Explain Porter’s Five Forces Model and how Bill can use it to analyze his current business and his expansion. Be sure to address each of the 5 forces and explain to Bill what they mean for his business.
Sassy shoes needs to stay competitive and profitable in the shoe industries. In order to do this they will need to analyze the business environment to determine the strategies they will need to implement. To do this they will use Porter’s Five Forces Model.
Threat of Substitute of Products or Services – This helps us to see what threats could exist with other shoe stores in the area would have over the two stores when they merge together. We need to look to see if they have an existing loyalty to major brands that we don’t and we need to make sure we keep the ones we have. Another important piece to this puzzle would be to see what their shoe products look like, quality, and cost. We will be able to make strategic decisions in order to keep us on a competitive advantage over other business.
Buyer Power – For Bill to influence the customer’s power he needs to let them know that the store is under new management. He can do this by placing a sign outside the store. Another good strategy would be to offer customer discount on purchases, such as a percentage off. Another example could be a customer spends $50.00 receives 10% discount, $100.00 receives 20% discount, $200.00 receives 30% discount and Bill could take this as far as he wants He could also do something like BOGO (Buy one get one) offers, or buy one get one half price.
Supplier Power – Since Bill wants to expand Sassy Shoes to include unique shoes with custom fitting and unusual shoe designs he will have to do a cost comparison. Cost comparison is needed to look at Bill’s current suppliers and other available suppliers, so that we can compare prices and materials that are used. Bill does not want to cut cost at the price of using quality material. Using cheap material he believes will not help sell unique custom shoes. It is important to him that customers get good quality shoe as before with minimum cost increase to them.
Threat of New Entrants – Assessing the business environment around Unique shoes and Sassy Shoes to see if there are new or upcoming shoe stores in the area that specialize in unusual shoe designs and custom fitting. Doing this assessment helps identify if there are some barriers that Bill’s new business adventure could possible face. We will be able to determine what business processes should be used after..
Rivalry Among Existing Competitors – Since Bill will be merging the two stores Unique Shoes and Sassy Shoes he will have various price levels, which should help bring in a wide range of customers. The unusual shoe designs and custom fit shoes would be at the higher end priced shoe, were as the remaining shoes would be at the middle to lower price range. The different price levels allow Bill to meet the needs of more customers and allow him to compete against big major change stores, mall stores, outlets and specialty stores.
Based on your analysis in question #1, select one of the five forces and explain how Bill can incorporate his analysis of that force into his Strategic Business Plan (SBP).
I think “Rivalry Among Existing Competitors” is something that Bill can incorporate into his SBP. His business has unusual shoes and custom fittings that you cannot find easily, which gives him the upper hand on the traditional shoe stores. He also has high and low prices that give him a wide arrange of customers. Since the malls and outlets, and major chain stores don’t sell the custom fit and unusual shoes he has created a competitive edge over other stores.
List three business areas and/or processes that could be supported by an IT solution.
Strategic – owner of the business
Operational – front line employees (sales clerks)
Tactical – managerial level
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