Harlequin Five Forces Analysis Essay

High economies of scale required. For an entrant to gain success in court novel market, it must receive mature sales, production, and distribution to operate effectively, which similarly leads to great risk. High product differentiation required. Other companies start to add much features while harlequin products remain relatively unchanged. Significant capital requirement required. This is evident in Simon and Schusters case, in which it bears a high upfront investment for this battle. Access to distribution channels is medium to difficult. Harlequin has gained exclusive access to groceries, but failed on stand-alone retails. Other competitors either choose regular bookstore or similar as Harleuqins however, it might be difficult to entrants to gain access to these channels by themselves. Government policy has been very protective to authors however, no clear restrictions on product images.Buyers PowerIncreasing buying power due to additional competing productsLow switching co stChanging target marketsA variety of choicesPoor retention rate, high return rateLoss of existing customers and high cost of attracting a new customerAmerican bray Series to meet consumers tastesSubstitutesThreat of Substitutes is high due to technology advancement and demand diversification.Evident in Harlequins attempts of film, clipping and scholarly persons choice (bookstore).Suppliers PowerIncreasing supplier power due to promising offer from Simon and Schuster Loss of excellent authors who later generate sales for Simon and Schuster shows that authors possess significant supplier power Other supplier powers such as sales force, printing business are relative stable Industry Competitors, aspiration among existing firmsLow growth rate as more competitors are competing for a stable marketother competitors are earning market share at Harlequins expenses oligopolistic market is another factor of intense competition Romance War due to introduction of silhouetteSimon and Schuste r introduced Silhouette, a rival business organisation of romance novels, in 1980 32% market share and risingCompetes the oversea marketsEmerging competitors as a result of Silhouettes introduction also evident in 5 additional rival lines launched in 1982 accelerate the intensity of competition and decrease Harlequins market share and chroma sales Possession of competitive advantage (i.e. No best seller management and standardization) which ease competition temporarily Bitter rivalry with Sillhouette S&Salthough losing money, but gaining market shareunderestimated by Harlequinhired Harlequins former vice president and best-selling authors advertising budgetcopied Harlequins Presents confused buyersFinancialRevenueincrease slowlyProfitdropped to half 1980-1981 ($44.7 22.3)drastically decreased from 1982 -1983 ($25.8 5.5)remove unprofitable subsidiaries films, scholars choices, magazine etcDebthigh debt ratio rapid increase from 1980-1982, then lower in 1983 expensive bad debts from the Reader ServiceCost40 new stores take up all the cashincreasing costs of Reader Servicesreducing costs at corporate level cut overhead expenses by 20% sales decreased, advertising expenses increasedWorking Capitalsdecreasing working capitals lack of cash flow for investment only 33 millions in 1983