Porters Five Force Model

It is very important for any company or organization to perform a thorough assessment of its

external environment in order to assess the industry’s profitability and attractiveness. For this

purpose, we use Porters Five Force Model developed by Michael Porter.

1. Rivalry among competing firms - High

Shahkam industries are providing with the knit wear from decades and a very big organization.

With the emergence of the demand in knit wear there are brands which performs as a direct

competitor such as shafi textiles, saad textiles and Lahore fashion fsd.

Lahore fashion is one of the leading competitors of shahkam. Catering to the same target market

with minimal differences in price and a large whole sale network, shahkam and Lahore fashion

are competing in almost all sectors. The differentiating factor between the two brands is in the

product portfolio and the brand image. Shahkam has a much vaster product mix than Lahore

fashion, hence catering to a wide variety of needs.

Saad textiles is a popular network with a

strong knitwear line. Their product mix

consists of a wide variety of men,

women and kids. While comparing

shahkam to saad textile, shahkam is able to maintain its position because of its large selling

network. In comparison, saad only has around 1/3rd of the export customer comparing shahkam.

Shaffi textiles also have a big unit, but they are only working for local customers. Since, their

product quality is fine but it takes time to emerge in international market.

However, it also true to say that as of now, shahkam has a fine line of differentiation with a

strong marketing mix, that no other company or brand has imitated.

2. Potential entry of new competitors – Mediocre/High

The knitwear market is a growing industry with ever-changing and ever evolving consumer

needs. The access to inputs is fairly easy. However, the access to distribution opportunities is

limited because of the saturation in the industry, especially in the recent years many brands have

started extending their product portfolio towards footwear. The market has already been

captured, therefore a need to find a USP is high for the new entrants. It is also now harder for

brands to find a defining brand identity, as so much has already been done. Other than that, the

government policies and licenses are not a hindrance when it comes to the knitwear industry.

3. Potential development of substitute products – Low

The potential development of substitutes is minimal. Since clothes are a basic product, needed by

each individual, there is no substitute for clothing. However, machine made clothes, which

currently dominate the market, may be threatened to some extent by handmade clothes, which

are also gaining ground, but cannot be replaced as handmade clothes cannot keep up with the

growing and changing fashion trends of today.

4. Bargaining power of suppliers – Low

Shahkam generally deals with minimal, stylish every kind of clothing, which means that the

ability switch suppliers are easy. Any supplier that meets the quality standards can supply the

goods. Also, shahkam is a huge organization which gives it an edge to switch suppliers easily. In

addition to this, the suppliers are large in number which gives the buyers the power to reject and

accept the suppliers.

 5. Bargaining power of consumers – High

As it has already been mentioned, that the clothing market is very saturated, which gives the

power to the customer to switch brands easily. The switching costs do not exist, meaning that the

brands have tow work extra hard in order to capture consumers. This narrows the space for

making mistakes. If a brand does not keep up with prices and quality the customer can easily

switch to a different brand. This is especially true, but to meet the quality of shahkam is not easy,

that’s what their competitive edge is. It’s easy to find the products elsewhere but quality cannot

be found everywhere. Therefore, even though shahkam have a strong customer base and an

identity that helps it retain its customers, the saturation in the market and the availability of

options is so much that buyers definitely have the power here.