Bonjour - Competitors, Rival Companies - Case Study Example

Management Business Project Report Name Course Tutor Date Management Business Project Report Executive Summary Bonjour is a company that is seeking to plunge in to the Australian clothing industry and at the same time contemplating on the use of a Chinese supplier. There is need to assess the nature of the Australian clothing industry. This further illustrates on the buyer’s demands. A number of aspects need to be ascertained with reference to the nature of the market. Competition is an aspect that can not be avoided. The company needs to plan effectively towards the effect of competition. Competition should not be perceived as a set back to the marketability of products. It is through competition that quality production can be fostered. The five forces model of competition if critically evaluated are a vital tool for a new company. By critically evaluating the five forces, it becomes possible for the company to earn a competitive advantage over its rivals. Rivals will always be in any business set up. The company can identity strategies to help it earn a competitive advantage over its rivals or alternatively plan towards barring the entry of more rivals. Such measures can include the reduction of prices. This is thought to be strategy that can effectively attract more customers and at the same time discourage other players from entering in to the same industry. With the plan to use a Chinese supplier in mind, the bonjour company will be strategically situated in the market. This will not only help in the rapid domination of the market but also save the company from the agony of getting to the target customers. The use of such a supplier is an ideal channel of distribution as the use of many intermediaries is bound to negatively affect the pricing of the commodities. This is because many of the intermediaries in a foreign market are bound to fix their own prices different from the original selling price. Such an aspect may enable substitutes to bit the brand being traded on the market. Analyzing the cultural aspects of the country of operation is equally vital as cited by the Hofstede’s frame work. Introduction The clothing industry in Australia forms the back bone of the Australian economy. For a new company in to the Australian clothing industry, competition is a key factor to examine. The porter’s five forces model of competition is a vital tool in assessing the impact of competition. This paper examines the five forces model with regard to the Australian clothing industry. This is in line with the implicated cultural diversities in Australia. This information is to serve as an assessment of the competition and cultural diversity for the Bonjour clothing company. This is a company that is seeking to plunge in to the Australian clothing industry for the very first time. The Porter’s Five Forces Model of Competition This is a frame work that analyses the economical impact of the nature of competition in a business set-up. The five forces implicated in this model illustrate the intensity of the competition in a market. These forces basically revolve around the profitability of the business investment and the fact that the competition intensity is not a chance aspect. This implies that the implicated magnitude of competition in any business is not related to good or bad luck. The influence of these forces on any industry is very instrumental. The figure below depicts an illustration of the five forces (Daniel 2004). The model thus points to five forces of competition that include; the entry of rivals or competitors, the threat implicated by substitutes, the consumers bargaining power, the supplier’s bargaining power and the existing rivalry among the players already established. The government is yet t o be included as a sixth force in the model (Daniel 2004). The Model With Reference To the Australian Clothing Industry The Australian clothing industry is at its peak of performance. It is the leading market in most of the western world. This industry forms the highest source of revenue for the whole of the country. The economic implications of this industry revolve around the activities common to clothing alongside the marketing. These activities largely contribute to the economy of the country and also provide the highest level of employment. The clothing industry in Australia happens to be fragmented on the basis of income, age, the type of bodies and gender. This goes in line with the preferences that are related to the type of lifestyle. The clothing industry in Australia is very advanced both at home and at the international level. Very many businesses are involved at various levels in the clothing industry. Competition is thus very high. With a population that is only a third of the United Kingdom’s in size on a land that is about 30 times greater, the market is very thin. This is in relation to international standards. Most of the Australian population is made of people with very casual living styles. This is an aspect that is attributed to the type of climate in Australia which appears moderate. This type of living and climate has a very great impact on the expenditure patterns among the natives. Majority happen to spend very little of their income on clothing. The figure below illustrates the Australian clothing industry (Allan 2004). With its location within the southern hemisphere, the country experiences seasons that are an exact opposite of those experienced in most of Europe. With this location, the country happens to be lagging behind with reference to the fashion trends in the world. It is established that it takes relatively long for most of the trendy fashions in Europe to emerge on the Australian market. Owing to its close proximity with Asia, majority of the clothing sold on the Australian market emerges from Asia. Clothing businesses in Australian are run at the retail level. Most of the clothing is thus sold in the leading lifestyle stores. Such stores stock a number of clothing accessories as per the consumer demands. Leading retail outlets that are involved in the clothing industry include Rebel sports, mountain designs, Kathmandu and Ray‘s out doors. The leading brands of clothing among the female stock include: