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5 Forces Analysis of Puma

In: Business and Management

Submitted By yeahhanlulu
Words 415
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Puma is one of the key sportswear firms globally that is involved in segments like sports clothing, footwear, and lifestyle products, where its core capabilities are in the field of manufacturing, designing, marketing and distribution of its products. The company has evolved over number of years to become € 2,738.8 million turnover firm in 2008 (FAME, 2009), however its roots can be traced back to the modest beginnings in the firm Gebruder Dassler Schuhfabrik by Rudi and Adi Dassler created in 1924, which later split into Puma and Adidas in 1948 (Keynote, 2009).

Porter’s Five Forces:
Porter’s five forces have been identified as the key competitive forces that define industry structure that is relevant to the business of the firm and therefore is highlighted as micro business environment analysis of the firm (Lynch, 2003). The implementation of the tool has been undertaken for Puma as follows: • Bargaining Power of Suppliers is low as Puma is one of the vertically integrated firms therefore making its own departments suppliers and distributors of its products, while raw material producers offer low differentiation therefore also have very low bargaining power.
• Bargaining Power of Buyers is medium to high as there are low switching costs between different brands therefore allowing opportunity to customers to try different firms for their wardrobe. However, the strong product portfolio and the price mix of Puma means that it enjoys a degree of customer loyalty which offers some barrier to the bargaining power of buyers.
• Threat of New Entrants is high in all the segments due to the fact that the industry has grown to become $68.1 billion at the end of 2008 (Mintel, 2008) that has attracted a lot of players from the fashion, apparel and footwear industries into the sportswear industry.
• Threat of Substitute is low as there is an increasing trend towards…...

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