As of 2006, Coach Inc. operates in premium handbag and accessories industry. The following are Porter’s five forces analysis and PESTLE analysis of this industry:
Bargaining power of suppliers: medium risk
Coach has a rigorous process to select its manufacturing partners; this fact implies that the suppliers do not have strong bargaining power in this industry. However, it is crucial for luxury goods companies to keep the quality standard and maintain this consistency. Uncertainty in availability of raw materials, disruptions or delays in shipments, loss or impairment of manufacturing sites, product quality issues will all impact the product delivery standard in this industry (Coach, Inc. 2006). Therefore there is a trade-off on suppliers’ bargaining power.
Bargaining power of buyers: high risk
Luxury buyers generally have high standards for product quality and customer service. This industry is a mature market with many competitive players thus consumers have many choices; declining customer base will easily trigger a considerable decrease in revenue.
Threat of substitute products: medium risk
The demand for premium handbag and accessories are inelastic compared to other goods that serve to satisfy basic needs. Consumer can always go for lower priced non-design brands as opposed the expensive premium brands. At the same time, counterfeits industry was growing fast during this time, posing great risk to luxury designers.
Intensity of rivalry among competitors: medium risk
The industry is dominated by many mature European brands; the companies normally have a long history and would like to maintain its heritage and differentiate itself from its peers. Thus premium handbag and accessories companies are not likely to go ...
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...ach might have lower profit margin than its peers, which urge Coach to reach out to new markets to sustain its revenue growth. Especially with the company going public, investors were expecting high and stable returns.
C.J.Rewick. “Trying new accessories,” Crain’s New York Business June 21, 1999, Issue 25.
Coach, Inc. (2006). 10-K Annual Report 2006. Retrieved November 21, 2014, from http://services.corporateir.net/SEC/Document.Service?id=P3VybD1hSFIwY0RvdkwyRndhUzUwWlc1cmQybDZZWEprTG1OdmJTOWtiM2R1Ykc5aFpDNXdhSEEvWVdOMGFXOXVQVkJFUmlacGNHRm5aVDAxTVRNek1qZzRKbk4xWW5OcFpEMDFOdz09JnR5cGU9MiZmbj1Db2FjaEluYy5wZGY=
Justin Shack, “The Bes CEOs’ in America”, www.globalpaymentsinc.com, January 2005
LVMH Group. (n.d.). Retrieved November 21, 2014, from http://www.lvmh.com/the-group/lvmh-group
Moganty, S. (n.d.). Coach Inc.: From Staid to Stylish. 15-15.
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