Haircuts

The UMUC Haircuts opened its doors in 1995. Over the years, the salon has seen an influx of salons opening in close proximity to the shop. The proprietor is very anxious about what the impact to the future of the business will be when the neighboring salon opens to serve the community. I’ve had the opportunity to observe the salon over the course of a couple of days and witnessed firsthand a number of weak points that need attention in order to assure the salon’s continued existence. I will be performing an analysis to pinpoint the impact of each area of the business affected.

Porter’s Five Forces Model contains five competitive forces that affect a company within their environment. Competition for profits goes beyond established industry rivals to include four other competitive forces. The extended rivalry that results from all five forces defines an industry’s structure and shapes the nature of competitive interaction within an industry. (Porter, Jan 2008). If the forces (buyer power, supplier power, substitutes, threat of entrants, rivalry) are powerful, they amplify competition; if the forces are frail, they diminish competition. Let’s begin to look at each force to determine its impact. First there is Buyer Power. Customers expectations can have negative influence on price forcing them to decrease. Buyer Power can become high in this state of affairs when there are greater choices that are presented to the customers. In other words, more salons setting up shop close by. This will definitely affect Myra’s strategy. Next is Supplier Power. Profits can dwindle due to dominant suppliers if they begin to charge more for beauty supplies. This will produce a negative effect. Higher supply prices will cut into profits or have to be passed on to the customer. Both scenarios will generate a negative outcome and affect Myra’s strategy. Supplier Power is high in this situation. Threat of Substitutes is high when more options become available. The threat is high...