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Porter’s Five Forces analysis
Another alternative method to the SWOT analysis was created by Michael E. Porter . It is called Five Forces analysis and it involves five factors that influence industry performance. Among them are:
1. The threat of the entry of new competitors
2. The threat of substitute products or services
3. The bargaining power of customers (buyers)
4. The bargaining power of suppliers
5. The intensity of competitive rivalry
The threat of the entry of new competitors is an important factor for the fashion retailing industry, as fashion market is profitable and it attracts new competitors. In order to get a stable growth sales trend, the company in this industry has to own a strong brand, to have great distribution conditions, to have a high level of customer loyalty and good cost effectiveness. I consider the threat of the entry the crucial factor for our industry.
The threat of substitute products or services is also a decisive factor, because customers often switch to alternatives in the fashion industry. The price and the quality of the products may be a serious factor for customers’ switching to another company’s products.
The bargaining power of customers has a vital influence in the fashion retailing industry, and buyers make a strong impact. The reason is that the substitutes can be found easily by buyers on the retailing market and to switch to another product is not a problem for a customer.buy term paper
Next thing I need to mention in this context is the bargaining power of suppliers. The materials that are usually used in the fashion retailing industry are not raw and the switching cost for the Jengo Ltd to move from one supplier to another is not that high. Therefore this factor has a slighter less importance than the other four factors of Five Forces model. The only one element of risk that comes from the bargaining power of suppliers is a possible growth of the materials and labour force in the countries where the Jengo Ltd has a manufacturing base.
The intensity of competitive rivalry is huge determinant for the fashion retailing industry. The elements that needs to be considered by Jengo Ltd include innovation issues, online business opportunities, increasing of marketing and advertising budgets, and in general the improvements of competitive strategy.
To sum up the methods of organizational environment analysis, I would recommend Jengo Ltd to consider the following six major factors when preparing forecasts for the next financial year:
1. The threat of the entry of new competitors,
2. The threat of substitute products or services
3. The bargaining power of customers (buyers)
4. The intensity of competitive rivalry
5. Local and national factors (from PESTEL analysis)
6. Opportunities and chances to become more successful company in the the fashion retailing industry (from SWOT analysis)

The benefits of budgeting for Jengo Ltd’s planning and control of its inventory, recruitment and cash management activities
Generally speaking, no company, no matter of the industry or it size, should operate without a budget.
The importance of budgeting for Jengo Ltd needs to be especially emphasized, because this tool is considered to be “one of the most important control tools used by managers. Without some form of formal budgeting, managers spend too much of their time solving daily problems instead of focusing on the future. In addition to a short-term budget, firms should have a long-term budget (3 to 10 years), with the most current year being this period’s operating budget.” (Fleming, 1995).
There are plenty of advantages of the budgeting for all of the company’s activities. First of all, budgeting helps to coordinate managers’ actions in accordance to the company’s goals and objectives. “As a result, an atmosphere of cost-consciousness and profit-mindedness is developed in the company. A comparison of actual costs with budget provides valuable information and helps determine where efficiencies as well as inefficiencies occur.“ (Fleming, 1995).
The inventory budgeting will ensure that Jengo Ltd will design a range of new products during the next financial period that is basic condition of increasing of company’s competitive level.
The recruitment budgeting will create a reliable personnel policy by planning the expenditures for the recruitment process, by improving and retaining employees, nd of course by planning personal costs that consist of salary and benefits. This element of budgeting will ensure the company’s better position to hire best people in the industry.
Cash management activities will become much easier to manage when using the budgeting. Management will have all the financial information about the company’s present position and its plans for the future. Therefore, it will be easier to manage the financial flows and it will be done more effectively than before. There is a also a practical recommendation that will help to increase cash forecast effectiveness in Jengo Ltd: the case forecast should be prepared on a monthly basis as a part of the routine budgeting process.