Lithuanian Footwear Manufacturing Industry Analysis According to Porter‘S Five Forces

Lithuanian Foot fall apart Manuf make a motionuring Industry compend According to Porters Five Forces Introduction For all clock footgear has been a basic necessity and just recently it has nonplus a matter of fashion and prestige, thus making enormous changes in footgear industry it expanded and became well distinguishableiated. Therefore, in aver to fulfil and cope effectively, companies attain to analyze their external environment. This paper volition sharpen on Porters five forces that shape competition in Lithuanian footwear com/chapter-practice/manufacturing industry. challenger A decade ago on that point were much more footwear manufacturers in Lithuania.However, right after Lithuania get together the European Union, footwear imports from China to the European Union increased octette times. It instanced huge profit losses for Lithuanias footwear manufacturers and many of them withdrew from the market. directly there argon two main footwear manufacturers UAB Sa balin and UAB Lituanica, a a few(prenominal) depresseder manufacturers such(prenominal) as UAB Paliutis and UAB Evenida and there argon also virtually individual aires which do not mass- wee but manufacture property just for individual methodicalnesss. As we commode retard there atomic number 18 not many Lithuanian companies but their competition creates the rivalry a positive sum.The largest companies UAB Sabalin and UAB Lituanica produce strap fit out for the whole family and merchandise approximately of their harvest-festivalion to separate European countries, especially to Great Britain, Latvia and Finland (http//www. lituanica. selective information/m93-1. html, http//www. visalietuva. lt/imones/info/sabalin-uab). Smaller manufacturers concentrate on specific footwear production such as boots and working clothe or take orders from Lithuanias companies and produce big quantities of specific safety horse apparel or enclothe which are part of employees uniform.F ootwear manufacturing usually is not their only scope so when they take a shit hard times in shoes manufacturing, they concentrate on other fields. For example UAB Paliutis produces not only boots but also other arctic and plastic production (http//avalyne. paliutis. lt/index. php), UAB Arnesima produces safety working shoes and, in addition, they strain safety gloves, waterproof clothes and etc (http//www. arnesima. lt/). Individual businesses do not bind a prominent get because Lithuanians elect custom boots just for ery important occasions, for example, weddings or when the foot is not standard and they cannot influence suitable shoes in shoe stores. However, the main competitors for footwear manufacturers in Lithuania are Chinese footwear producers. According to UAB Lituanica managing director D. Keltuva, just the lash they use for a pair of shoes costs the same as the finished Chinese pair of shoes. To become more competitive, Lithuanian manufacturers cut their pric es however, it was impossible to become equivalent competitors because Chinese labor force was far and away cheaper.Besides, schoolgirlish to middle- ripen Lithuanians are concerned about fashion and prestige so Lithuanian manufacturers are unable to compete with designers shoes or well cognize brands. UAB Sabalin director Regina Arcisauskaite claims that her manufactory orients to segments from middle to high prices and to middle class batch however, this company does not aim for luxurious or fashionable products segment. bare-ass entrants Recently not a single bigger footwear manufacturing business has been started. The main case is the economic recession, which has caused the decrease in footwear sales.Another reason is still huge competition from China. However, today shoe shops Lietuviska avalyne and Dolita report that sales in Lithuania are constantly increasing and people, especially elder ones, prefer more expensive, but bore Lithuanian shoes from natural whip and fu r. Besides, Lithuanians let turned back to small boutique shops and prefer obtain in places which post unique products and comfortable surroundings. This probably will cause an increase in tally of small shops, run by small businesses owners or new entrants who will be unforced to fill this niche.Lithuanias government policy is favorable to new entrants and offers a lot of ship canal to start a new company. The main requirements for new business entrants are quite high government taxes and the initial capital in whatsoever cases. However, new entrants face one huge barrier to entry. nearly Lithuanians do not trust Lithuanian production they do not conceptualise about the caliber and price and choose fashionable foreign footwear. Moreover, incumbents have already survived through Chinese invasion and recession so they have a lot of experience.As soon as the newcomers face the first difficulties they capacity get lost and go bankrupt just like many other Lithuanian footwear manufacturers did five years ago. This might caution them from entering this market. One more important barrier is that in order to unmannerly a new footwear manufactory a huge amount of initial capital is needed. New entrants need new premises, inventories and certifiable employees. This may also deter a lot of newcomers from entering this market. Substitutes shoe market in Lithuania is tremendous.You can see shoe shops ein truthwhere and shoes in various styles, colors, designs and prices are brought there from a lot of different countries. There are a lot of other shoe stores which offer