Global Value Chain Management
Marketing Strategy Term 4 2011
03 August 2011
1. Perform a Porter’s Five Force Analysis
Force 1: Barriers to Entry
| |Questions |Answer |Reason for Barriers to entry | |1. |Do Larger firms have a cost/performance |Yes (Positive) |Larger firms like ECCO have resources to cut down their | | |advantage? | |production cost and can invest more on technology and R&D to | | | | |consolidate the market. | |2. |Are there any proprietary product |Yes (Positive) |Firms believe in core competencies of product development and | | |differences? | |production technology focusing on differentiating their product | | | | |from competitors. | |3. |Are there Established Brands? |Yes (Negative) |Threat from well established brands for market share and profit.| |4. |Do customers incur large switching |Yes (Positive) |Switching cost incurred in terms of quality and usability which | | |costs? | |cannot be leveraged by buying other convenient and less | | | | |expensive products. | |5. |Is large amount of capital required for |Yes (Positive) |High investment in assets like Specialized technology, | | |entry? | |equipments, infrastructure, etc. Thus hard for new entrants in | | | | |the market. | |6. |Is there a steep experience curve? |Yes (Positive) |Relatively low cost of operations is a very powerful strategic | | | | |advantage that can be achieved by learning and experience curves| | | | |to dominate market share. This is possible only for large | | | | |incumbent firms like ECCO, Adidas, Nike, etc. | |7. |Is it difficult to access distribution |Yes (Positive) |Firms have good integration for distribution of their shoes via | | |channels? | |group distribution centre, sales agents, retailers and | | | | |supermarkets. | | | | | | |8. |Is there a limited supply of skilled |No (Negative) |Availability of skilled personnel in the footwear industry holds| | |personnel? | |some opportunity for human resources to new entrants | |9. |Are there any patents? |No (Negative) |Thus no competitive advantage for firms legally and exposure for| | | | |new entrants. | |10. |Do entrants face very strong |Yes (Positive)...