Porter Five Forces
Autor: shawn94 • July 7, 2015 • Business Plan • 337 Words (2 Pages) • 3,547 Views
Porter Five Forces
Rivalry among existing competitors
Rivalry is high because there are a large number of similar retailers including both large and small firms. Based on the case, the total market size of the global textiles, apparel and luxury good market are slow annual growth rate of just 3.7% for 2007-11 which leading to the higher competition.. The rapid change in the industry also leads to firms constantly H&M’s main competitor which are Zara, GAP and UNIQLO.
Threat of Entry
The threat of new entrants is high. According to the case, entering into the apparel industry does not require a huge capital investments and many individuals have the means to start a clothing line. However, on a global scale, a few large corporations account for a major share of total industry revenues.
Power of Suppliers
The power of suppliers in apparel industry is low. As international trade liberalises, the number of global suppliers has increased and compete in lower manufacture wages. It is easy to switch from one supplier to another. But, it involves the firm in high risk if the firm choosing a low-wages manufacturer supplier that may not up to quality standards. It also take the firm in the risk of not able to respond to the fast changes and demands in apparel industry. With this, GAP and Zara have their own factory to produce the own brand products.
Power of Buyers
The power of buyers is high. This leads the buyers to switch easily from one brand to another. The retailers seek to offer what the buyer's demand. There are various apparel retailers in the global market like UNIQLO, GAP, ZARA and H&M. It provides a huge selection of garments for the consumers and will quickly adopt new trends.
Substitutes Products
There are not direct substitutes for apparel, but there are substitutes to retail. Different distributional channel will lead the consumers such as online and luxury stores. The consumers would make the purchase in their own way. An online store is allowing the consumers easier access to the products through internet.
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