This case study examines Dynomite Haircuts, a hair salon that established itself in a college town before facing growing competition. Using Porter's Five Forces framework, the paper evaluates supplier power, buyer power, competitive rivalry, the threat of substitution, and the threat of new entry as they apply to this small business. Based on that analysis, the paper proposes a competitive advantage strategy focused on branding differentiation, location leverage, strategic pricing, and operational improvements — particularly scheduling. The paper concludes with a concise statement of direction that ties the competitive strategy to a specific process improvement.
This study guide is drawn from PaperDue's library of 130,000+ paper examples across 47 subjects.
The paper demonstrates applied framework analysis — taking a well-established theoretical model (Porter's Five Forces) and systematically mapping each component onto a specific business context. This technique requires the writer to evaluate each force individually, assess its relevance, and then connect the diagnosis to a unified strategic recommendation, showing that theory and practice reinforce each other.
The paper follows a five-section case study format: (1) an introductory overview identifying the business and its challenges, (2) a force-by-force Five Forces analysis, (3) a strategy section translating the analysis into competitive recommendations, (4) a single focused process-improvement recommendation, and (5) a summary Statement of Direction. This structure mirrors standard business case study conventions at the undergraduate level.
This case study examines the needs and objectives of a small business known as Dynomite Haircuts. Dynomite Haircuts first opened in a college town where it was the only business of its kind within a 10-mile radius. This was ideal, as it allowed the company to establish roots, gain a solid reputation and client base, and begin to expand in a deliberate and concerted manner. Over time, however, a much higher level of competition has developed in the area. In spite of this increased competition, the business is still performing well — yet it could perform even better, reaching a higher level of effectiveness necessary to generate greater revenue.
The areas that need to be improved are: scheduling, supply ordering, inventory management, collecting customer information, and marketing. Once these areas are addressed and these obstacles adequately overcome, nothing will prevent Dynomite Haircuts from thriving with both effectiveness and permanence.
The first of Porter's Five Forces is Supplier Power, which determines how easily suppliers can raise or lower the cost of supplies (Mindtools.com, 2014). The ability of suppliers to influence prices depends on a range of factors: "This is driven by the number of suppliers of each key input, the uniqueness of their product or service, their strength and control over you, the cost of switching from one to another, and so on. The fewer the supplier choices you have, and the more you need suppliers' help, the more powerful your suppliers are" (Mindtools.com, 2014). The ability of a supplier to drive up prices is largely negative for a business of this type. In this case, however, the reality of this force is mixed: it depends on what types of supplies the owner, Myra, chooses to purchase. In the profession of hair grooming and care, supplies are available at every price point, and Myra can find quality products regardless of her budget. This force will not significantly affect her strategy for competitive advantage.
The second force refers to the power of buyers to drive prices down. This force is shaped by "the number of buyers, the importance of each individual buyer to your business, the cost to them of switching from your products and services to those of someone else, and so on. If you deal with few, powerful buyers, then they are often able to dictate terms to you" (Mindtools.com, 2014). In Myra's case, buyer power is not very high and will not strongly impact her competitive strategy. Buyers do have somewhat more leverage because of the rivalry present in the market, but they cannot strongly dictate Myra's prices. Myra simply needs to be careful not to price herself out of her market.
The third force is the threat of rivalry, which refers to how many competitors a given business faces. As noted in the introduction, the level of rivalry is exceedingly high and represents one of the elements most likely to impact Myra's strategy for competitive advantage. More competitors mean less market power, since buyers can easily go elsewhere if they feel they are not getting the best value from the company.
The fourth force is the threat of substitution. "This is affected by the ability of your customers to find a different way of doing what you do — if substitution is easy and substitution is viable, then this weakens your power" (Mindtools.com, 2014). In this case, the threat of substitution is exceedingly high: given the number of other professional venues offering hair services, customers can easily find alternatives. This reduces Dynomite Haircuts' market power considerably and should definitely be factored into Myra's competitive strategy.
The fifth and final force is the threat of new entry — essentially, the threat of new competitors entering the market: "If it costs little in time or money to enter your market and compete effectively, if there are few economies of scale in place, or if you have little protection for your key technologies, then new competitors can quickly enter your market and weaken your position" (Mindtools.com, 2014). In this case, the threat of new entry is mixed. While it is not trivial for a person or entity to enter the world of professional hair services, it is not impossible either. This remains a factor that will continue to affect Dynomite Haircuts' competitive position and overall business output.
You’re 65% through this paper. Sign up to read the remaining 3 sections.
Sign Up Now — Instant Access Already a member? Log inAlways verify citation format against your institution’s current style guide requirements.