Question

1. Table 3-7 (Page 72) provides a list of 15 conditions that cause high rivalry among competing firms in an industry. In the women’s handbag business, what in your opinion are the top five (among the fifteen) conditions contributing to Coach’s demise?
2. Figure 3-3 (Page 71) reveals Porter’s Five Forces Model. Rank order the five forces from 1 = most impact to 5 = least impact to reveal your opinion regarding which forces are contributing most to Coach’s demise.

Answer 1

provides a list of 15 conditions that cause high rivalry among competing firms in an industry. In the women's handbag business, what, in your opinion, are the top 5 (among the 15) conditions contributing to Coach's demise?

The intensity of rivalry among competitors in an industry refers to the extent to which firms within an industry put pressure on one another and limit each other's profit potential.There are numbers of structural factors that can affect industry rivalry and among them, the top five conditions that contribute to the women’s handbag business are when consumers can switch brands easily, when competing firms have similar capabilities, when rivals sell similar products/ services, when rivals have excess inventory and when consumer demand is falling.

If brand loyalty is insignificant and consumer switching costs are low, then this will surely intensify industry rivalry like in the case of Coach, Inc. It is easy for consumers to switch from one company to another. Next is when competing firms have similar capabilities because rivalry is high when there are a lot of competitors that are roughly equal in size and in power, which is when the industry is growing slowly and when consumers can easily switch to competitors offering for little cost which happened to Coach that erodes its market share. Another thing is when rivals sell similar products/ services because the existence of products outside of the realm of the common product boundaries increases the propensity of customers to switch to alternatives and this will ultimately affect an industry’s profitability and should therefore also be considered when evaluating the industry’s attractiveness. And lastly, when rivals have excess inventory and when consumer demand is falling because the products being purchased are standard or undifferentiated.

reveals Porter's Five Forces Model. Rank order the five forces from 1 = most impact to 5 = least impact to reveal your opinion regarding which forces are contributing most to Coach's demise.

Porter’s Five Forces analysis is a framework that helps analyzing the level of competition within a certain industry. is a model that identifies and analyzes five competitive forces that shape every industry and helps determine the competitive strength and position of a business organization. In the case of Coach, the forces are ranked as follows:

1. Rivalry among competing firms

Since this is considered as the most powerful of the five competitive forces, it can be seen that the industry of women’s handbag business is extremely competitive that even cause the market price of Coach to erode.

2. Potential development of substitutes products

Coach is in close competition with producers of substitute products with other industries. The presence of substitute products puts a ceiling on the price that can be charged to consumers will switch to the substitute product.

3. Potential entry of new competitors

Whenever new firms can easily enter a particular industry, the intensity of competitiveness among firms increases that is why Coach formulated strategies to protect its market shares.

4. Bargaining power of consumers

The bargaining power of consumer represents a major force affecting the intensity of competition in an industry. In the case of Coach, it acquired a footwear brand to revamp its business as well as its marketing.

5. Bargaining power of suppliers

Coach have its partnership with its suppliers in order to gain control or ownership of suppliers in order to negotiate and assist each other with reasonable terms.