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Threats of New Entrants/ Entry Barriers

Highly Medium Medium Highly


Factors Neutral Comments ScoreWeighted
: Score
Unfavorable Unfavorable Favorable Favorable

Economies of scale Low 5 High Successful companies are operating at their full capacity. 29 3.63

As the market is highly segmented and availability of low range


Capital required Low 2 High products till premium range, not much capital is required to enter
the market segment.
Access to distribution channel is ample and thousands of
Access to distribution channels Ample 1 Restricted distribution channels, i.e retail chains, franchises, dealers,
wholesale dealers.
Large number of competing brands are present and pose great
Expected retaliation Low 5 High
threat for new entrants.
Various type of differentiated products are available in market from
Differentiation Low 4 High
many vendors even within the same category.
Indians are not much health conscious and not pay much focus on
Brand Loyalty Low 2 High
footwear quality and mainly consider prices.
Industry was labor intensive due to availability of cheap and skilled
Experience Curve Insignifacant 5 Significant
labor in India, old players are making more profits.
Indian govt. did not allow foreign companies to enter the market
Government Action Low 5 High prior to economic liberalization making it ideal breeding ground for
local players

Exit Barriers
Highly Medium Medium Highly
Factors Neutral Comments ScoreWeighted
: Score
Unfavorable Unfavorable Favorable Favorable

Specialized assets are not very costly and hard to get rid of so its
Specialized Assets High 4 Low 12 3.00
significantly easy to sell them off.
Foxed cost of exit is also not high and companies can close off
Fixed cost of exit High 4 Low
their businesses by following normal Gov. rules.
Foreign companies are coming up with joint ventures/association
Strategic interrelationship High 2 Low
of local companies.
License hurdles & govt. prohibition for foreign companies to enter
Government Barriers High 2 Low or exit industry is under monitoring by Government bodies and
associations.
Competitive Rivalry
Highly Medium Medium Highly Weighted
Factors Neutral Comments Score :
Unfavorable Unfavorable Favorable Favorable Score

Composition of competitors Equal Size 4 Unequal size They are unequal because of their financial variances 21 4.20

Market growth rate is exceptionally good, specially in 90s where it


Market growth rate Slow 5 Fast
was 20%.

Domestic with ventures (i.e. with foreign manufacturers with


Scope of competition Global 5 Domestic
collaboration of local players and independent local companies)

Storage costs are high due to the trend of storing production at


Fixed Storage Cost High 2 Low
ware houses around the nation.

Because of intensive competition, players are trying to produce


Degree of differentiation Commodity 5 High
differentiated products.
Power of Buyers
Highly Medium Medium Highly
Factors Neutral Comments Score : WS
Unfavorable Unfavorable Favorable Favorable

Well-penetrated dealer network. For Bata India only they were


Number of important Buyers Few 5 Many 13 2.60
close to 10,000 dealers all over India.

Capital intensiveness is not high and a buyer can also opt to go


Threat of backward integration High 2 Low
for its own manufacturing.

Product differentiation was there, catering different needs of


Product Supplied Commodity 1 Speciality
customers for normal, formal, sports, casual products.

Long term contracts are not their between manufacturer and


Switching cost Low 1 High
buyer plus cost to switch is also not high.

Profit margins for buyers are not very high and buyers are relying
Profit earned by buyers High 4 Low
on mass sales.
Power of Suppliers
Highly Medium Medium Highly
Factors Neutral Comments
Unfavorable Unfavorable Favorable Favorable
Score : Weighted Score
Suppliers are easily available for the supply of Leather, rubber and
Number of important suppliers Few 4 Many 15 3.75
other support materials.
Suppliers are in good quantity with various sizes and types and its
Switching cost High 5 Low
easy to switch from one to another.

Availability of substitutes Few 4 Many Substitutes are their, for example leather have non-leather material

Threat of forward integration is their because its not very difficult to


Threat of forward integration High 2 Low
go into manufacturing even by employing limited capital.
Threats of Substitute Product
Highly Medium Medium Highly
Factors Neutral Comments Score : ws
Unfavorable Unfavorable Favorable Favorable

As the demand for the product is high and the product is


Threats of obsolescence of industry's
High 5 Low a consumable item, its demand will stay along with 16 4.00
product
categories.
Aggresiveness of substitute products Substitute products are equally in competition and
High 5 Low
in promotion playing an important role in the industry.

Indian shoe industry is mostly price sensitive and


Switching cost Low 1 High consumer mainly consider low price products and easily
switch to other products when ever they want.