Rochford, voodoo Dolls, French kitty Contempo alongside ivory and Itsu. For the male wear, the leading brands include Roar, Crusty Demons, Blue print, Town and country alongside Globallocal and Hope and glory. The Bargaining Power of Suppliers With Reference To the Australian Market Suppliers in business are a term that is used to refer to people who are willing and able to avail commodities to the market. Normally, the provision of commodities to the market by various suppliers is under the influence of the prevailing market price. This implies that the supplier’s power in bargaining may likely be high in the event that; there are very few suppliers that are not of a fragmented form. The same is applicable in the event that they are none if not very few alternatives to the same type of produce in the market. When the potential customers targeted by the supplier are fragmented, their own bargaining power is downgraded. This aspect is equally applicable in the event that switching from one supplier to yet another is relatively costly. Since the Australian clothing industry is already flooded with many suppliers, the Bonjour Company needs to establish strategies that will give the company a competitive advantage. The role of quality product provision is thus vital. There is need to for the company to establish its own retailing channels in order to effectively market its clothing in Australia. A very strong brand recognition is yet another aspect that may enable the company to attain a competitive advantage over other companies (Henry 1998). Competitors or Rival Companies In a very competitive business set up, the implicated profitability is almost negligible. Every business enterprise is bound to strive towards emerging over its rivals. The magnitude of competition or rivalry is thought to differ among various businesses. This magnitude is measured as an indicator of the concentration of the industry. With a very high industrial concentration, the share of the market is held by well established large enterprises. With the situation in the Australian market, the market share is not held by very many large enterprises. Such a low industrial concentration implies that none of the players in the industry hold any significant share of the market. The fragmentation of the Australian clothing market makes it very competitive (Michael 2008). In an effort to effectively emerge over its many rivals, the Bonjour Company can advocate for the following measures; price moderation of its clothing which is bound to offer a short lived advantage. Improved differentiation of the products is a more reliable measure to adopt. This can be effectively enhanced through innovative manufacturing that can foster brand recognition. The use of ideal channels of distribution in a foreign market is yet another vital measure. The proposal to use a Chinese supplier with the entry in to the Australian market by the Bonujour Company is appropriate. These two countries have a long term tradition of trade. Most of the Australians get majority of their clothing from the Asian market. This is a strategy that will enable the company to effectively explore good relationships with the most ideal suppliers. According to the five forces model, the magnitude of any kind of competition is under the influence of the following: The number of business enterprises in the same line of operation. The rate at which the market seems to be growing is of great impact. This is because a market that seems to be growing at a slow pace pushes enterprises to struggle for dominance of the market . Fixed costs in the production of products are bound to push for cost effective strategies in an effort to recover costs. Rivalry can also be influenced by the durability of the products with which companies are involved with. Clothing is not perishable but highly influenced by fashion. The impact of fashion on the clothing industry makes the products offered on the market to appear like they are highly perishable. This is because with the emergence of a new fashion, it becomes relatively hard to sell old stock. The Entry of Competitors This is a measure of the ease with which a number of rival businesses can enter in to the same market. The possibility of such rivalry is thought to affect the existing competition. It is normal for firms to enter and at times exit the market. However a number of firms have a few attributes that effectively guard against the entry of rivals. With the emerging profitability in the Australian clothing industry, it is expected that very many companies are eying opportunities. According to this force, companies may be exceedingly slow at entering in to a market whose profitability is marred with a lot of uncertainties. To effectively enter in to the Australian clothing industry and subsequently prevent the entry of rivals, the Bonjour Company can needs to maintain very low pricing. Identifying a barrier to effectively deter the entry of other companies in the clothing industry will help maintain profitability for the company. It therefore emerges that it is relatively easy for other companies to enter in to an industry if at all: there is common technology that can be easily adopted by any firm; very little brand recognition which explains why on entering the Australian market, the Bonjour Company should seek to attain brand recognition. In an effort to make it hard for other companies to enter in to the same line of operation, the company can use patents and restrict it self to certain distribution. In this regard the use of a Chinese supplier is very vital (Wet 2008). The Bargaining Power of the Buyer This refers to the influence of customers on the production. The concentration of buyers in a market is thought to amount in to a monopoly. The command of the buyer on the pricing of the commodity becomes very strong with such a situation. With the situation on the Australian clothing market, the reverse is the case. “This has been further enhanced by the dominance of retail marketing” (Steve 2003, 34). This aspect is further enhanced with the fact that the clothing market in Australia is fragmented. This makes it difficult for any of the buyers to strongly influence the pricing of the products. The influence with which buyers on