Porter's Five Forces Analysis for a Small Hair Salon Business
This paper applies Porter's Five Forces framework to Happy Haircuts, a small independent hair salon facing growing neighborhood competition, including the national chain Hair Cuttery. The analysis evaluates buyer power, supplier power, the threat of substitutes, the threat of new entrants, and rivalry among existing competitors. Based on these findings, the paper identifies the customer as the strategic business area most in need of improvement and recommends targeting customer and employee scheduling as the single process to prioritize. The overarching generic strategy proposed is to improve business outcomes through a superior customer experience, supported by information technology and information systems.
- Introduction: Background on Happy Haircuts and competitive context
- Porter's Five Forces Analysis: Five forces applied to the hair salon
- Strategic Business Area for Improvement: Customers identified as priority strategic area
- Process to Be Improved: Customer and Employee Scheduling: Scheduling selected as the key process to fix
- Generic Strategy and Conclusion: Strategy summary and technology recommendations
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What makes this paper effective
- Methodically applies each of Porter's Five Forces to a concrete small-business scenario, making an abstract framework tangible and actionable.
- Each force is evaluated with a clear impact verdict (positive, negative, or neutral) and a direct statement about whether it should affect strategy, giving the analysis structure and consistency.
- The paper flows logically from environmental analysis to strategic area identification to a specific process recommendation, demonstrating disciplined strategic thinking.
Key academic technique demonstrated
The paper demonstrates applied framework analysis — taking a well-established strategic tool (Porter's Five Forces) and systematically using it to generate business recommendations. Rather than simply describing the model, the author anchors every force to the specific competitive context of Happy Haircuts, then draws practical conclusions about technology implementation and scheduling improvement.
Structure breakdown
The paper opens with context about Happy Haircuts and its competitive situation. It then analyzes all five competitive forces in sequence, assigning each an impact rating and strategic relevance. From there, it narrows from the broad environment to a specific strategic business area (customers), then to a single actionable process (scheduling), and closes with a concise statement of the generic strategy. This funnel structure — environment → area → process → strategy — is well-suited to applied business analysis.
Introduction
Happy Haircuts began as a small barbershop and hair salon, but its business has gradually grown over time. However, competition has also appeared in the neighborhood, including the hair-cutting chain Hair Cuttery. The owner plans to implement information technology and information systems in order to improve business operations. This paper applies Porter's Five Forces framework to better understand the competitive environment, identify a strategic business area that needs improvement, and propose a targeted process for enhancement.
Porter's Five Forces Analysis
Buyer Power
Buyer power is strong. Customers have many options in the neighborhood and are able to dictate whether they prefer to make an appointment or walk in. They can significantly influence how hair salons in the area conduct business. However, this dynamic can be turned to Happy Haircuts' advantage: by implementing information technology and improved management practices, the owner can strengthen client relationships — particularly through better scheduling and more efficient service. The overall impact is positive and should directly inform the business strategy.
Supplier Power
Supplier power is relatively strong in the case of Happy Haircuts, primarily because the business is not a large buyer. As a result, it has little real leverage when negotiating prices or delivery terms. Suppliers could always choose to prioritize larger players in the market who purchase in higher volumes more frequently than Happy Haircuts. The overall impact is negative and should be factored into the owner's strategy.
Threat of Substitute Products or Services
There is virtually no threat of substitute products or services for haircutting. However, there is a small threat in the area of manicure services, as some customers may choose to do their nails at home. The overall impact is neutral and should not significantly affect the business strategy.
Threat of New Entrants
The threat of new entrants remains a meaningful concern. Happy Haircuts was once one of the few hair salons in the neighborhood, but several new barbershops and hair salons have opened in recent months. A particular threat comes from Hair Cuttery, a well-known chain known for its low prices, which plans to open a location in the area. While Hair Cuttery does not offer manicure services, it is a formidable competitor in the hair-cutting market. The overall impact is negative and should significantly affect the owner's strategic planning.
Rivalry Among Existing Competitors
Rivalry among existing competitors is intensifying. With multiple new businesses entering the market and competing for the same client base, competition has accelerated in recent months and is likely to continue growing. Despite the challenges this presents, rivalry can also play a constructive role — motivating Happy Haircuts to sharpen its approach and refine its strategy. Understanding competitive forces in this way is essential for small businesses navigating a crowded local market. This force should affect the owner's strategy.
Strategic Business Area for Improvement
The strategic business area that most needs improvement is the customer experience. The issue is not necessarily how the business is currently treating its customers, but rather the increased competition that will require Happy Haircuts to become even more competitive going forward. Focusing on the customer area is a well-suited choice, particularly given that customer scheduling, customer marketing, and customer information management have already been identified as key processes in need of improvement. Customer experience strategy is widely recognized as a critical differentiator for small businesses facing larger, well-resourced competitors.
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