Customers want products that are low price and within


Percieved Price / value High 5 Low
considerable buying power.
Over All Industry Attraction
Factors Unfavorable Neutral Favorable Comments
Score : WS

Entry Barriers 3.63 21.18 3.53

Exit Barriers 3.00

Rivalry among existing firms 4.20

Power of Buyers 2.60

Power of Suppliers 3.75

Threats of Substitute product 4.00


BATA India
Lakhani Ltd.
Liberty
Woodland
Phoenix
Addidas Nike Reebok Puma
Strategic Factors
Weight
R WS R WS R WS R WS R WS R WS R WS R WS R WS
Production 0.25 5 1.25 4 1 3 0.75 4 1 2 0.5 1 0.25 1 0.25 1 0.25 1 0.25
Differentiation 0.20 5 1 4 0.8 4 0.8 2 0.4 2 0.4 2 0.4 2 0.4 2 0.4 2 0.4
Distribution Network 0.15 4 0.6 3 0.45 3 0.45 4 0.6 2 0.3 1 0.15 2 0.3 1 0.15 1 0.15
Product Quality 0.10 5 0.5 3 0.3 5 0.5 2 0.2 2 0.2 4 0.4 4 0.4 3 0.3 3 0.3
Financial Position 0.30 4 1.2 3 0.9 4 1.2 4 1.2 1 0.3 4 1.2 4 1.2 3 0.9 4 1.2
Total 1.00 4.55 3.45 3.7 3.4 1.7 2.4 2.55 2 2.3
External Factor Analysis Summary (EFAS)
External Factors Weight Rating Weighted Score Comments
Opportunities
E-Commerce 0.1 2 0.2 Internet and electronic commerce is a new venue to sell and should be adopted.
Acquisition of small Producers 0.05 2 0.1 Small producers can be acquired to gain more market penetration.
Capturing Market where no other potential competitor exists 0.1 3 0.3 Monitor market area that are still left to capture and jump in.
Innovative products in women footwear 0.05 4 0.2 Bring more features and product differentiation in women footwear
Marketing and advertisement structure is not properly developed and needs re-
Effective Marketing Campaigns 0.1 4 0.4
vitalization.
Threats
Customer dissatisfaction 0.1 4 0.4 Customers are more price conscious.
Price war with competitors 0.1 4 0.4 Competitors and specially local ones are on low price structure.
Increasing Competitors 0.05 3 0.15 New entrants are coming in.
Political instability 0.05 2 0.1 Political instability can bring problems in over all business structure.
Economic threat 0.1 3 0.3 Economic downfall specially in 90s played key role in business growth.
Changing customer preferences 0.1 3 0.3 customers in India are not very much product focused.
International vendors are competing specially China with low cost and non-leather
0.05 3 0.15
Threat of international substitutes and local substitutes products.

Total Weighted Score 0.95 2.85


Internal Factor Analysis Summary (IFAS)
Internal Factors Weight Rating Weighted Score Comments
Strengths
Brand image 0.15 5 0.75 Good Brand image all over India.
Good Quality 0.15 4 0.6 Prime focus on quality.
Diversity with ranges in running, training, court, basketball, foorball and outdoor footwear of entire family. 0.1 3 0.3 Trying to enter in all market segments.
Financially strong 0.05 3 0.15 Financial strength is good due to backing of parent company.
Conveniently accessible outlets in various part of the country 0.05 4 0.2 Strong dealer and stores network all over India.
Targeting all income segments 0.1 3 0.3 Trying to capture all sort of customers with diverse buying powers.
Provide training for managers and employees 0.05 3 0.15 Trying to train management to bring modernization in all cadres.

Weakness
No continuity of leadership 0.1 4 0.4 Winning leadership lacks and a direction oriented leader is required.
Decreasing Sales 0.1 4 0.4 Sales are decreasing in late 90s.
No proper planning regarding advertisement 0.1 4 0.4 Focus on marketing campaigns is required.
No variety in fashionable shoes 0.05 3 0.15 bring more innovation in fashionable market segment.

Total Weighted Score 1 3.8


TOWS
Strengths Weaknesses
Brand image
Internal Factors (IFAS)
Good Quality
Diversity with ranges in running, training,
court, basketball, foorball and outdoor
footwear of entire family.
Financially strong
Conveniently accessible outlets in various
part of the country
Targeting all income segments
Provide training for managers and
External Factors (EFAS)
employees

Opportunities
E-Commerce
Acquisition of small Producers
Capturing Market where no other potential
competitor exists
Innovative products in women footwear
Effective Marketing Campaigns

Threats
Customer dissatisfaction
Price war with competitors
Increasing Competitors
Political instability
Economic threat
Changing customer preferences
Threat of international substitutes and local
substitutes
SPACE
Financial Strengths (FS) Values
Return on Equity 2
Y-Axis Ease of Exit 4
Case Flow 2
Liquidity 3
2.75

Industry Strengths (IS) Values


Growth Potential 6
Profit Potential 5
Financial Stability 3
X-Axis Technological Know-How 5
Resource Utilization 5
Capital Intensity 4
Ease of Entry 5
Productivity, Capital Utilization 5
4.75

Environmental Stability (ES) Values


Technological Stability -2
Demand Variability -1
Y-Axis Price Range of Competitive Products -1
Barriers to Entry -5
Competitive pressure -1
Price Elasticity of demand -2
-2

Competitive Advantage (CA) Values


Market Share -3
Product Quality -1
Product Life Cycle -4
X-Axis
Customer Loyalty -6
Competition's Capacity Utilization -3
Technological Know-How -2
Control over suppliers and Distributors -1
-2.86

Y ES+FS 0.8
X IS+CA 1.9
CA
-4.5 -4 -3.5 -3 -2.5
FS
6
5.5
5
4.5
4
3.5
3
2.5
2
1.5
1
IS
-2 -1.5 -1 0 1 1.5 2 2.5 3 3.5 4 4.5
-1
-1.5
-2
-2.5
-3
-3.5
-4
-4.5
-5
-5.5
-6

ES