External Business Analysis

External Business Analysis


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Kelly’s salon important strategy depends on the organization’s reactions to the Five Forces in its industry surroundings. The firm has succeeded in accomplishing the leading position in the beauty business. Kelly now remains as the leading player in the industry. In any case, the external factors in the business environment force weight that must be addressed. Kelly needs to create strategies that address the bargaining power of buyers and suppliers. Viable systems are likewise required for the firm to withstand the dangers of substitutes and new entrants. While Kelly has made progress in this industry environment, Porter’s Five Forces analysis uncovers that the organization must continue advancing to guarantee long-term suitability (Tabacchi, 2010).

Five Forces Analysis



(Minimum 2 good sentences)

BUYER POWER The bargaining power of purchasers is high in this industry because there are such a variety of determinations of salon clients can look over. Consequently, clients have a significant impact and control over the organizations in this industry (Tabacchi, 2010). Customers can change over to another spa effortlessly with next to zero expense. Therefore, because there are such a large number of choices of comparable products and services at comparative value levels, brand unwavering is hard to keep up Yes
SUPPLIER POWER The bargaining power of suppliers is low. As a result of the reality, there are such a large number of suppliers offering similar items at costs which are moderately the same the dealing force of suppliers is relatively small. Prices for salon products and services are frequently set at a wholesale price; however, costs for every single other item are regularly debatable. It makes the bargaining power rather low No
THREAT OF SUBSTITUTE PRODUCTS OR SERVICES The potential for substitutes is low. The possibility of substitute for facial medications is fair since clients can buy elective facial items, for example, creams, covers, and so forth. Therefore, the risk of substitution in this industry is low, especially because numerous individuals have stress from their day by day lives and appreciates being spoiled by administrations from this industry. Yes
THREAT OF NEW ENTRANTS It is high. While evaluating what the potential for new entrants is, we ought to take a gander at the capital prerequisite to beginning the business and how available the capital is. Government directions don’t act like a huge boundary to the section because a firm needs to agree to authorize prerequisites to work, which isn’t excessively confounded. Yes
RIVALRY AMONG EXISTING COMPETITORS The competition among current rivals is high. The beauty industry is a divided one in which there are numerous small to medium firms. These organizations have low to medium piece of the pie. A considerable lot of these organizations are singular businesses and some are chains. It implies clients have a wide assortment of alternatives since they can without much of a stretch change amongst contenders. It prompts an open door for price wars since clients have more power and the divided firms need to give customers a motivating force to consume from that firm. Yes





Justification of the strategy

The company’s cost leadership strategy is in line with the porters five forces analysis. Kelly can reduce costs by assessing those set by competitors and ensuring he differentiates her services to attract clients at a lower price. The issue of buyer power can be addressed by making the services negotiable and adjustable depending on the customer’s needs. The supplier power is critical as it drives the costs strategy. Developing long-term relationships with producers ensures that the business can access products cheaper. The company should always be up to date when it comes to potential substitutes so as to adjust as fast as possible. New entrants can be curbed by stabling strong customer loyalty to avoid the possibility of losing customers to new rivals (Bose, 2008).

Business Process

To maintain a competitive advantage, the business should adopt technology in a way that regulates customers and employees. The use of technology will propel the cost leadership strategy to the desired level. The system can allow customers to book appointments at specific times and even choose their favorite employee to provide the service. It will allow Kelly’s salon to adjust and be ready to serve clients at their requested times. It also allows employees to plan and balance work-life issues (Evans, 2003).







Bose, R. (2008). Competitive intelligence process and tools for intelligence analysis. Industrial Management & Data Systems108(4), 510-528.

Evans, N. D. (2003). Business Innovation and Disruptive Technology: Harnessing the Power of Breakthrough Technology… for Competitive Advantage. FT Press.

Fleisher, C. S., & Bensoussan, B. E. (2003). Strategic and competitive analysis: methods and techniques for analyzing business competition (p. 457). Upper Saddle River, NJ: Prentice Hall.

Tabacchi, M. H. (2010). Current research and events in the spa industry.Cornell Hospitality Quarterly51(1), 102-117.


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