Component 3 Threat of New Entrants It is not easy to getting started in the jewelry industry and a new company will have to take into consideration three important factors: capital, strong supplier relationships, and reputation. Jewelry companies have high capital requirements in order for them to compete in this industry. For new companies coming into this industry it may prove hard to obtain the necessary capital requirements to sustain the business. Next, a new business will have to worry about where they will obtain their inventory from. Typically existing competitors have already locked down the best geographical locations, which put new companies at a disadvantage. Finally a new competitor will have to contend with brand loyalty. Established companies like Blue Nile and Tiffany’s have already won over the consumer base with their prestigious brands and excellent product selection. When companies need to spend resources building a brand, they have fewer resources to compete in the marketplace. This will benefit an already established Blue Nile. Threat of Substitute Products The jewelry industry is a thriving one with many jewelry stores as well as department stores providing the service. This means that there are many choices for the consumer when it comes to purchasing jewelry. The problem Blue Nile faces is brand loyalty. Being relatively new to the jewelry scene Blue Nile’s biggest challenge will be to lure away customers from competitors like Zales or even
By upgrading their brand, it will help to identify the qualities of the products that set it apart from the competition. They have to make the
It is crucial for a business to know where their customers come from in order to select the best location for the store. Choosing the best geographic area can help in the success of the business or the failure of the business. This is why Trader Joe’s has particular criteria when choosing new store locations. Trader Joe’s is aware who their target consumer is and utilizes the data they receive to place their locations in the areas that will benefit in the growth of the organization.
Entering the market requires heavy investment in establishing a name and make lots of outlets. It is a growing market with lots of pioneers that can make branches anywhere and threat the other chain in there selling areas.
There would still be a net loss in 2006 due to the increase of break-even point, which increased from $7,505 to $8,640.
In analyzing the market/industry, the company was able to see some things that helped shape their plan. The first was rivalry among competing sellers. Our analyses indicated that there were 9 companies in the shoe industry that Competitive Shoes considered rivals. These companies were relatively new in the industry and produced the same types of shoes as Competitive Shoes. Due to this fact, they knew that the rivalry would be fierce since Competitive Shoes was going to produce a product that was like theirs, and the difference between the products would diminish as the products of industry rivals became strongly differentiated. This indicated to Competitive Shoes that brand loyalty would be minimal and buyers could easily switch brands at will. Competitive Shoes felt that they could produce the same quality shoes as the high-end producers, while at the same time lowering its production cost and offering the product at a lower price. This would make it easy for buyers to switch brands at will.
The industry does not possess major threat from new entrants due to strong barriers to entry and strong competition for retail space. There is also a strong rivalry between competitors as limited space is being contested by major players alongside
The location of a business has a large impact of future sales and success. The potential location holds communities that are very close-knit and once loyalty is established sales can be maintained. The personal relationships with the customers are highly important in this area.
As the brand name of Nike continue to soar, other companies in the industry; learning from the success Nike has experienced, start focusing more on brand development to keep up with the increasing levels of competition. These companies resort to brand maintenance, which has become the main target in this industry due to product differentiation made by Nike. Nike, being market-advantaged, produces an extensive range of products, through which it gains a balanced level of profits. This has influenced rival companies to initiate a new range of products in their businesses too. Previously these companies had high risks of failing in business, if their single products did not appeal to the market. Due to the impact of Nike’s business strategy, the other companies are also enlarging their product range,
Brand competitors and the diversity of choice that is available to consumers, puts brands under pressure to offer high quality products and service, excellent value and a wide availability (Clifton et al., 2009). Brands must differentiate themselves from the competition and create an unforgettable impression.
The disadvantages are higher outbound transportation costs. Even with a strategic warehouse location, such as Kentucky, there will bound to be retail outlets farther than others, such as San
The threat of new entrants is high in the fast segment. There is a threat of new entrants is because the entry barriers are very low. The business barriers to entry the market could take those forms: first one is the capital costs, the higher the investment required, the less the threat from new entrants. Secondly, regulation and legal constraints are the main concerned points. In most industries, regulations related to health and safety, products handling, and licenses to operate, export, or install new facilities. And other forms of barriers could be brand loyalty which could be an important factor in increasing the costs for customers of switching products. The new entrants need to change the valuable brand suppliers with its efficient economies of scale to have a reasonable supply chain network or corporate with the low cost producers to supply the products in the market. Also it might gain a large market share in the market as well. For instance, Sports Direct Company reported retail sales were £371m while gross profit increased 9.6 percent to £149m, it
Blue Nile’s strategy is to have a large inventory of high-quality diamonds, exceptional customer service, and low prices. Blue Nile has adopted a best-cost provider strategy; as a best-cost provider, Blue Nile earns a competitive advantage in the market, by offering more value for the money at a lower cost than competitors.
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
Other environmental influences, such as competition, may fuel the company’s desire to create more and better products that could well determine their location and standing in the global market. Increase in the number of competitors for the same line of products may mean that there