Business Environment Analysis: The Power of the buyer (Coursework Sample)

UMAC Case Analysis
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This is a three page report that seeks to critically analyze the UMUC hair cut business that was started by Myra Morningstar which was nearby a strip mall a few distance away from the college. This report seeks to establish a scenario through which a detailed discussion of the porters’ five forces analysis in respect to UMUC hair cut business will be done on a detailed perspective. Moreover, it necessitated having a brief overview of the viable strategy that can keep UMUC abreast in respect to the 21st century besides exploiting its technology.
In the year 1995, Myra Morningstar established a hair cut barbershop and has over the years expanded this business to the extents of including services such as hair styling for both men as well as the women CITATION Den11 \l 1033 (Denning, 2011). In this case, her business has been triumphant and has thereof graduated to 3 barber chairs, 3 hair stations for styling as well as a shampoo station. In respect to frequent demand by her customers, she feels that it would be necessary to further her business by adding at least two more other stations for manicures CITATION Pro114 \l 1033 (Prof. Lobosky, 2011). This idea is as result of a small gift shop that is next door to her premises which made her think about establishing a station basically for manicures. During the opening of UMUC hair cut, it was the only service provider within the nine mile radius locus. As a matter of fact, it was amongst the first businesses to be established in the strip mall whereby the number of customers was increasing year by year. Nonetheless, a number of other barber shops have been established around the vicinity. Of late, it is very clear that a hair cattery that will be established about five miles away. Across the street right at the shopping centre, a quite expensive spa has been opened whereof hairstyling is being offered CITATION Bar11 \l 1033 (Dozier, 2011).
The Power of the buyer
Consumer services firms do not face any strong buyer power on account that the customers are fragmented and in this case do not have any strong influence on the prices of the services being offered. On account that the prospective clients of UMUC services are individuals, rather than the retailers, then it is very apparent that UMUC has very weak buyer power/influence.
The power of the supplier
Oftentimes, the consumer services companies can encounter a significant amount of supplier power on account that there are some costs that are incurred during the switching of the suppliers. Besides, suppliers that are so much involved with a lot of businesses with cosmetics are very much likely to beholden by their clients. In this case, you will find that because there exists so many competitors in the prevailing market it follows that the supplier will have very limiter power in respect to UMUC hair cut businesses.
Threats posed by the new entrants
Considering the quantity of the capital investment that is required to enter a particular segment in the consumer services, such as hair styling, it is very evident that the threat of new entrants is comparatively low in the industry. Particularly, in some segments that are in the consumer products industry, this cannot be the case because a small service provide could come up with a superior fashion of providing the same service but in a better way CITATION Bar11 \l 1033 (Dozier, 2011).
The test here is whether UMUC hair cut can offer its services on the same consumers just like its immediate rivals. My verdict is that UMUC experiences a low threat of this force.
The threat of possible substitutes
In respect to the consumer products and services industry, branding is only successful in assisting to create a competitive advantage. However, the pricing power of the branded product or service can be extinguished by a substitute like a store branded label gifts. Most of the firms are of the presumption that if they are in a position of offering services at a relatively lower price than their competitors, they would opt to accept the MR (marginal revenue) from their lowered priced goods rather than risking losing sales to a private firm competitor. My verdict is that UMUC does not face any threat of substitute of its services CITATION Den11 \l 1033 (Denning, 2011).
The magnitude of rivalry
Considering the fact that the place of establishment of UMUC has been invaded by other businesses offering the same services is an apparent reason to conclude that it is a force that can be a threat to its business operations.
There exist several generic strategies that UMAC can exploit in a bid to be at the verge of the industry. These includes: product differentiation whereby the business ought to come up with better and quality hair styling perhaps through change of its cosmetic products. On the other hand, it can embark on cost leadership so as to increase profits but on the other hand making sure that it cuts down its costs by making sure that its services are at par with the industry’s average price. Moreover, it would be beneficial for this company to utilize the porters focus strategy whe...