The Rich

THE RICH

Question 1 (a)

Discuss the impact of the intensity of rivalry and bargaining power of buyers on THE RICH, when Niksim entered the retail industry in Putrajaya’s commercial area.

First competitive force is intensity of rivalry. The entrance of Niksim will make Niksim as the rival of THE RICH since they is in the same industry and in the same commercial area. This rivalry tends to increase in intensity when THE RICH either feel competitive pressure from the Niksim or see an opportunity to improve their position. The impact of intensity of rivalry is THE RICH may have to compete with Niksim for the same customer with the same resources. THE RICH and Niksim will compete to each other in order to survive the business. Since there is increasing in supply, the demand of THE RICH from the customer will decline. When there is less demand, the product are not moving and will lead to high holding cost incurred by THE RICH. In addition, this condition will make competing within the Putrajaya’s commercial area more challenging; commonly it will lead to frequent price war, advertising battle and so on. Therefore, the intensity of rivalry will give significant impact on THE RICH operation.

Next competitive force is bargaining power of buyer. THE RICH’s buyer extension of power is strong since they are free to choose the product from different business entity and mostly of the buyer are from wealthy people who owned money. First impact is the buyer will switch to another competitor like Niksim. The buyer now will choose the product that suits their affordability and their preference since the availability (supply) of product increase. This will give opportunity to the buyer to make a choice from broader range unlike before when there is only THE RICH that exist. This occurs because there is no switching cost charge to THE RICH buyer to prevent their existing buyer to move to different business like Niksim. Besides that, when the power of buyer is strong, the buyer...