a market can control the pricing of the commodities depends on; the quality of the commodities alongside the differentiation. For the Bonjour Company to effectively overcome the impact of the buyers bargaining power in the pricing of its products, it should offer high quality products. Such products will then make it hard for the buyers to easily switch to alternative suppliers. The Threat of Substitutes With reference to the five forces, substitutes in the market are alternative products offered by other industries. The pricing of such commodities is known to strongly affect the marketability of products. For example the pricing of aluminum cans is strongly affected by the pricing of glass ware bottles. Substitutes are not rivals. The impact of substitutes in competition is known to emerge through pricing. The bonjour company on entering the Australian clothing industry should thus price its clothing appropriately to avoid loosing to the power of substitutes. This should also be considered in line with the decision to use a Chinese supplier. This is because most of the clothing in the Australian market comes from Asian countries. Such clothing is bound to strongly substitute the rest of the clothing from the European market. It is feared that most of the fashionable clothing on the European market emerge in Australian long after a number of the Asian clothing has traded. This explains the need to use a Chinese supplier in the marketing of its clothing. Most of the buyers seem to be more conversant with the Asian clothing than the European clotting (Steve 2003). Hofstede’s Cultural Dimensions Gerald Hofstede offers a frame work on the relationship between national and organizational cultures. The five dimensions offered in this frame work include: the power of distance, the impact of individualism against collectivism, masculinity versus femininity the degree of uncertainty of avoidance, and the long term against short term orientation. In an effort to understand the type of management to adopt in any country, there is need to empathize with the local culture. For a country like Australia, the power of distance is the most essential aspect of the frame work. This is an aspect that implicates on how the unequal distribution of power in an organization is accepted among the less powerful. With the low power distance in Australia, Australians willingly expect and accept the kind of power distribution that is bound to be consultative. Such a power relation is thought to be democratic. With this respect, individuals relate to each other irrespective of their formal positions. The juniors in such organizations are at liberty to contribute and at the same time critique the decisions made by their superiors (Michael 1985). Differences and Similarities between Australian and French Cultures and How the Gap Can Be Bridged The most oblivious difference in the culture of the two countries is the language. Australians speak English while the people of France speak in French. In an effort to effectively meet the market demands, there is need to train the French employees to speak in English so that they can effectively communicate with the Australian customers. Some lifestyle is made more appealing with music in Australia. Music is thus part and parcel of most of the natives in Australia. However only a few people in France prefer music. Owing to its location within the hemisphere, most Australians are not strongly driven by fashion trends in clothing. The people in France on the contrary are strongly influenced by emerging trends in fashion. It is thus advisable for French employees to positively transform their Australian colleagues by introducing them to trends in fashion. This is an aspect that will also boost the marketability of the company, as it will enhance the rate at which new fashions in clothing emerge in Australia. Australians fancy football unlike the people in France. This will go very well if the Bonjour Company sought to promote football in Australia by stocking its stores with sport wear. The weather in Australia is very moderate. This aspect of the climate makes most of the natives to dress casually. This is contrary to the climate in France that may be very unbearable in winter. For the purpose of embracing the weather, French employees in Australia should adorn themselves in outfits that reflect the moderate climate. Such an aspect will also help the company in deciding on what type of clothing to stock in its stores (Benjamin 2003). Conclusion For the Bonjour Company to earn a competitive advantage in Australia there is need to evaluate the Porter’s five forces model. This is a model that examines the impact of various influential forces in the marketability of products; this model is formulated on the basis of two major aspects. These aspects include the profitability of the business and the fact that competition is not a chance affair. Earning a competitive advantage in a fragmented market like the Australian clothing industry requires ideal structures. Fragmentation of the market makes it very competitive. The degree of competition is also related to the profitability accrued from this industry. It is the leading industry in the Australian economy and it happens to be very attractive. The ability to effectively fit in to the Australian culture is yet another vital aspect that can foster the competitive advantage. Bibliography Daniel Bonney. 2004. Advanced PE for OCR A2. Heinemann. Allan Chapman. 2004. Porter’s five forces model. Journal of business management. 12 ( 3): 31. Michael E. Porter. 2008.On Competition Harvard Business Review Book. London: Harvard Business Press. Henry Mintzberg. 1998. Strategy safari: a guided tour through the wilds of strategic management. California: Free Press. Wet Feet. 2008.Ace Your Case V: Business Operations Questions. Melbourne: WETFEET. INC. Michael Edward. 1985. Competitive advantage: creating and sustaining superior performance. Clifornia: Free press. Benjamin Gilad. 2003.Early warning: using competitive intelligence to anticipate market shifts,control risk, and create powerful strategies, Washington: AMACOM Div American Mgmt Assn. Steve Johnson. 2003. The five forces of competitive advantage. Journal of business management. 6 (2):23. Read More