The paper 'Core Competencies and Strategic Choices' is a good example of a Management Case Study. Temple & Webster is an online furniture and homeware merchant based in Australia. Its concept is based on offering a diverse range of elegant functional home furnishings at low prices to make them highly affordable to many people (Low 2015). Instead of selling expensive home furnishings affordable by few, Temple & Webster concept allows the company to serve many by offering low-priced products (Keating 2015). However, to sustain its high revenues, it needs to counter growing competition.
The company’ s internal environment is analyzed using the resource model and associated concepts, such as the value chain. Porter’ s Five Forces analysis is used to analyze the external factors affecting the company. 2.0 External environment 2.1 Porter’ s Five Forces model Porter’ s Five Forces model refers to a generic theoretical model that categorizes an industry structure into five basic competitive variables, namely rivalry among the firms in the industry, bargaining power of suppliers, bargaining power of customers, the threat of new entrants, and lastly, the threat of substitute products (Aarons & Waalewijin 2002). 2.1.1 Competitive rivalry Temple & Webster operates in a highly competitive industry, which is made up of much other low-priced quality online and brick-and-mortar furniture and homeware merchants, such as eBay and Gumtree.
Because of the attractiveness of the furniture sector in Australia, Temple & Webster continues to compete, as well as to grow in Australia. Temple & Webster is presently the undisputed market leader in the industry of online furniture and homeware at the national scale. The company currently encounters competition from Gumtree and eBay, which, however, do not specialize in furniture and homewares, as they offer general merchandise.
Again, the traditional brick-and-mortar retailers are growing fast and expanding across Australia (Keating 2015). 2.1.2 Threats of new entrants Temple & Webster currently enjoy a window of opportunity period that is free from the possibility of new entrants. However, the threat of new entrants into the Australia furniture and homeware sector is extremely high. This is because of the lucrative nature of the sector and the low entry barriers because of the low capital requirement to start an online business. Indeed, since Temple & Webster is still a startup, the possibility of the rise of new competition for the company is not flimsy.
However, there is a high demand for homeware in Australia. Co-founder Shanahan learned this opportunity while working for eBay and Gumtree. The company, however, benefits from first-mover advantage, having been the pioneer online company specializing in the online homewares category. 2.1.3 Bargaining power of suppliers Temple & Webster suppliers lack ample bargaining power since there are numerous furniture makers in Australia and globally. They have the capabilities and capital resources that make them attractive for forming partnerships with Temple & Webster.
Similarly, Temple & Webster seeks to focus on the strategy of creating strategic long-term partnerships with its suppliers. It has low bargaining power, as it is continually competing to maintain its relationship with the global giants like eBay who have higher capital resources and capacity to form an affiliation with Temple & Webster (Keating 2015). 2.1.4 Bargaining power of buyers Temple & Webster’ s customers have low bargaining power since the competition is intense from the brick-and-mortar merchants, as well as from general merchandise companies like Gumtree and eBay.
Again, Temple & Webster has limited experience in the industry, as it is still a startup, which has only worked for three years. Online marketing has been a challenge since once it markets using Google; it gets customers who are more price-conscious, which implies that it has to revise frequently the prices of its products. Besides, the customers encounter an extensive choice of alternatives provided by the local furniture retailers and producers (Keating 2015).
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