Myer Holdings Limited is an Australian based departmental store which has its retail stores in different locations all over the country. The company was incorporated by Sidney Myer and Elcon Myer in the year 1899 in Bendigo, Victoria. A huge variety of products for different segments of population has been sold by this company (Myer, et al., 2010). Number of members of this company is more than 5 million and its annual earning is around $3.2 billion. Numerous personalities served as brand ambassador for this company.
In the recent years, the marketing position and market share of the company has declined tremendously due to the emergence of online selling portals like Amazon, and others. The entrance of several other companies like H&M, Sephora also emerged as a threat for the company. A lot of modifications has been induced on the company for which has failed in adapting those changes. Further written down of assets can be expected for the company because a lot of investigation has been done on the company (Shankar, et al., 2011). The prices of the shares of the company also shows huge decline. Due to this, the company has failed in attracting the investors
Micro environment analysis for the company can be done by using Porter’s five forces analysis. This analysis provides help in analyzing the level of competition for the company. It also provides help in developing knowledge about the factors or forces which provides dimensions to the business.
Threats of New Entrants: High level of risk is faced by the Myer Company due to increasing demand possess by the increasing population. Presence of large scale companies like Myer Company makes the entry of small retailers quite difficult. The company enjoys economies of scale due to large market share. The Myer Company has also emerged as threat to the new company due to the increased level of customer loyalty.
Threat of Substitutes-High: A large number of substitutes are available in the market for the products that the Myer Company tends to sell. Usage of new technologies in the production lower downs the cost production which makes availability of new and improved products at reduced costs. The main strategy that is used by Myer Company to gain the competitive advantage is product differentiation.
Bargaining Power of Suppliers: Retail industry does not get suffered too much by this force. Vendors are required to supply improved quality of products at reduced costs. Reducing overall costs and increasing the level of efficiency are the main focuses area of the Myer Company (Baas, 2014). The bargaining power of the company positively influenced by availability of large number of substitutes and high deliberation existed among vendors.
Bargaining Power of Customer: Buyers generally bargain for those products which possess lower quality. Customers shift themselves to the malls and retail stores when they are not required to pay switching costs. Company like Myer cannot increase the price of the products even though it has captured big share of market, because the number of potential firms in the industry has increased significantly and customers can easily shift to any other brand. Competitive advantage can be enjoyed by Myer Company y offering unique and diversified range of products.
Industry Rivalry: Balanced competition has existed between Myer and its rivals. Competitive pricing policies are used by the companies in order to show that they sell diversified and high quality products (Cameron and Quinn, 2011). Every retailer wants to grab maximum market share which increases the intensity of competition.
On the basis of above analysis, it can be said that high barriers to the entry in the market has faced by the new firms. Concentration of major retailers lowers down the bargaining power of the consumers.
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