In the traditional economic model, competition among rival firms drives profits to zero. But competition is not perfect and firms are not unsophisticated passive price takers. Rather, firms strive for a competitive advantage over their rivals. The intensity of rivalry among firms is very large in case of jewelry business. There are a lot of big brands and even small small jewelers are present in the market.
II. Threat Of Substitutes
In Porter's model, substitute products refer to products in other industries. To the economist, a threat of substitutes exists when a product's demand is affected by the price change of a substitute product. In general jewelry falls under the category of apparels, all over the world. Additionally, in India, Jewelry is often looked as the option for investment rather than apparels. There are a lot of substitutes like equity, real estate, mutual funds, fixed deposits, etc. are available for the target customer.
III. Buyer Power
The power of buyers is the impact that customers have on a producing industry. In general, when buyer power is strong, the relationship to the producing industry is near to what an economist terms a monopsony - a market in which there are many suppliers and one buyer. Also for Tanishq customers, there is capacity for buying is different for different customers. Quality might be the USP of Tanishq. But, making charges of any jewelry plays a vital decision in the process of buying from a particular supplier.
IV. Supplier Power
A producing industry requires raw materials - labor, components, and other supplies. This requirement leads to buyer-supplier relationships between the industry and the firms that provide it the raw materials used to create products. Labour in person is a very crucial parameter in jewelry industry. Also, the 80 to 90% of the selling price constitutes the cost of gold as a raw material.
V. Barriers to Entry / Threat of Entry
It is not only incumbent rivals that...
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