Reebok is the global market leader in sports footwear and apparel. Reebok designs, develops, markets, and distributes footwear, apparel and accessories. The Company’s products are sold worldwide through a combination of retail accounts, wholesale accounts, and independent distributors. Reebok has strategic alliances with various brands to jointly develop lifestyle shoes. Furthermore, the Company manufactures and sells apparel and accessories under a number of different brands. The Porter’s 5 Forces analysis represents a model that identifies and analyzes the competitive forces that shape every industry and helps determine an industry’s weaknesses and strengths. This approach is consistent with the company strategy regarding growth in both product lines (such as sports footwear, apparel, or sports) and geographic markets.
Reebok Bargaining power of suppliers:
The bargaining power of the supplier in the shoe industry is very low because all industries need raw materials to produce their final products. Suppliers in this business are not too powerful when it comes to changing prices so they will be forced to lower their prices to gain more business.
Reebok Bargaining power of buyers:
Because sports footwear and apparel are considered consumer goods, the bargaining power of buyers is very high. Shoe manufacturers can influence consumers through advertising products or selling them at a lower price to make the product affordable, thus creating a relationship between the two parties.
Reebok Competitive rivalry:
Although there are a few strong competitors such as Nike and Adidas (here is Adidas Porter’s Five Forces), Reebok’s market share is still bigger than the others. However, competition within the company might be high because it may affect prices and decrease profits. The new CEO will have to control this issue by encouraging employees to maintain their efficiency and encouraging them to offer innovative and competitive products.
Reebok Threat of new entrants:
The threat of new entrants is very high in this business because there are no patents or copyrights that may prevent other companies from entering the market. The only way for Reebok to avoid this problem is through its strong brand name and popularity among consumers.
Reebok Threat of substitutes:
Since sports shoes are a need among consumers, the threat of substitutes is very low because everyone needs them to survive. This lowers the risk for Reebok’s business and thus it can expand its operations through offering other types of shoes or entering new markets.
Reebok Porters Five Forces Conclusion:
Porter’s Five Forces show that the external factors affecting Reebok are very strong, but because of the company’s success in dominating this industry, it can overcome any problem resulting from these forces. Thus, Reebok is expected to remain strong and continue its domination in sports footwear and apparel. However, since this industry is highly competitive due to fierce competition, the Company will have to come up with innovative strategies in order to maintain its leading position. Finally, Reebok is expected to be able to continue being successful by finding new ways to expand into new geographic regions or developing new products that are not offered by other companies.