chain's new focus on female fashion clothing and accessories that it brought into the market before its competitors even if it had to pay more to the suppliers. Such a strategy assisted it in becoming a market leader where it came to the latest trends and fashion in the women-ware.

Many manufacturers from other industries, such as fashion industry, are trying to enter the market to split market share. For example, Doc Martens,

The Danish fashion market is a Monopolistic Competition market, and according to the theory, there is free entry barriers (new firms are free to set up a new business, if they wanted to). This is not the case in real life though, since the initial capital can be an issue for some people, the manager simply doesn’t have enough money to set up their company, which can be a barrier.

The Threat of New Entrants: A lot of new competitors have entered the market in the retail industry like Top Shop, Cotton On, Zara, H&M etc. These are all brands from overseas, meaning they are highly updated in the trends of the fashion world which is what loyal customers favour. This is a weakness for TFG as all the brands that are listed in the chain store group are South African and not international brands. This could lead to a decrease in sales as a lot of consumers turn to trending clothing and products.

The company is under critical observation on their supplier’s welfare and working conditions that has raised issue on upholding its branding (Yildiz, 2014,pg 580)

Knowing who your competitors are, and what they are offering, can help you to make your products, services and marketing stand out. It will enable you to set your prices competitively and help you to respond to rival marketing campaigns with your own initiatives. You can use this knowledge to create marketing strategies that take advantage of your competitors ' weaknesses, and improve your own business performance. You can also assess any threats posed by both new entrants to your market and current competitors. This knowledge will help you to be realistic about how successful you can be.

But unfortunately, it does not happen, manufactures do not gets all of it. Other players, either via theft or counterfeit product, interrupt the supply chain that is set by manufacturer to delivers its product to final consumer. Usually end consumer relates the performance of product to its manufacturer that is also called as brand image. It is commonly assumed that strings of brand image are in hand of its manufacturer and channel members. But due to leakage of product in grey market, other hands get involved in building, maintaining or even destruction of brand image. Last but not the least are the ones who are majorly effected by this leakage are final consumers. Rationalisation is something which is in built in human minds. Every consumer seeks to maximize utilization with consumption of minimum resources. This is theory that feeds the players of grey market and encourage them in form of revenues and profits.