As the owner of Boys and Girls Happiness, a child furniture manufacturing enterprise, seeking a loan from a bank to finance the construction and operation of three new store locations, you have been asked to provide the loan officer with a brief analysis of the competitive environment in child furniture. 1. Draw a five-force diagram for the child furniture manufacturing, and briefly discuss the nature and strength of each of the five competitive forces in child furniture. 2. Do whatever Internet research is required to expand your understanding of competition in the child furniture industry and do a competent five-force analysis.
Threat of new competition
In any type of industry, businesses have to be alert to new comers. People might see the profitability of said industry and will feel attracted to embark into it. This means companies need to establish a brand equity and a brand loyalty from customers in order to suffer less from new competition that are establishing on the industry.
Threat of substitute products
The child furniture industry has threats from substitute products mainly from alternatives such as adult furniture or teen-ager furniture. Parents might buy future-ready furniture for their children because of children’s non-stop growing. Parents might think they will save money if they just buy bigger furniture in order to save time and money instead of having to buy furniture for babies, then for young children, and then for teenagers and young adults.
Bargaining power of customers
Because of the economic times we are living in, customers dictate market price mainly because people are looking where to cut costs. It is hard for people these days to purchase high end products as they did before; they are looking to get a very good item at an extremely low price.
Bargaining power of suppliers
Suppliers are applying pressure to retailers and