Analysis of Porter 5-Force in the Jysk Micro Environment in the Chinese Market

The following example essay is about Porter 5-Force analysis in the JYSK micro environment in the Chinese market. Read the introduction, body and conclusion of the essay, scroll down.

For the external analysis I will do a Porter 5-Force analysis on the Micro environment of JYSK on the Chinese market. First I want to have a look at the Industry competitors, so the rivalry. If we take a look on the Chinese market, we can see that there is already a fierce competition going on the market.

Domestic and foreign retailers like IKEA or Wal-Mart have already successful penetrated the market. The number will increase constantly, because everybody wants a piece of the cake.

If we look at the entry market for JYSK, that would be Shanghai, so there is already a large furniture center. There is no concept like JYSK so far, but most of the segments they serve are already covered, like mattresses. The Chinese market suffers from plagiarism; there is no uniqueness due to that.

Next I want to have a look at the potential entrants. In general there are no big entry barriers; it’s easy to penetrate the market. Costs are quiet low. The sorts of concepts you can offer are limited, there is no franchise retail chain on the market yet.

Jysk Swot Analysis

IKEA is similar, but different because it’s a self-service shop. The advantage of being a famous European chain is no advantage in china any more, Chinese are brand fixed, but they don’t know European brands on the market that much.

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For the potential entrants there is to mention, that almost the whole world wants to join the Chinese market and there is and there will be even more beginners. Next I want to have a look at the substitutes. Substitutes do not exist due to the uniqueness of the product-level.

It’s almost impossible to substitute a mattress, of course you can use an air mattress, but the possible substitutes are not worth to be mentioned. The big problem is the Chinese patent system, because there is none, the market suffers from plagiarism. Next I want to have a look at the buyers and there Power. The bargaining power of furniture buyers in china is pretty low. Furniture creates less significance for buying ambitions. Most of the time Chinese don’t even buy it by themselves due to a lack of time.

If we think about switching costs in that segment, they are low. It’s hard to tie the customer, because the products JYSK sales are exchangeable without any switching costs and the possibilities will be even more in the future. As a result of that the bargaining power growths. Chinese are very open and well informed though very brand fixed, it is easier to tie them with a brand than a product. The consumers are very price sensitive, they want more for less. It’s important to consider national special features, ike not using some colors (yellow) because of their special meaning. Buyers want hard mattresses and because of the fast changing generations the trend of bed-linen and duvets will be change as well. Next I want to have a look at the suppliers. There is already a fierce competition going on at the local supplier market, mass production of less quality is floating the market. Way cheaper than JYSK products. The large number of manufacturers pushed the bargaining power of the Chinese furniture industry suppliers. Conclusion:

Porter’s 5 Forces has shown that the Chinese furniture market is developing quite fast and changing all the time and due to this suffers from different circumstances (e. g. changing customer needs/ less raw materials). Focusing the micro-level it must be stated that the market is defined by intensive competition due to rivalry in conquering market shares. While entering the market is nothing in the way, companies must be rather careful to prevent plagiarism and stuck to what they are good at. Keep their focus on the brand and less at the variety of the products because the Chinese market offers every product already way cheaper.