UMUC Haircuts Stage 1 Since the opening of UMUC Haircuts in 1995, Myra Morningstar has seen an increase in customers and competition from a variety of competitors. Myra would like to expand her business into the gift shop area next door. To remain competitive, Myra recognizes that she needs to improve her current management practices in combination with better scheduling of her employees and customers and management of her supplies. Myra has hired a System Analyst to help her with determining how she can improve her business.
FIVE FORCES ANALYSIS
FORCE
EXPLANATION
(Minimum 2 good sentences)
IMPACT (POSITIVE, NEGATIVE, or NEUTRAL)
AFFECT STRATEGY? (YES/NO)
BUYER POWER
Customers buyer power is neutral.. Customer have the option to go to another competitor in the area.
Neutral
No
SUPPLIER POWER
Supplier Power is high. Supplies are going up in price. Myra has no means of finding cheaper prices. Myra has no control over suppliers.
Negative
Yes
THREAT OF SUBSTITUTE PRODUCTS OR SERVICES
Threat is neutral. Customer can let hair grow or get someone else cut their hair.
Neutral
No
THREAT OF NEW ENTRANTS
Several businesses have open and one more will open within a 5 mile radius, Barrier entry is high because Myra has no IS.
Negative
Yes
RIVALRY AMONG EXISTING COMPETITORS
Threat of substitute services is high, Myra has no means of contacting customers and has no promotions to offer. Rivalry offering same services as Myra’s business.
Negative
Yes

Strategy for Competitive Advantage
Myra has selected Operational Effectiveness strategy for competitive advantage. This strategy will improve the manner in which internal business processes are executed so that the UMUC Haircuts performs similar activities better than rivals. It is supported by Supplier Power, Threat of New Entrants, and Rivalry Among Existing Competitors. Operational Effectiveness Strategy has an impact on the Porter’s Five Forces of Analysis. Buyer power is neutral because Myra’s customers can switch to another competitor if UMUC Haircuts has no time for them. Supplier power is high. The supplier has increased the price of the materials that Myra purchases for UMUC Haircuts. Myra has no power over supplier. The threat of substitute products or services is neutral because competitors are offering the same services as UMUC Haircuts. Such as the expensive Spa with hair styling and manicures or the news that a new Hair Cuttery offering men’s and women’s haircuts and styling that will open. Threat of new entrants is high. According to (Quickmba.com, 2015), when industry profits increase, we would expect additional firms to enter the market to take advantage of the high profit levels, over time driving down profits for all firms in the industry. New business around Myra’s UMUC Haircuts are starting to appear. Rivalry among existing competitors is high because other business are offering the same services and new competitors are starting up.
Process to be Improved
Myra has identified that to be better than her competitors, Myra needs to improve Scheduling employees and customers. Myra also selected the strategy of Operational Effectiveness which is to improve her standard of operations internally and goes hand in hand with the fundamentals of her business. A technology solution that can help Myra’s UMUC Haircuts can be a computer in her back office. With a computer, Myra can easily use programs to schedule employees as well as customers. Myra can schedule and keep track of how her employees work and schedule customers to the employees so that customers are satisfied and don’t switch to the competitor. She can also find a new supplier that supply her with cheaper but yet good quality supplies.

STRATEGY FOR COMPETITIVE ADVANTAGE: Operational Effectiveness
PROCESS TO BE IMPROVED: Scheduling of employees and customers.