When we talk about the leading players of the jewelry industry, India comes in the list of a few tops global players. For India, the jewelry industry is one of the fastest growing industries and the leading earner of foreign exchange as the people from all over the world love to wear Indian made jewelry. When talking about the Indian jewelry industry, the two main sectors that come to our mind are diamond jewelry sector and the gold jewelry sector. In this scenario, there are lots of questions that comes to our mind, for instance, what are the factors that make India one of the top players in the jewelry industry throughout the world? There are two most important things that should be mentioned here, the low production cost of jewelry and the presence of skilled labor for this sort of industry in India. The last but not the least thing to mention here is that India has set up about 3000 offices throughout the world for the marketing as well as the promotion of Indian diamonds, which plays a very significant role in making India one of the top players in this industry.
A Quick Overview of Porter’s Analysis on Jewelry Industry
Following is the quick overview of porter’s five forces analysis on jewelry industry:
1. The threat of new entrants – LOW TO MEDIUM
2. The bargaining power of buyers – LOW
3. The bargaining power of suppliers – MEDIUM
4. The substitutes products – LOW
5. The competitors in the industry – HIGH
The Bargaining Power of Suppliers
When we talk about the bargaining power of suppliers in the jewelry industry, it’s medium. What are the potential reasons behind? The reason is that India is one of the largest players and this is the main concern of the suppliers. For the country, there are lots of suppliers available i.e. national as well as international. In this scenario, the bargaining power of the suppliers should be low, so why it’s medium? The reason is that the jewelry industry also needs the reliable suppliers to retain its position in the global market so this is the reason for which the bargaining power of the suppliers remains medium for jewelry industry of India.
The Bargaining Power of Buyers
For jewelry industry, when we talk about the bargaining power of buyers, it’s quite low. What can be the potential reasons behind the low bargaining power of Indian Jewelry industry? As a matter of fact, the India has two types of buyer i.e. domestic buyers as well the foreign buyers for both gold and diamond jewelry. In this scenario, the position of India becomes string for the reason that the high demand for the jewelry from inside as well as from outside the country gives the power to the industry as compared to the buyers.
The Competitive Rivalry
This porter force deals with the inter-firm rivalry. For instance, when we talk about the jewelry industry of India, we look for all competitors in the industry. In this scenario, any player of the jewelry industry faces two types of rivalry, for instance, the first one from inside the country and the second one from outside it. In this regard, it is obvious that the competition amongst the firms is really high for the reason that the industry is too vast and all the players of the industry are playing well, especially inside the country. When we talk about the international competitors in the jewelry industry for India, china comes at the top of the list. So, all these things combine to make the competition amongst firms really high.
The Threat of Substitute Products
In this force of porter analysis, we get to know about all the substitute products in comparison with the industry being analyzed. When we talk about the jewelry industry, what can be the potential substitutes to gold jewelry and diamond jewelry? The most important substitutes of it that come to our mind are imitation or artificial jewelry, stone jewelry or the bagasra jewelry etc. But as a matter of fact, all these substitutes can’t deny the importance of gold or diamond jewelry. The reason is that the way of living of the people is being enhanced with the each passing day. The standard of living as well as the status of the people is on the high increase. So, all these substitute products can’t produce a threat for gold or diamond jewelry for the reason that these are high in demand so the threat of substitute products for jewelry industry of India remains low.
The other potential substitutes other than imitation or stone jewelry are stock market, real assets, mutual fund investment as well as bank deposits etc.
The Threat of New Entrants
This is the last force of porter’s analysis in which we determine the threat of new entrants in any specific industry, for instance, we look for the all barriers for new entrants and judge is it difficult to enter or not. When we talk about the jewelry industry, the barriers for the new entrants aren’t very high for the reason that the capital requirements to enter in this industry are low and one can easily enter into this industry and can earn a name for the reason that the demand for gold and diamond jewelry is high. It’s been called medium for the reason that the rules and regulations by the government to enter in the industry are really strict. Also, to enter into the jewelry industry, one requires skilled manpower for the reason that it is an essential thing in this regard. The last but not the least thing that makes the threat of new entrants medium for this industry is advanced technology requirement, which is really essential to enter this marketplace.
Analyzing all these forces for your business will assist you to get to know about all the strengths and weaknesses and then take appropriate steps accordingly so that you could maximize your success chances.