Michael Kors Business Strategy and Policy Essay

Michael Kors Business Strategy and Policy - Essay Example The paper tells that the vision of Michael Kors has taken the company from American luxury sportswear house to a merchandise of global accessories, and footwear with the presence in over 74 countries. The company has exceptional experienced sales momentum with a clear trajectory for important future growth. This has made Michael Kors a highly recognized brand of luxury lifestyle in North America and has led to an improving awareness in the international markets. The company has successfully expanded over the years beyond apparel into accessories that include small leather goods, handbags, jewelry, eyewear, watches, and footwear. Introduced in 1981 in the fashion industry, Michael Kors Company reflects the luxury pinnacle and establishes authority in aesthetics in the entire brand and makes the cornerstone of the company runaway shows. The collections of Michael Kors Company are available in many retail shops and other department stores in the world and are subjected to international competition in offering accessories in the industry. In spite of the cut-throat competition in the design market and fashion industry, Michael Kors Company has remained a world celebrated designer. In the analysis of Michael Kors’s business strategy in the fashion industry through the Porters Five Forces Model, we will consider the following competitive forces of the company: Threat of entry by emerging or new competitors Intensity of rivalry among the competitors Pressure from the available substitute products Supplier bargaining power Bargaining power of customers These five forces in the Porters Model taken together provide insight into the competitive position of Michael Kors Company in the fashion industry as well as its profitability Rivals in the fashion industry are the existing competitors in the market. These are the competitors that Michael Kors faces in the fashion industry which may drive profits to even zero. Rivalry can be weak in the industry with the small nu mber of competitors that do not aggressively compete. Rivalry can also be intense where there are a large number of competitors who fight in a cutthroat environment. In the case of the Fashion industry, some of the factors that affect the intensity of rivalry among the existing competitors include the number of replica handbags of from Michael Kors by other firms and this will lead to intensive competition. The fixed costs and the high percentage of fixed costs in the total costs of Fashion industry demand that the company sells more accessories in order to cover for such costs, hence increasing the competition in the market. In addition, Fashion industry needs  to practice product differentiation because similar products in the market will basically compete on the price basis, and therefore identification of brand reduces rivalry. Among the features of competitive advantage is the barrier to entry into the fashion industry. The fashion industry has very high barriers to entry suc h as the fake Prada china handbags because the prices are normally very expensive for the newly established firms such as authentic designer handbags to gain entry. On the other hand, where the fashion industry has minimal barriers to entry such as Louis Vuitton handbags are cheap relatively for new firms to enter.