Mona Hayek Mona Hayek and her sister lived in Kuwait. She was an artist looking

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Mona Hayek

Mona Hayek and her sister lived in Kuwait. She was an artist looking to make use of her skills in a small business. She noticed there were few designer, original clothing options in her market. So she decided to set up a small business making high quality, hand painted children’s clothing. Mona’s clothing was bright and cheerful. She was competing in a small market with few competitors so she sold her products at high prices with small production. She started Colors of Life specializing in one of kind children’s clothing at first and then added hand-painted scarves later.

Mona enjoyed a few successful seasons and decided to expand and take on a bigger staff, a bigger workshop, and create hand-painted tablecloths. She was able to find additional artist to work with her. In 1998 left Kuwait and set up a larger factory in the UAE free zone and for the next three years her business continued to grow. In the UAE she was the first into this market and had some early branding and sales advantages. Since the economy was good Mona thought this was another opportunity to expand in her local markets with new products offered in different clothing categories. She enjoyed another string of successful months and Mona again began to look overseas for more growth opportunities.

In 2000, one of Mona’s employees, who was Indonesian, suggested they look at manufacturing in Indonesia. Then In 2001, with her employee's assistance, Mona established a factory there and found another factory willing to work with them on Mona's new idea for painted designer footwear. Mona and the factory signed long-term commitments to each other with granted advantages for both of them. These factories allowed Mona access to the growing Indonesian market without paying tariffs and to take advantage of the low logistic costs. The factories gained a long term standing order from Mona. Her clothing line started to level off in its market share growth so Mona decided to put more focus on her hand painted footwear. Since she was again the first into the market with a new product her sales and profits were good. However, the taxes in Indonesia were higher than the taxes in the UAE so she had made to make plans and adjustments for her profits.

There was a problem in purchasing a special paint she required in Indonesia. She was forced to pay a high fee to her supplier, who was the only option for that paint. This created some cost increases. These increases caused her to search for another source of the special paint. In spite of this, her new footwear line was a hit and for two years her business sold thousands of them and her profits grew. Her clothing line was still steady in market share neither growing nor shrinking. Her line of products were original and no one else sold anything like them until competitors started copying her. The new competitors made similar mass production footwear that was lower in quality and price. The footwear market did not grow, but the sales categories shifted within the market. These new competitors were affecting her cash flows and finances by taking market share from her and affecting her pricing. In addition, the economy in the Indonesia also started slowing down and people were now not spending as much on luxury items. She decided to open a new line of hand painted hats, but the product line was unsuccessful with very poor sales. She was forced to close down the hat production. She sat down with her staff to evaluate the situation.

1-What the porter five forces model of competition to the Mona hayek business?

2-Discuss two external industry changes that have affected company’s profitability within the Mona hayek business?

3-Explain Whether the Pharmaceutical industry unattractive or attractive from a profit-making position?

4-Conduct a detailed SWOT analysis based on the case

Strength:

Weakness:

Opportunity:

Threat:

Explanation / Answer

1. The Porter's five forces model of competition are:

- Threat of competitors- She did not face this threat as the competition was very less in the market of the product she introduced. So she could get the monopoly in the market and increase her prices according to that.

- Bargaining power of supplier- This power was faced by her in the Indonesian market where she had to purchase the special paint which was available with only one supplier hence she was forced topay higher prices for that paint.

- Bargaining power of buyer- She did not face this power as she got monopoly in the market for her products and no other company sell any such thing of such quality. Also the product she sold were luxury goods and the customers buying it did not bother to bargain on the prices she sold in it.

- Threat of substitution- The threat of substitute products was not there for her as her products were distinctive with good quality and innovative ideas like hand painted clothes. footwear etc.

- Threat of new entry- She faced this fear in the market of Indonesia as new competitors starting to emerge in the market who gave competition to her products by giving similar products with less quality and lower prices.

2. The two external industry changes that have effected the company's profitability are:

- emerging of new competitors who copied her and produced same type of products with less quality hence lower prices attracted the customers she played monopoly on. This took her market share hence effected the sales and profitability.

- the economy of the country slowed down because of which the people did not spend as much in the luxury goods which effected her sales negatively and brought the profits down.

4. SWOt analysis based on the case:

Strengths

- Distinctive high quality products

- small market with few competitors

- high demand of products among luxury product buyers.

Weaknesses:

- High taxes in Indonesian market.

- monopoly of supplier

Opportunity:

- Expansion in new markets

- Price hikes due to monopoly in market

- expansion of new products

Threat:

- Emergence of new competition in market.

- economy fluctuations

-higher taxes

-supplier's bargaining power

-

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