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Poh Kong Industry Analysis

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Michael Porter’s Five Forces is a model used to analyse Poh Kong industry’s competitiveness.
Porter’s Five Forces analysis looks at five key areas mainly: the threat of entry, the power of buyers, the power of suppliers, the threat of substitutes, and competitive rivalry.
Threat of new entrants: High
This threat refers to the extent how easy or difficult is it for new entrants to begin to compete, which barriers do exist. Retailers and manufacturers of Poh Kong faces strong competitive pressure from 3000 local gold jewellery retail outlets and import products. Around 1500 of gold jewellery retailers are members of Federation of Goldsmith and Jewellers Association of Malaysia. The Group also faces moderate competition from manufacturers of gold …show more content…

The power of an industry’s important buyer groups based upon conditions regarding its market situation and the relative importance of its buying from the industry as compared with its whole business. Customers have low bargaining power related to price when they shop at luxury stores and reluctant to seek for options, because of such a limited alternative. Poh Kong has gained intense pricing power. Its raising gross margins indicate that it passes on its greater input costs to its customers. Poh Kong customers may not get the exclusivity of the Poh Kong brand although they are free to shift to any other …show more content…

In the jewellery industry companies that are considered mass merchandisers or limited line jewellers usually compete on the basis of price. Specialty jewelry companies have found high success competition in quality rather than price. Besides that, brand recognition is the critical asset. Next, there is a high growth rate in the industry as the jewelry industry expands internationally. The top competitors in the industries are developing many stores with the purpose of raise market share and capitalize on competition. This has created a spiritless industry that now competes by taking market share away from the other players and lead to price wars among existing firms in the industry. The switching costs and degrees of differentiation lower as the industry grows. These low degrees of differentiation affect consumers buying behavior based on price rather than

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