Using the Five Forces Model of Competition - Assignment Example

Automobile manufacturers can easily change suppliers at will because the options are numerous. For instance, Japanese car manufacturer Toyota maintains more than ten different suppliers in America, with the major qualifications being the delivery, cost, and quality of the products (Burns and Marx, 2014). In any case, if a supplier cannot satisfy these fundamental conditions, they can be quickly replaced with readily available and more capable options.

In recent times, however, the ground appears to be shifting in favor of suppliers. With frequently declining capacities and constantly increasing production schedules, suppliers have started enjoying the privilege to accept the clients and contracts they desire and rejecting those they do not favor. This is inspired by prices or the wider conditions of working with specific manufacturers. In summary, the balance of power is starting to shift in favor of suppliers (Su, Guo, and Ma, 2011). Another factor that has led to increasing supplier power is the aftermath of the 2008 financial crisis. Widespread plant shutdowns resulted in and continue to cause shortages in vital parts; this helps suppliers’ cause.

Strategic Planning in Sports Apparel

The strongest competitive force is the bargaining power of buyers. In almost all industries and businesses, buyers dictate the most important aspects of enterprise growth and development. Some of these aspects include price and marketing (Thompson, Peteraf, Gamble, and Strickland, 2014). The bargaining power of buyers is the strongest because it is easier to replace or manage all other stakeholders than buyers. More often than not, buyers’ preferences are the biggest determinants of the goods and services offered and the methods involved in the sale of those goods and services.

Under Armour’s top three biggest rivals to watch are Nike, Adidas, and Puma. This is because those three firms not only enjoy the largest market shares but also manufacture highly competitive products that ensure they maintain their presence in the industry (Thompson, Peteraf, Gamble, and Strickland, 2014). Another reason they are the strongest rivals is their financial muscle, which they can use to cause major shifts in the industry.

Adidas and Nike have more or less the same strategy, which is to manufacture sports apparel that any consumer across the world can identify with and buy. Both companies also place a strong emphasis on international markets, adopting a “think global, act global” mentality. Nike and Adidas also employ differentiation and consumer profiling to manufacture and sell their products (Thompson, Peteraf, Gamble,e and Strickland, 2014). Under Armour is more “local” as compared to Nike and Adidas because most of its operations and sales are in the United States. Although it sells abroad, its focus has always been to conquer the domestic market first, something that the two rivals seem to have done already (Thompson, Peteraf, Gamble,e and Strickland, 2014). Under Armour also uses a cost leadership strategy in manufacturing and selling; most of its products are priced lower than Nike’s and Adidas’.

From the financial data, it is clear that Nike has been the best performer. Under Armour has several cues it can take from its rivals. The most important are an efficient and effective, large-scale distribution network, effective management of multiple divisions and operations, highly effective and stable marketing divisions, awareness of and readiness to face up to competition, and a “think global, act global” approach to expansion (Thompson, Peteraf, Gamble and Strickland, 2014). Read More