quality footwear. These shops gain advantage because customers are exposed to a great choice, meanwhile people can merely see Lithuanian shoe shops in shopping centers or in the streets. Moreover, Lithuanias youth tends to wear mainly sports shoes and frequently replace them with new ones. They wear them two in summer and in winter, so they are not face for quality and long lasting shoes wh ich are rather expensive.In this age of new technologies another substitute is available for everyone online shops or eBay. Lithuanians find it cheaper to order something from overseas than to buy it in local shops. This phenomenon is also applicable to footwear. Most of the online shops have return policies so people are not afraid(predicate) to buy and, if it is necessary, to change the item. Finally, parents tend to buy footwear for their squirtren in second-hand shops. They see no need to spend huge amounts on shoes when their childs feet are constantly growing. The same trend is seen among elder people.Pensions in Lithuania are relatively low so the pensioners cannot afford new quality shoes. Therefore, they go to second-hand shops where they can find almost new and really quality foreign footwear they even can find branded shoes in very good condition. Since the price is still a very important factor in choosing shoes, nowadays most Lithuanians try to find substitutes which could offer suitable quality and price ratio. motive of suppliers Today Lithuanian footwear manufacturers buy raw materials mainly from Lithuanian companies, for example, leather impact companies AB Siauliu Stumbras and UAB Naturali oda. There is a great variety of available leather and other raw material suppliers in Europe so footwear manufacturers are not dramatically thinkent on their suppliers and can advantageously switch their suppliers since switching costs are low. However, leather touch companies depend on economic situation and cattle ranches. The manager of leather processing company TDL Oda Vidmantas Simkus explains that when economic crisis occurred, the demand for meat decreased thus the number of grown cattle also decreased.It resulted in lack of raw leather material last year and was the reason for double increase in price. Respectively, Lithuanian footwear manufacturers had to buy more expensive raw materials, their product prices increased and they became le ss competitive in shoes market. Besides, footwear manufacturers are not the only ones who use leather for their production. Coats, gloves, hats, handbags and some bijouterie are make from leather so leather processing companies have some ability to choose whom to sell their production to and in this way to raise the prices. Power of buyersFootwear is necessary for every person so they cannot avoid buying shoes. However, they can choose where and what kind of shoes to buy. Generally, in footwear industry buyers do not have a lot of designer, but in Lithuania their great power is significant. Since there is great variety of imported shoes and just a few Lithuanian footwear shops, the buyers choices determine which shoe shops (and thus which manufacturers) will survive. There are very few shops in Lithuania which sell some(prenominal) foreign and Lithuanian footwear Lithuanian footwear is sold largely in special stores.Since Lithuanians do not trust Lithuanian production, their p enchant might cause bankruptcy for some shops. It would mean that Lithuanian footwear would be sold just outside the country. Individual businesses owners are greatly dependent on the buyers because they are their main customers and if they are not willing to pay for original custom shoes, these businesses are sure to face a lot of difficulties. On the other hand, Lithuanian footwear in export countries has a lot of loyal customers who recognize products quality and reasonable price.UAB Lituanica director Kestuts Deltuva says that their sales abroad are constantly increasing and they have a lot of new orders and now they are having a very invade season. Conclusion All things considered, Lithuanian footwear manufacturing industry is full of opportunities. Rivalry among Lithuanian footwear producers is rather weak. Since they do not intensively compete in Lithuanias shoes market, it creates some opportunities for new entrants. This industry is open for new entrants who should conside r different strategic plans and try to meet the demand for both quality and fashionable footwear in Lithuania.The main caper that Lithuanian footwear manufacturers face is a great variety of substitutes shoes of different brands, styles and origin are easily accessible, and also different places and slipway of acquisition are available. Suppliers do not have significant power however, buyers are the main force which determines which companies will survive in Lithuanian footwear manufacturing industry. References June 27, 2005. Avalynes gamintojai siekia ES apsaugos. Retrieved from http//www. zebra. lt/lt/naujienos/verslas/avalynes-gamintojai-siekia-es-apsaugos-72238. html June 2010.Footwear Industry Profile Europe. Industry overview. Retrieved from crease Source Complete Inciuriene, Sigita. November, 2010. Vidmantas Simkus Man geriausia Siauliuose. Retrieved from http//lics-siauliai. lt/wp-content/uploads/2010/02/Mes-Siaulieciai-Nr61. pdf August 29, 2005. Kinu batsiuviai verzia k ilpa Lietuvos avalynes gamintojams. Retrieved from http//www. verslobanga. lt/lt/spaudai. full/4312ada8d1f1a October 18, 2010. Lietuvos batsiuviai be batu nelieka. Retrieved from http//www. verslozinios. lt/index. php? act=mprasa&sub=article&id=26957