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Running Head: PEARL INDUSTRY 1Assignment - 2Case Analysis The Pearl Industry – Is there a Market Opportunity?
PEARL INDUSTRY 2Question 1Part 1- Threats of Entry This is a low threat to the business considering that firms need to have a reliable supplier and knowledge of pearl business to start the business. Also, human resources to hire for this business should learn and enjoy the history, structure, and composition of the pearls to run successful operations (E. Dobbs, 2014). Therefore, competing with both local and international firms in the market is expensive. Due to the unpopularity of pearls in Canada, it is also difficult to find accomplished suppliers who will provide legit products unless new entrants establish contact from China or Japan. Also, there is high product differentiation, branding, and marketing for the firms present in Canada. The local market entails firms offering low and high-end products while international firms such as Michael Hill International Limited offers high-end pearls. However, differentiation for the pearls is not widely exploited as most firms offer products of different compositions, or sourced from fresh-water or salt-water (Proctor, 2014). Part 2- Bargaining power of buyersBuyers have high bargaining power as the market offer similar products on the low-end market where the rest of the local firms have a similar price range. As a result, this attracts low switching costs since buyers have a choice between various products due to the pricing (E. Dobbs, 2014). Also, the existence of fake pearls on the market makes it difficult for them to purchase relatively expensive but legit pearls. However, differentiation and proper branding can make it easy for buyers to purchase products from the firm.Part 3- Threat of Substitute At the moment, substitutes present a low threat to the business since there are few substitutes for the pearls offered in the market. Some of these substitutes include gold, diamond, and silver, which are more expensive and targeted for high-end markets. However, there is a highinfiltration of fake pearls from popular sites such as E-bay, which sell their products at a