Michael Porter’s Competitive Forces Model is a tool necessary in analysing the environment in which an organisation operates (Laudon, & Laudon, 2018). It provides an organisation with an overview of what their competitive advantages are, and what factors influence it. dUCK is an organisation operating in the constantly changing fashion industry that faces various competitive forces as a result.
Competitors describe the the number of competitors in an industry and their advantage over a company. It can be concluded that the more competitors exist paired with the similarity of their offerings to those of a company, the lesser their power (Chappelow, 2019). dUCK’s competitors are vast as they operate in the fashion industry that is rather saturated, however their unique product offerings set them apart and function as their core competency, and in this instance they have a greater power to charge higher prices for their quality and competency.
New market entrants also have an effect on the power of a company. The threat of new entrants is a weaker force in the fashion industry as its saturation and dense population require great differentiation if an organisation seeks to penetrate the industry (Pratap, 2018). dUCK has an advantage as it is a brand with a unique offering and acquires success through this still, brands can find unique ways to grow popular and acquire success.
The threat of product substitutes and services pose a threat for organisations internally within the industry. For organisations such as dUCK which focus on luxury and premium offerings, there are substitutes which can duplicate the high-end style for a lower price. Ultimately there is no substitute for the accessories and clothing items in general, there is however a substitute for the brand (Pratap, 2018).
The bargaining power of customers concerns the ability that customers have lower prices. In the case of the industry in which dUCK operates, the power of buyers is a powerful force as they are becoming progressively well informed in terms of their product alternatives and with the multitude of competitors and brand substitutes to choose from, customers power is greater (Bush, 2016b). The bargaining power of customers becomes evident through higher quality of products offered, price decreases and a differentiation in product offerings (Varga, 2010).
Bargaining power of suppliers addresses how easily suppliers can drive up the cost of inputs (Chappelow, 2019). In the fashion industry, the power of suppliers is relatively weak as the suppliers are usually low cost labourers and manufacturers who follow the specifications set by the organisation (Pratap, 2018). This means that suppliers are dispensable to organisations such as dUCK, making them replaceable, Bush (2016b) further states “as a result, input prices for this industry are relatively low and will stay there until the global development gap closes up significantly.”