Porter's 5 Forces of Levis

Topics: Jeans, Levi Strauss, Government Pages: 2 (308 words) Published: March 9, 2011
Porter’s Five Forces
Levi’s Strauss
Power of buyers is high.

* Even though Levi’s is a hallowed name in the market, the power of buyers is relatively high considering the fact that they can easily change to other brands.

* Switching cost is low.

* Power of buyer is high because the product is standardized.

Power of suppliers is low.

* Competition within manufacturer is high since it is mass-produced.

* Manufacturer is located in many third world countries: Central America, China, Cambodia, Vietnam, therefore Levi’s can switch to other manufacturers easily.

Barrier of new entry is low
* Singapore is a country with limited natural resources therefore it open for investment and international trade.

* Government policy encourages new entrance as the taxation for local and foreign companies are the same. (FTA)

* 96% of the imports and exports enter duty free.

* There is no government policy that prevents Levis Strauss competitors to enter the market, instead the government of Singapore encourages it.

* Exit barrier low: Inventory can be moved to a more profitable market or it can be liquidated.

Degree of Rivalry is high.
* High chance for consumers to switch to alternative brands (CK Jeans, Guess Jeans, DKNY Jeans, Diesel)

* Fashion conscious buyers prefers high priced brands (7 for all Mankind)

* Mid-class earners prefers low priced jeans (Lee, Wrangler)

* Since the retail industry in Singapore is growing, firms are able to improve revenues because of the expanding market.

* Low level of product differentiation will increase rivalry because of no brand identification.

* Strategic stakes are high because Levi’s is losing market position.

Substitute Threat is high.

* Buyers are likely to switch to other products considering the climate conditions. (They would switch to lighter clothing because of humidity) Example: cotton trousers are switched...
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