Question

Discuss the following topic in adequate detail ( The five competitive forces that determine industry profitably.) With examples and references

Answer 1

Competitive rivalry- This power explores how powerful a business rivalry is. It takes into account the number of current rivals, and what each can do. Competition competition is strong when there are just a few companies offering a product or service, when the market is growing, and when customers can quickly turn to a competitor's offer at low cost. When competition is high in rivalry, advertisement and price wars occur which can damage the bottom line of a company.

Under Armour, the Nike, Adidas and younger teams face heavy rivalry. Nike and Adidas, with substantially greater resources at their disposal, are competing within the performance apparel market to build market share in this up-and-coming category of products. Under Steel, it has no patents for materials or processes, and its product line may be replicated in the future.

The bargaining power of suppliers- This force analyzes how much leverage the manufacturer of a company has, and how much influence it has over the capacity to increase its costs, which in effect reduces the competitiveness of a company. It also assesses the number of raw material suppliers and other available tools. The less of a producer, the more influence they have. When there are many vendors, the companies are in a stronger spot.

A large customer base restricts the bargaining power of suppliers. Douzens of manufacturers operating in multiple countries are manufacturing under the Armour brand. It gives Under Armor an advantage by reducing the influence of the manufacturers.

The bargaining power of customers- This force explores the consumer's control, and its effect on pricing and quality. Buyers have control because they're less in number but there are plenty of sellers and it's easy to turn to buyers. In comparison, purchasing power is weak when buyers purchase goods in limited amounts and the seller's product is somewhat different from its competitors 'product.

Customers under Armour include retailer and end-user companies. Wholesale buyers, such as Dick's Sporting Goods, have a degree of negotiating power, as they could swap Under Armour's goods with those of Under Armour's rivals to achieve higher margins. End-user consumers have fewer bargaining power because Under Armor enjoys high brand awareness.

The threat of new entrants- This force takes into account how easy or difficult it is to enter the competition for competitors. The simpler it is to gain entry for a new company, the greater the chance of depleting the market share of an existing business. The entry barriers include absolute cost advantages, product access, economies of scale and good brand identity.

Significant capital costs are required for branding, advertisement and product demand formation, which restricts the entry of new entrants into the market for sports apparel products. Existing companies in the sports apparel industry may thus in the future enter the performance apparel business.

The threat of substitute products or services- This force studies how convenient it is for customers to turn from the product or service of a company to the one of a rival. This explores the number of rivals, how they compare their rates and efficiency with the company being studied, and how much income these rivals gain, which will decide how they will reduce their costs any further. The effect of substitutes is told by switching prices, both immediate and long-term, and the willingness of the customers to adjust.

The demand for performance apparel, sports footwear and accessories is expected to continue to grow. Therefore, this force does not threaten Under Armour in the foreseeable future.