Below is my answer, could anyone tell me if I did it right or not? Thanks. HW #1
ID: 1168740 • Letter: B
Question
Below is my answer, could anyone tell me if I did it right or not? Thanks.
HW #1
Porter’s 5 Forces Framework
Please rate the athletic apparel industry (e.g., Nike, Adidas, Under Armour) as high, moderate, or low on each of the following dimensions of industry structure. Based your analysis, rate the overall competition in the industry. Do you expect high or low profit persistence in the industry?
Athletic Apparel Industry
Rivalry among existing firms
Moderate to High
Threat of new entrants
Low to Moderate
Threat of substitutes
Low
Bargaining power of buyers
Low to Moderate
Bargaining power of suppliers
Low
Overall
Low to Moderate
Rivalry among existing firms
Growth rate
Low to Moderate (+)
Concentration
Moderate ()
Switching costs
Low (+)
Fixed/Variable cost
Moderate to High (+)
Threat of new entrants
Economies of scale
Moderate to High (-)
First mover advantage
High (-)
Ease of access to dist. channel
Low to Moderate (-)
Legal barriers
Low (+)
Threat of Substitutes
Relative price and performance
High/Poor (-)
Buyers’ willingness to switch
Low (-)
Bargaining Power of Buyers
Differentiation/Switching Costs
Low to Moderate (+)
Buyer market concentration
Low (-)
Bargaining Power of Suppliers
Differentiation/Switching Costs
Low (-)
Supplier market concentration
Low (-)
Athletic Apparel Industry
Rivalry among existing firms
Moderate to High
Threat of new entrants
Low to Moderate
Threat of substitutes
Low
Bargaining power of buyers
Low to Moderate
Bargaining power of suppliers
Low
Overall
Low to Moderate
Explanation / Answer
Athletic apparel industry:
1. Rivalry among existing firms- The athletic industry the competition is very high. They can compete with large group of compaanies
2. Threat of new entrants- In the apparel industry the threat of new entrants is high
3. Threat of substitutes- The threatof direct industries is comparitively low
4. Bargaining power of suppliers- The apparel industry the bargaining power of suppliers is high in the case of moderate industries.
5. Bargaining power of buyers- The bargaining power of buyers is very high
Rivalry among existing firms
1. Growth rate- most case of the athletic industries the growth rate is moderate to poor
2. Concentration - it is moderate. because the companies are more concentrated in foriegn countries
3. Switthcing cost- switching cost of diffrent wesuit are comparitivly low
4. Fixed and variable cost- it is moderate to high. Because they are producing quality product
Threat of new entrants
1. Economies of scale- the economies of scale is high. because they produce high quality product
2. first mover adventage- high
3. Ease of acces dist. channels- low- because it is international market.
4.Legal barriers- it is low. they have their own brach in each country
Threat of substitutes
1.Relative price and perfomance- high/high- They can produce high quality products in the market
2.Buyers willingness to switch- Low
Bargaining power of buyers
1. Diffrentiation/ switching cost- Moderate
2.Buyers market concentartion- low
bargaining power of suppliers
1. Differentiation/ switching cost- low
2. Supplier market concentration- low
The athletic apparel industry faced lots of competition among the existing firms and new entrants in the market. So the supplier concentrate on the market and give new and variety product must be produced. Becuase consumers choice are changed day to day. Produce new and quality product.
When the firms are not concentrated in the market their competition will becomme very high. It will cause reduced the profit of the firm.
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