Michael Kors Case Study

Michael Kors Case Study
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Michael Kors Case Study
1.0. Porter’s Five Forces
1.1. Potential development of Substitute Products
* With the presence of other high-end fashion retailers like Ralph Lauren, Gucci, Coach, Louis Vuitton, Michael Kors can face competition in products such as handbags, women’s accessories because these are niche products of brands mentioned above(David and David, 2017).
* However, in general, Michael Kors does not faces immense and immediate threat of substitute products because the consumers of Michael Kors are indifferent on price, especially in Europe and North America, which are its strongholds(David and David, 2017).
* Lastly, it has not marketed and specially focused on the Asian region, which is the market for mid-range to affordable price category. Hence, if there are substitutes or rip-offs in this market, it would have no significant short-term effect on Michael Kors’ financial and business health.
1.2. Bargaining power of suppliers
* Since Michael Kors is a major player in the industry, it operates in which means that it generates an extraordinary amount of business. Moreover, its raw material consumption is also immense; hence, suppliers would be vying to get into business with them. Hence, suppliers would have weak control over the company(Michael Kors, 2018).
* Secondly, the operations of the company are spread over many continents have manufacturing facilities globally. Hence, on the back of huge geographical exposure and advantage, they can source their raw material from different sources, weakening the control of the suppliers(David and David, 2017).
* However, Michael Kors happens to be a profit conscious and quality conscious company; hence, they would want to make sure that the quality of raw materials is not compromised. Moreover, due to stiff competition with their rival brands, Michael Kors would be interested in keeping their cost minimum. Hence, these two prime factors can position suppliers to leverage their bargaining power.
1.3. Rival among competing firms
* The industry in which Michael Kors is operating is a niche market with niche products. Each brand is known for its specialized product. Hence, there is minimal competition amongst the companies in terms of providing substitutes to Michael Kors products.
* However, the high-end fashion industry has had almost stagnant growth which means that to increase revenues, firms would have to eat into each other’s shares. Hence, there could be intense competition between firms(David and David, 2017).
1.4. Bargaining power of consumers
* The products offered by Michael Kors happens to be highly differentiated niche products. The appeal of the products and services offered by this brand is unique to this customer base. Hence, consumers have little or no space to manoeuvre with their fashion choices(Cartner-Morley, 2014).
* However, the income group, which primarily drives Michael Kors' sales are high-end consumers with huge disposabl...