Mrs. Ebtissam Algosaibi: An Entrepreneur in the Kingdom of Saudi Arabia Case Solution And Analysis, HBR Case Study Solution & Analysis of Harvard Case Studies

VRIO

Valuable	Rare	Costly to imitate	Exploited by the organization	Competitive Implication	Performance
No				Competitive Disadvantage	Below Normal
Yes	No			Competitive Parity	Normal
Yes	Yes	No		Temporary Competitive Advantage	Temporary Above Normal
Yes	Yes	Yes	Yes	Sustainable Competitive Advantage	Sustainable above normal

Erum has got quite a few strengths which make it a strong component in the industry. Being stable and sound financially it makes Erum grow enormously in the coming years. Based on the VRIO Analysis, the Erum lies under the Temporary Competitive Advantage because of the competitive implication the authority has. The reason for the temporary competitive advantage is that although it is unique for now, but it can be copied easily. Erum has got strong financial backing which can make them grow and expand further in the coming periods. It can also launch some other products by doing product line extension where more customers can be targeted.

This will again account for a competitive edge for the company in the industry. The unique ability of expanding in the future can make them enter the Sustainable Competitive Advantage row or column and this will become the sustainable competitive advantage for the Erum. Basically what Erum needs to do is to focus on strengthening its internal strengths and capabilities and look for further exploration in the marketing. Once it decides to go for similar strategy where they look to expand and grow further Erum can execute various strategic options that can enhance its status and position in the industry which can further enhance and develop the brand name.

Porter Five Forces

The porter five forces model examines the market conditions with respect to the ease of doing business. It examines the extent to which different market forces are capable of driving demand and controlling profit terms for the companies in the market. It also determines the extent to which external forces may affect the performance of companies in the respective market.

Bargaining Power of Buyer: High

The buyers of the jewelry products provided by the Erum are the royal o highly niche. The bargaining power in this industry is therefore high, as there are lot buyers in the markets, minimizing their power to bargain (Kevin, 1996). As the impact on the revenues of losing one customer is very significant, the power divested to buyers stand somehow high. Consumers also have a variety of options to choose from and to compare the best deals in town for their destination and hence can switch between many brands. Although high costs are associated with switching between these brands, but the customers are quiet niche so it has no impact. Adding to this, is the rising use of the internet that has made the customers more price sensitive and also has raised their power. As online selling is increasing in a fast manner, therefore buying power has increased marginally, helping consumers not only to compare prices at a given point in time but also the many other specifications like color and design.

Bargaining Power of Supplier: High

The jewelry industry is characterized by a high supplier power company which supply stones and other material has a major role to play in success of the brand. Supplier and buyer try its best to go for strategic alliances for long term returns. In addition to the global presence of many brands reflects that there is no other alternative for specifically Islamic jewelry (Goldstein, 2005). As the commodity prices are rising throughout the world and even Erum also doesn’t have control over the gold prices, therefore the strategic alliances favors the both.

Threat of New Entrants: LOW

The threat of new entrants, keeping in mind that the jewelry industry is one that is capital intensive, is low. The existing peers have created a saturated and mature markets in this industry which prevents new competition. Moreover, the cost of entry is somehow high in this industry, but if the borrowing rate for the loan is cheap then this is not an issue (Swarming, 2006). Another, thing is the legal and qualitative considerations in the industry, which further prohibits new entrants from entering into the market. However, existing brands across the world has been doing exceptionally well.

Threat of New substitutes: Moderate

The threat of substitute is moderate because gold jewelry can be replaced by artificial sets and al. Women’s across the world purchase the artificial sets on a temporary basis because people sometimes avoid gold plated jewelry because of high cost and other recession issues. Moreover the element of fashion cannot be neglected here because people often buy new trend instead of conventional products...............................

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