Pumpkin Patch Case Study Analysis
Forces that affect the general environment globally Include global competition. Wars, terrorism, risk of a global financial crisis and global energy crisis.
Issues in I-J and US are the quotas to abide by Asian manufacturers.
The Industry Environment:
The reason for an Industry analysis Is to understand the dynamics and structure of the childlessness industry and also to identify the threats and opportunities important to the firm.
Threat of New Entrant:
The threat of entry into the children’s clothing retail industry is moderate; because brand Issues gaining path into the market Is difficult.
However, product sourcing Is dead easy at the bottom end where brand Is Irrelevant such as private label. Nonetheless, one barrier to entry is product differentiation; specifically Pumpkin 1 OF 7 Patch NAS done well In tens area as teen are addle to PICK out willing Kiosk’s Tattoos consistently by sourcing for ideas locally and internationally to meet consumer preferences.
Bargaining Power of Suppliers:
Suppliers exert power by increasing prices and reducing quality of their products in the clothing industry.
Outsourcing of production to several Asian countries limits and reduces suppliers’ power. Good relationships with suppliers from throughout Asia are an advantage. Most suppliers are not dominated by a few large companies and the clothing industry is a significant customer for the suppliers. Hence, bargaining power of suppliers with regard to UP is relatively low and does not pose an issue for the firm.
Threat of Substitute Products:
Substitute products are goods from outside the industry that performs similar or the same function as a product that the industry produces.
In the children wear industry; there is little or no substitute for the product outside the industry as they are generally unique to other industries. It is like choosing between clothes and toys.
Intensity of Rivalry among Competitors:
There are a lot of competitors in the childlessness industry and the degree of fermentation reduces the intensity of this rivalry amongst competitors. In this case, fashion is really the key factor for differentiation. The largest competition in the children wear industry includes department stores and discounters such as Mark ; Spencer and Wall-Mart.
The second largest group of competitors is specialty clothing retailer who has children section like GAP. Finally, a third category is specialty of children’s clothing like Pumpkin Patch. Competitive rivalry intensifies when there is high strategic stakes where it is important for the competitors to perform well as a market leader.
For example, Pumpkin Patch who specializes in selling mainly children’s clothing. However, in a growing market the pressure to take customers from competitors are lower. Also, rivalry is reduced when buyers find a differentiated product in the children wear industry that satisfies their needs, they tend to develop brand loyalty.
Finally, intensity of rivalry among competitors in the children clothing industry is moderate to high and the need for brand recognition/ differentiation in this industry is essential to reduce intensity of rivalry amongst competitors.
Bargaining Power of Buyers:
In most industries, buyers are limited to choice in buying products, particularly from the childlessness industry. Therefore, what lessens choice is the degree of differentiation driven by brand. Nonetheless, buyers always bargain for higher quality, greater level of services but lower prices. Bargaining power of buyers is powerful when they can switch to another product at little or no cost especially in the childlessness industry, also their power increases when the industry product is undifferentiated.
Therefore, industry firms needs to adjust the price of their products imitatively where buyers are willing to buy but maintain the point at which the industry earns the lowest acceptable rate of return on its invested capital.
Analysis Last but not least, the children clothing industry is somewhat attractive with very little concern for bargaining power of suppliers, intensity of rivalry among competitors within the industry is manageable as long as the company is able to differentiate from competitors.
However, one force that may be a threat to the children wear industry is the bargaining power of buyers as the switching costs for teen to Duty products among ten Mainstays Tall Is low. I Norte, retaining ten customer base in this industry is very important and crucial to the survival of a firm. Over time, methods such as integrated differentiation and cost leadership can help reduce this threat substantially.
J compete with Pumpkin Patch based on price and similar fashion.
J have also attempted to recruit designers from UP. These factors affect UP financially and their innovation ability that are big contributing parts to the firm. J were former suppliers to UP. However, measures such as exclusivity agreement with suppliers are taken by he firm to reduce the problem of suppliers integrating forward to become competitors. Other strategic groups such as discount retailers like Wall-mart in the U. S and the Warehouse in New Zealand have distribution centers in multiple places to increase efficiency and flexibility.
Conversely, competition amongst department stores such as Marks ; Spencer and GAP in the childlessness industry, engages in wholesale market arrangements in the I-J. Moreover, competition promotes greater awareness for rivals in the childlessness industry, the potential of this segment in the clothing market.
Opportunities ; Threats
Enter the wholesale market in the I-J; through large retailers. Establish distribution center in Northern Hemisphere; lower distribution costs and price of products to reduce bargaining power of buyers. Suppliers integrate forward to become competitors in the childlessness industry; buy over manufacturing plants .
- Strong Bargaining Power of Buyer, possibility of loss in customer base.
- Intensity of Competition amongst companies in the industry.
- Company faces increasingly competitive markets both locally and in the international market. Internal Analysis Pumpkin Patch’s Resources, Tangible and Intangible Tangible are assets that can be seen and quantified.
These are broken down into four groups consisting of financial resources, organizational resources, physical resources and technological resources. Pumpkin Patch’s financial resources include the funds raised through the initial public offering of $100 million in 2004 and three times that amount by 2005. Also, they have operating revenue of about $280 million in 2005.
Secondly, the firm’s physical resources include assets such as the distribution centre that is located at the head office in Auckland ND the retail stores they have acquired mainly in Australia and New Zealand.
Also, UP bought the HUB clothing chain from Gleason for their Urban Angel brand. Finally, the last Tangible asset UP has is their stock of technology such as their trademarks and copyright for their brands ‘Pumpkin Patch’ and ‘Urban Angel’. The three types of intangible resources include human resources, innovation and reputation resources. Pumpkin Patch human resources are built around knowledge and organizational routines. The firm’s culture emphasizes on family values and informality in the workplace that is consistent with the company’s brand.
Secondly, UP innovation resource is a significant part of the firm. They are able to source for fashion ideas internationally and have a team who controls conceptual artwork, style creation Ana quality control. I nose Ideas are teen eternal Day a group AT Skilled team what works and incorporating successful element from previous years design to the following year. Finally, reputation resource that UP has is the recognition of its brand name ‘Pumpkin Patch’ where they are known for producing and selling high quality childlessness products at competitive prices within the industry.
Capabilities tell us what a firm can do.
In the case of Pumpkin Patch, their most noticeable capability is their ability to design childlessness both locally within the design department and internationally by sourcing for ideas from designers around the world. Another capability observed is the firm’s ability to source products overseas at a lower cost but at the same time quality control measures are taken to ensure the final product is up to standard with its company brand.
Thirdly, Pumpkin Patch has the capability to stock and distribute its products from all markets and all Hansel at once even though the southern and northern part of the world is always in different seasons. Also, one of the more noticeable capabilities UP has is their sales and marketing of their products using different channels reaching out to customers such as the retail stores, wholesale segment, and internet and with their catalogue. Some other capability analyzed includes sales staff, managerial experience, customer support, wholesale relationship and family culture.