The analysis of the TFL footwear company should be based on the effective framework which would help the strategic managers in conceptualizing the importance of gaining the competitive edgeover the competitors. In doing so, Porter’s five forces model would be viewed as a powerful and simplistic tool to assist in understanding the power that lies in the current situation of thebusiness. The effects of the external environment on TFL can be better understood through this framework.
There is an extensive need for effective management tactics and strategies in different key areas. Also, the company has to strive to retain its market position in the domestic and international environment. However, corresponding external factors and forces enumerated in the porter model should remain the strategic consideration of TFL.
- Competitive Rivalry
The competition in the footwear industry is so fierce from both Chinese and Indian products. Due to this, it takes longer time to credit the wholesale agents and dealer on providing goods to customers or act as a middleman. The nature of the footwear industry is fragmented, it has left the industry with extreme competition. A high market growth rate has made the potential competitors keep focusing on gathering larger market share through providing exceptional quality products as well as fulfilling the utility and fashion requirements of customers.
The number of competitors are limited and are striving hard to dominate the market. They have contemplated to keep prices low in order to avoid losing customer base.
- Bargaining Power Of Buyer
The bargaining power of customer is low because there are limited number of alternatives or footwear manufacturing companies in the market. On the other hand, the demand posed by the customers tends to vary and is based on the changing trend. Satisfying them is the key to long term success, due to which the competitors keep providing high quality, new style product at low or competitive prices. As the availability of the substitutesis moderate, the buyer could likely buy products from other companies instead of TFL. Also,the brand differentiation is low, the buyer cannot explore valuable brand.
- Bargaining Power Of Suppliers
The retail distribution strategy was employed by manufacturers at TFL, including wholesale agents, distributors and retailers. The bargaining control of supplier is high because of the company’s overly dependency on the suppliers’ efforts and struggles in selling greater number of products to the customers.
Also, the company does not have direct access and can’t approach to the end customers; it makes themcontingent on dealers, suppliers or wholesale agents. As such, the dealers and agents are ofsignificantconcern as they determine the strategies of TFL in footwear industry environment.
- Threat Of New Entrants
Threat of new entrant is high. The access to input is easy. Also,new entrants can access to the limited opportunities.TFL needs to defend itself against the new rivalry. In addition, the cost of doing business is low which has not limited the ability of the new entrants to disrupt the environment of the footwear industry. The barriers to entry i.e. rules and regulations are not much. Thus, it is necessary to adopt the innovative approach……………..
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