Environmental Analysis at ODEL

BACHELOR OF ARTS (HONS) IN BUSINESS MANAGEMENT

BABM BARTCH 07

STRATEGIC MANAGEMENTENVIRONMENTAL ANALYSIS

ODEL

GROUP MEMBERS

SATHEESHA RAJALINGAM

FAZLAN MARIKKAR

ADHUHAM RASHEED

KARTHIGA THURAIRAJAH

PRASAD FERNANDO

SAAD HUSSAIN

ZAIN NOORDEEN

ENVIRONMENTAL ANALYSIS OF ODEL

Executive summary

Odel is one of the most successful brands that have emerged from Sri Lanka till this date.

Odel SELECT is a department devoted to dressing customers with a taste for high fashion. It

displays international designer wear by world renowned fashion icons. The analysis of

potter’s five forces on Odel revels that Odel has high bargaining power towards their

suppliers yet the competitor rivalry in the industry, thereat of the new entrant, and consumer

bargaining power is high. Meanwhile the threat of a substitute remains at medium. The report

does not contain a full SWOT analysis but only the strengths and weakness of Odel. It is

important for Odel to maintain these strengths mean while re-designing their strategy to

overcome their weakness.

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Table of ContentsExecutive summary......................................................................................................................... i

1 Introduction...................................................................................................................................1

2 Potters Five Forces Analysis for ODEL.........................................................................................1

2.1 ODEL’s five forces analysis..........................................................................................2

3 SWOT analysis of ODEL..............................................................................................................4

3.1 Strengths................................................................................................................................4

3.2 Weaknesses............................................................................................................................5

4 Conclusion.....................................................................................................................................6

5 Reference.......................................................................................................................................7

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1 Introduction

One of the most innovative brands that have originated in Sri Lanaka to this date “Odel”

was first established in 1990. However the concept of Odel began to take shape in 1989

when Otara Gunewardene started selling clothes to her family and friends, from the boot of

her own car. During the time Otara saw something only a few could see, which is the

immense potential for retailing a range of stylish clothing to the fashion conscious Sri

Lankan. In 1995 the first branching out of the Odel chain of superstores was opened at

Majestic City. Yet the business got its momentum in 1999 when the flagship store at No. 5

Alexandra Place, Colombo 7, was launched in 1999. The splendid colonial architecture

build with modern glass and metal extensions which spans across 33,000 sqft, not only

provided a solution to lack of space to operate at larger scale but an emergence of seamless

and eclectic fusion of culture. Tired feet and hungry tummies can treat themselves to a host

of refreshing goodies located around the store, as well as at the food court, Boulevard.

Today at the stores of Odel offer its customers Ladies wear, Menswear, Kids wear, Home

ware, Delight - Sweet indulgences from chocolates to exotic nuts, Perfume & Cosmetics,

Books & Music, Shoes & Handbags, Jewellery & Accessories, Luggage, Food and

Stationery, Gift Wrap & Souvenirs (Odel, 2011).

2 Potters Five Forces Analysis for ODEL

Porter’s five forces is a strategic model which was developed by Michael Porter to determine

the state of competiveness in a market (Tony, 2006). The model is a flexible tool which could

be used to analyze a firm opportunities and overall competitive advantage no matter which

industry or market the firm operates. The model is comprised in five forces which are

Revelry

New entrants

End users/Buyers

Suppliers

Substitutes

A graphical representation of potter’s five forces model are shown on next page in figure 1.

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Intensity and rivalry

Potential Entrance

Buyers

Threat of rivalryBargaining power

Bargaining power

Suppliers

Substitution

Threat of substitution


Figure 1 Potter Five Forces model

2.1 ODEL’s five forces analysis

Five Forces Impact Description

High Medium Low

Bargaining Power of

Suppliers

-The power of ODEL in the market place and

the large quantities it purchases from the

suppliers and the suppliers are not ready to

lose the opportunity to supply to such a

powerful dealer.

-There are over 1000 suppliers and 200 plus

factories locally and globally supply Odel

with the incredible range of products which

give Odel the leverage and Options (Odel,

2011)

-Odel has their own manufacturing facilities

Bargaining power of -The degree of moving toward other options



Buyers is very high where there are lot more

fashionable wear stores in the island such as

Hameedias, Crocodile, Levis, Roma Four and

House of fashion who offers similar product

with no or little difference and are also

located in several places

Threat of

substitution

-As stated earlier customers have many

options to choose.

-But the advantage which ODEL has is the

reputation that they have gained by offering

quality goods, where this has made ODEL to

thrive in the market place yet other fashion

chain market has the capacity to distribute

international brands like Gucci, Prada, Armani

yet their target market currently is different.

Threat of new

entrance

-The fashion industry is expected to

experience a growth in the Sri Lankan

economy, thanks to the influence of social

media and the end of civil war. Hence this

growth might attract international companies

and brands to such Marks and Spencer to

enter the market.

Threat of inter

rivalry

-The main players in this industry are

Hameedias, Crocodile, Levis, Roma Four,

House of fashion, Fashion bug, Glitz etc..,

where some of them markets own brands and

well-known brands such as Levis, Reebok,

Adidas. Some of them only market well-

known brands where they are the authorized

distributors in the island for those brands who

have built their brand image in the market.

All these competitors offer similar product

with little or no difference to customers.



Hence this has created a price war in the

industry.

3 SWOT analysis of ODEL

3.1 Strengths An affluent customer base and a good tourist customer base

Recognized Own brands like ODEL, Otone, Backstage and Embark

A diversified product Mix with over 1500 products

Being the ambassador for reputed global brands like Doir

Being the only major global designer brand retailer in Sri Lanka

Having their own manufacturing facilities

High brand equity

Good relationship with local designer wear brands

A qualified marketing force with knowledge and experience in designing effective

advertising and promotion campaigns

Having an online shop

3.2 Weaknesses Lack of stores – the stores are only located in Colombo which limits the customer

acquisition

Main target group is tourists

Lack of brand recognition in international market

Lack of customers loyalty towards the business

Spending a huge expenses on interior designing



4 Conclusion Since the potters five forces identify that, threat of inter rivalry, threat of new entrance, and

bargaining power of buyers are high the authors believe that Odel should go building their

strategy on differentiating their product image. Also the overall the biggest threat to Odel is

form international brands entering the market or a launch of a substitute product from

international company. Another area where odel have to stay focused is overcoming their

weakness. In a situation where Odel has the weakness of lack of customer’s loyalty a new

entrant from a branded company could easily lead a huge loss the market share of Odel.

Meanwhile it is also important for Odel to be focused on maintain their strengths.



5 Reference

Odel (2011), Cooperate Odel - About us[ONLINE] Available http://www.odel.lk/corporate-

odel/about-us [Accessed25th May 2013]

Tony.L(2006). Michael Porter’s “Five Forces” Model[ONLINE] Available

http://www.cbe.csueastbay.edu/~alima/courses/3551/MurderCleaners/FiveForcesPorter.pdf

[Accessed 25th May 2013]




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Environmental Analysis at ODEL