Question

What is an analytical tool that aids in understanding the various competitive forces that affect strategic planning? Although all organizational sectors potentially face similar kinds of competitive forces, each sector and/or organization may face unique factors that affect competitive pressure at any given time, depending on varying circumstances.

For instance, you may investigate “supplier bargaining power from foreign markets” or “dealing with emerging companies in the cell phone (or tech) industry.”

Answer 1

I hope everyone is having a great week so far. This week we were learning more about Porter’s Five Forces model. It is important to use an analytical tool in order to identify threats to your business and how to address them. When an organization knows their competition, they will be able to better select their strategic plan. The Five Forces model will look at five specific factors that will determine whether or not a business can be profitable based on the other businesses in the industry. The five forces are competitive rivalry, bargaining powers of supplied, bargaining power of customers, threat of new entrants, and threats of substitute products or services.

For the purpose of this forum post, I decided to research more about threats of new entrants in the sports apparel industry. Some research indicates that large capital costs are required for branding, advertising, and creating product demand (Martin, 2018). This will limit the amount of new manufacturers in the sports apparel industry. While new entrants will be limited, existing companies could enter the performance market such as Under Armour, Nike, or Adidas.

According to Market Realist, the sports goods industry is highly competitive and fragmented with many players. The products are differentiated based on innovation and brand value. When the companies have product differentiation and brand image they will be able to charge higher prices and reduce the risk of substitution from their competitor’s products. For example, Under Armour has been working on building their brand but are significantly behind NIKE. Under Armour ranks number five in the “Forbes Fab 40: The World’s Most Valuable Sports Brands 2014”. Under Armour will need to work on their competitive edge in order to gain more momentum and help to reduce the threats of new entrants in the market