Porters 5 Forces Framework applied to Floua:

 Suppliers (Bargaining Power of Suppliers)

 Buyers (Bargaining Power of Buyers)

 Rivalry among competitors

Applying Porter’s five forces to Floua, we can see that Floua has a low threat of new entrants and substitutes. The rivalry
among existing competitors is high for Floua because companies like Sephora and Ulta Beauty are popular cosmetic chains
that feature different brands of similar products. Finally the bargaining power of buyers is high while the bargaining power
for suppliers is low. https://blogs.cornell.edu/info2040/2017/10/23/porters-five-forces-analysis-and-sephoras-bargaining-
power/

Buyer Power: HIGH: Customers can purchase beauty products from various places such as the brands website like Floua,
department stores, cosmetic retailing stores, such as Sephora, and drug stores. Customers have a strong bargaining
power in general because of the availability of products, the intense competition in the beauty industry and the
switching cost is low. In order to have access to a full line of products, deluxe samples and beauty advice, brand loyal
customers prefer to shop at specific department stores. Department stores and specialty stores are the most popular
beauty shops in developing countries because they are well available in most cities and towns. Also, customers who
invest less in beauty find drug store products more affordable compared to higher end products carried at Floua.
Drugstores offer low- end beauty products and target consumers who invest less on skincare and makeup. Even though
there isn’t a direct competition between this group and Floua, drugstore beauty products are cheaper alternatives to
Floua’s collections. Drugstores have a wide market base in students and younger generations. This base increases
during recessionary times and some of Floua’s customers may switch over to more affordable products to cut down
household expenses. https://docplayer.net/21994307-Bus478-case-synopsis-for-sephora.html

Threat of new entry: Floua has a low threat of new entrants because entry barriers of starting a cosmetics chain that
features distinctive brands is high. https://writingbros.com/essay-examples/pestel-and-portal-analysis-on-sephora/ There are
high economies of scale by the big companies. Entry in the industry requires substantial resource investment
https://www.case48.com/porter-case/49906-Sephora-s-Retail-Innovation , high capital investment in inventory and to
establish a manufacturing setup is high, efficient distribution network, reputable brand image, and relationships with a
great number of brands. https://docplayer.net/21994307-Bus478-case-synopsis-for-sephora.html

Supplier Power: LOW- In regards to supplier concentration the bargaining power is low as a result of a large number of
suppliers in this industry. https://www.slideshare.net/audreyjaspart/sephora-in-ireland . There are many manufacturers of the
products required by this beauty business. There is a low differentiation of inputs. Also there’s a certain switching cost and
a threat of forward integration exists. https://www.porteranalysis.com/porters-five-forces-analysis-cosmetic-and-skin-
care-industry/ Suppliers can threaten forward integration as Floua not only sells their own but sell other brands which
suppliers could easily sell elsewhere. https://www.slideshare.net/audreyjaspart/sephora-in-ireland
However the presence of substitutes of the inputs is low. Overall the bargaining power of the suppliers in this industry is
low.

Threat of Substitutes: Low- There is a lack of substitutes to beauty products. Consumers could produce some kinds
of (DIY) products at home, but the variety of products they can make at home will be limited.
https://docplayer.net/21994307-Bus478-case-synopsis-for-sephora.html The same applies for skincare products which
only have 2 substitutes either home remedies or other skin products made at home with natural ingredients such as herbs and
oils to protect and rejuvenate the skin. Such products however are more used at rural areas. Further, some women think of
these substitutes as old fashioned and ineffective. The switching cost and buyer inclination to substitutes both are low
https://www.porteranalysis.com/porters-five-forces-analysis-cosmetic-and-skin-care-industry/ because buyers don’t have
time to make the product and there’s a high possibility the results of their homemade product will be bad.

Competitive Rivalry: HIGH

The degree of competition amongst rivals in this beauty industry is high. Floua directly competes with large cosmetic
retailers such as Sephora and Ulta. https://docplayer.net/21994307-Bus478-case-synopsis-for-sephora.html With so
many well-known retailers at such an array of prices, consumers feel more brand loyalty to the makeup product than the
place they are buying the product from. https://www.coursehero.com/file/17966685/Five-Forces-Sephora/ The degree of
product differentiation is also low. Further, there’s rapid changes and improving of products due to consumer preferences
and industry trends. With discount pricing strategies by competitors, Floua place a huge investment in advertising and
promotion by using SMI’s. Thus, the competitive rivalry within the industry is high for Floua.
https://www.porteranalysis.com/porters-five-forces-analysis-cosmetic-and-skin-care-industry/