Harlequin Five Forces Analysis Essay

High economies of scale required. For an entrant to gain achiever in squelch novel grocery, it must possess mature sales, production, and statistical distribution to operate effectively, which similarly leads to great risk. High product differentiation required. new(prenominal) companies start to add more 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 convey is medium to difficult. Harlequin has gained exclusive access to groceries, but failed on stand-alone retails. other(a) competitors either choose regular bookstore or comparable as Harleuqins however, it might be difficult to entrants to gain access to these transmit by themselves. Government policy has been very protective to authors however, no clear up restrictions on product images.Buyers PowerIncreasing buying power cod to additi onal competing productsLow switching costChanging target marketsA variety of choicesPoor retention rate, high return rate injustice of existing customers and high cost of attracting a new customerAmerican Romance Series to meet consumers tastesSubstitutesThreat of Substitutes is high collect to technology advancement and demand diversification.Evident in Harlequins attempts of film, magazine and scholars choice (bookstore).Suppliers PowerIncreasing provider power due to promising offer from Simon and Schuster Loss of excellent authors who later on generate sales for Simon and Schuster shows that authors possess significant supplier power Other supplier powers such as sales force, printing business argon relative stable Industry Competitors, Rivalry among existing firmsLow process rate as more competitors are competing for a stable marketother competitors are earning market section at Harlequins expenses oligopolistic market is another factor of intense competition Romance war d ue to introduction of silhouetteSimon and Schuster introduced Silhouette, a rival line of romance novels, in 1980 32% market share and risingCompetes the oversea marketsuphill competitors as a result of Silhouettes introduction also evident in 5 additional rival lines launched in 1982 urge the intensity of competition and decrease Harlequins market share and volume sales Possession of competitive advantage (i.e. No outperform seller management and standardization) which ease competition temporarily Bitter competitor with Sillhouette S&Salthough losing money, but gaining market shareunderestimated by Harlequinhired Harlequins former vice president and best-selling(predicate) authors advertising budgetcopied Harlequins Presents confused buyersFinancialgrossincrease slowlyProfitdropped to half 1980-1981 ($44.7 22.3)drastic solelyy decreased from 1982 -1983 ($25.8 5.5) train unprofitable subsidiaries films, scholars choices, magazine etcDebthigh debt ratio rapid increase from 1 980-1982, then lower in 1983 expensive bad debts from the endorser ServiceCost40 new stores eating up all the cashincreasing be of Reader Servicesreducing costs at corporate level cut overhead expenses by 20% sales decreased, advertising expenses increasedWorking Capitalsdecreasing working capitals inadequacy of cash flow for investment only 33 millions in 1983