External Environmental Analysis of Hallensteins
Hallenstein’s operates in an industry which is highly competitive. The performance of the market is highly affected both internal and external environmental factors. However, macro-factors have the potential of affecting the economic productivity of the firm (Dun & Bradstreet, 2007). These external factors can be analyzed using the porter’s fives forces model. This model is essential in conducting an industrial analysis of the clothing market of New Zealand. Using this model, Hallensteins economic and industrial performance can be analyzed as discussed below.
Just like the rest of the firms, globalization has affected the clothing industry of New Zealand. Using the porter’s model, competitive rivalry in the clothing industry (especially men’s wears) affects the profitability and economic potentials of growth and development of Hallensteins. Amid this intense competition, Hallensteins has remained profitable over time. As noted by the CEO, the changes in the fiscal and monetary policy adopted by the government of Australia and New Zealand had impacted on the purchasing power of the consumers (Bollard, 2002). Hallensteins faces still competition from fashion and clothing firms such as DHL Express Fashion Export Scholarship. The clothing industry of New Zealand is a perfectly competitive industry with free entry and exit. The fashion and men’s wear traded in this industry have close substitutes which are highly differentiated. This allows for stiff and fair competition in the industry.
The power of suppliers
The suppliers determine the success of an industry. This is the same situation in the fashion industry where Hallensteins operates. Hallensteins depends on both imports and exports as their main suppliers. This implies that the industry operates in a fairly competitive industry with respect to supplies (Roy, 2009). Therefore, suppliers determine the success of Hallensteins through manufacturing quality products for both men and women and at the same time ensuing study supply of the much needed fashion and clothing essentials.
The power of buyers
A market only exist where there are willing and able buyers. Buyers are highly sensitive to price, quality and taste and preferences. For Hallensteins, the main group of customers is men. Given the competitive nature of this industry and the free accorded to the buyers, Hallensteins success rests on how well it match the changing needs of the customers in the fashion industry. Hallensteins target men as the most potential group of consumers because of their relatively higher purchasing parity and economic dominance (Rutland, 2005).
Threats of substitutes
Customers in the fashion and clothing industry of New Zealand have a variety of products and clothes to independently choose from. This gives them a chance of satisfying their diverse interests and preferences. For instance, there are range of men’s shirts, coats, trousers, and shoes which consumers can choose form. Substitutes become a threat when their prices are relatively cheaper, and the consumers are ready to make a product switch.
New Entrant Threat
Since Hallensteins operates in a perfectly competitive industry with no legal barriers to entry or exit, other international fashion firms are free to enter the clothing industry of New Zealand. The entry of new firm or manufacturers is a big threat to the future success of Hallensteins as this would imply stiffer competition for the limited resources (Roy, 2009).