Business Competitive and General Environment

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Topic: Analysis of Porter's Five Forces and PESTEL of Fashion Industry Company: G2000

Porters Five Forces
(1)Potential New Entrants
a. Bimba & Lola --- First established in year 2005, selling feminine office wear. b. The ability of some brands to start ordering or selling products online has diminished the entry barrier in which huge investment is required to set up networks of shop outlets. c. New entrants can easily enter the market as cost of facilities or equipment needed is low. Moreover, producers may have efficient and sufficient way of distribution of their products.

(2) Bargaining Power of Buyers
a. Target group of consumers are those working man and women whose careers are in the office and those with middle income and above. Most of the consumers are Chinese who usually spend between RM 200 and RM250 in average for everytime of purchasing. b. Bargaining power of buyers is high because there are many other fashion brands selling similar products in the same field which allow consumers easily switch to other brand should there is any raise in price of G2000’s products. Furthermore, there are lots of substitute goods for G2000’s products where in addition spending of apparel or clothing just creates a small proportion of most consumers’ total expenditure while the frequency of buying clothes is low. c. Apart from this, the development and advancement of technology enables consumers to compare the price, quality and style of products easily. For example, consumers may check for the price and style of products of G2000 and other brands such as Esprit, Zara and the like before they visit to the outlet shops of G2000. They may decide whether want to buy G2000’s products before they leave their home.

(3) Bargaining Power of Suppliers
a. Bargaining power of suppliers is low as G2000 won’t depend on single or two suppliers. G2000 has a lot of suppliers and it has its own designer. All the suppliers and designers are from Hong Kong headquarter. Moreover, it’s quite easy for G2000 to switch to other suppliers as the cost of switching is not too expensive.

(4) Substitutes
a. As G2000 is main in selling formal attire for office ladies or men, semi-formal attire or casual wear may become the most threaten substitutes to G2000. Since semi-formal attire become more and more popular among the office working group nowadays, consumers may easily switch their taste and habit on types of working attire to be wore. For instance, the brand Baleno and Giordano are now introducing more semi-formal wear which may induce consumers to change their style and switch to spend on their products instead of buying G2000‘s formal attire.

(5) Rivalry
a. Padini --- First established in year 1971. Comprises 8 district brand and each brand represents different fashion philosophy. The eight sub-brands allow consumers to have more options on style and design of apparel. The eight brands are PDI, Seed, P&Co, Vincci, Mikki, Padini Authentics, Padini and Padini Concept Store. Besides, Padini also apply the ‘fashion’ concept in food industry. Padini has tapped synergy between shopping and eating by establishing the Seed Café. The first Seed Café was set up in June 2000 with its first outlet at One Utama. Such innovative enabling Padini to spread its brand wider to the consumers and the café serves to strengthen branding image of Padini. On the other hands, Padini frequently held clearances fair which allow consumers to buy its products at lower price. The price is as low as RM6. This will definitely attract more consumers to purchase its products and thus expand the market. b. Crocodile --- First established in late 1940’s. The brand has sufficient power to compete with G2000 as it is a long-established brand in apparel market and it may already have created brand-consciousness to certain group of consumers. Those particular customers will not easily switch to other brands such as G2000 because of their loyalty to the Crocodile brand....
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