BACHELOR OF ARTS (HONS) IN BUSINESS MANAGEMENT BABM BARTCH 07
STRATEGIC MANAGEMENT ENVIRONMENTAL ENVIRONMENTAL ANALYSIS
ODEL
GROUP MEMBERS SATHEESHA RAJALINGAM FAZLAN MARIKKAR ADHUHAM RASHEED KARTHIGA THURAIRAJAH PRASAD FERNANDO SAAD HUSSAIN ZAIN NOORDEEN
ENVIRONMENTAL ANALYSIS OF ODEL Executive summary Odel is one of the most successful brands that have emerged from Sri Lanka till this date. Odel SELECT is a department devoted to dressing customers with a taste for high fashion. It displays international designer wear by world renowned fashion icons. The analysis of potter’s five forces on Odel revels that Odel has high bargaining power towards their suppliers yet the competitor rivalry in the industry, thereat of the new entrant, and consumer bargaining power is high. Meanwhile the threat of a substitute remai ns at medium. The report does not contain a full SWOT analysis but only the strengths and weakness of Odel. It is important for Odel to maintain these strengths mean while re-designing their strategy to overcome their weakness.
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ENVIRONMENTAL ANALYSIS OF ODEL
Table of Contents Executive summary .................................................................................................................................. i 1
Introduction..................................................................................................................................... 1
2
Potters Five Forces Analysis for ODEL ......................................................................................... 1 2.1
3
ODEL’s five forces analysis ................................................................................................... 2
SWOT analysis of ODEL ............................................................................................................... 4 3.1
Strengths ................................................................................................................................. 4
3.2
Weaknesses ............................................................................................................................. 5
4
Conclusion ....................................................................................................................................... 6
5
Reference ........................................................................................................................................ 7
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ENVIRONMENTAL ANALYSIS OF ODEL 1 Introduction One of the most innovative brands that have originated in Sri Lanaka to this date “Odel” was first established in 1990. However the concept of Odel began to take shape in 1989 when Otara Gunewardene started selling clothes to her family and friends, from the boot of her own car. During the time Otara saw something only a few could see, which is the immense potential for retailing a range of stylish clothing to the fashion conscious Sri Lankan. In 1995 the first branching out of the Odel chain of superstores was opened at Majestic City. Yet the business got its momentum in 1999 when the flagship store at No. 5 Alexandra Place, Colombo 7, was launched in 1999. The splendid colonial architecture build with modern glass and metal extensions which spans across 33,000 sqft, not only provided a solution to lack of space to operate at larger scale but an emergence of seamless and eclectic fusion of culture. Tired feet and hungry tummies can treat themselves to a host of refreshing goodies located around the store, as well as at the food court, Boulevard. Today at the stores of Odel offer its customers Ladies wear, Menswear, Kids wear, Home ware, Delight - Sweet indulgences from chocolates to exotic nuts, Perfume & Cosmetics, Books & Music, Shoes & Handbags, Jewellery & Accessories, Luggage, Food and Stationery, Gift Wrap & Souvenirs (Odel, 2011).
2
Potters Five Forces Analysis for ODEL
Porter’s five forces is a strategic model which was developed by Michael Porter to determine the state of competiveness in a market (Tony, 2006). The model is a flexible tool which could be used to analyze a firm opportunities and overall competitive advantage no matter which industry or market the firm operates. The model is c omprised in five forces which are
Revelry New entrants
End users/Buyers
Suppliers
Substitutes
A graphical representation of potter’s five forces model are shown on next page in figure 1.
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ENVIRONMENTAL ANALYSIS OF ODEL Potential Entrance
Bargaining power
Threat of rivalry Intensity and rivalry
Suppliers
Threat of substitution
Buyers
Bargaining power
Substitution
Figure 1 Potter Five Forces model
2.1
ODEL’s five forces analysis
Five Forces
Impact High
Medium
Description Low
Bargaining Power of
-The power of ODEL in the market place and
Suppliers
the large quantities it purchases from the suppliers and the suppliers are not ready to lose the opportunity to supply to such a powerful dealer. -There are over 1000 suppliers and 200 plus factories locally and globally supply Odel with the incredible range of products which give Odel the leverage and Options (Odel, 2011) -Odel has their own manufacturing facilities
Bargaining power of
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-The degree of moving toward other options
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ENVIRONMENTAL ANALYSIS OF ODEL Buyers
is very high where there are lot more fashionable wear stores in the island such as Hameedias, Crocodile, Levis, Roma Four and House of fashion who offers similar product with no or little difference
and are also
located in several places Threat of
-As stated earlier customers have many
substitution
options to choose. -But the advantage which ODEL has is the reputation that they have gained by offering quality goods, where this has made ODEL to thrive in the market place yet other fashion chain market has the capacity to distribute international brands like Gucci, Prada, Armani yet their target market currently is different.
Threat of new
-The
fashion
industry
is
expected
to
entrance
experience a growth in the Sri Lankan economy, thanks to the influence of social media and the end of civil war. Hence this growth might attract international companies and brands to such Marks and Spencer to enter the market.
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ENVIRONMENTAL ANALYSIS OF ODEL Threat of inter
-The main players in this industry are
rivalry
Hameedias, Crocodile, Levis, Roma Four, House of fashion, Fashion bug, Glitz etc.., where some of them markets own brands and well-known brands such as Levis, Reebok, Adidas. Some of them only market wellknown brands where they are the authorized distributors in the island for those brands who have built their brand image in the market. All these competitors offer similar product with little or no difference to customers. Hence this has created a price war in the industry.
3
SWOT analysis of ODEL
3.1
Strengths
An affluent customer base and a good tourist customer base
Recognized Own brands like ODEL, Otone, Backstage and Embark
A diversified product Mix with over 1500 products
Being the ambassador for reputed global brands like Doir
Being the only major global designer brand retailer in Sri Lanka
Having their own manufacturing facilities
High brand equity
Good relationship with local designer wear brands
A qualified marketing force with knowledge and experience in designing effective advertising and promotion campaigns
Having an online shop
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ENVIRONMENTAL ANALYSIS OF ODEL 3.2
Weaknesses
Lack of stores – the stores are only located in Colombo which limits the customer acquisition
Main target group is tourists
Lack of brand recognition in international market
Lack of customers loyalty towards the business
Spending a huge expenses on interior designing
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ENVIRONMENTAL ANALYSIS OF ODEL 4
Conclusion
Since the potters five forces identify that, threat of inter rivalry, threat of new entrance, and bargaining power of buyers are high the authors believe that Odel should go building their strategy on differentiating their product image. Also the overall the biggest threat to Odel is form international brands entering the market or a launch of a substitute product from international company. Another area where odel have to stay focused is overcoming their weakness. In a situation where Odel has the weakness of lack of customer’s loyalt y a new entrant from a branded company could easily lead a huge loss the market share of Odel. Meanwhile it is also important for Odel to be focused on maintain their strengths.
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ENVIRONMENTAL ANALYSIS OF ODEL 5
Reference
Odel (2011), Cooperate Odel - About us[ONLINE] Available http://www.odel.lk/corporateodel/about-us [Accessed25th May 2013] Tony.L(2006). Michael Porter’s “Five Forces” Model[ONLINE] Available http://www.cbe.csueastbay.edu/~alima/courses/3551/MurderCleaners/FiveForcesPorter.pdf [Accessed 25th May 2013]
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