Business Valuation of Polo Ralph Lauren Corporation - Mark Moore ...

to Jones New York’s inability to meet the $100 million required at the end of 2002. IfJones New York wins the lawsuit, it will materially impact the value of the company,especially with $343 million in cash.Five Forces ModelRivalry Among Existing Firms:The fashion retail industry is constantly growing with several competitors,including Tommy Hilfiger, The Gap, Liz Claiborne, Lacoste, and Express. Polo RalphLauren has managed to retain a large portion of the market with a competitive edge byintroducing popular designs and branching into new markets such as interior decorating.The company is expanding and increasing sales overseas by acquiring smaller retail andmanufacturing companies around the world. The popularity of the internet has broughtmore sales opportunities, which has led to an increased development of online marketing.While entry barriers for matching Polo Ralph Lauren’s large scale operations are veryhigh, the cost of entering new markets is not so high in its position. This is why homefurnishings, interior decorations, and fragrances have been added to its product mix.Licensing, opening new stores, and maintaining a global infrastructure are also key forfuture growth.Threat of New Entrants:There will always be a threat of new entrants in the fashion retail industry, but itis incredibly difficult and expensive to match the scale economy of Polo Ralph Lauren.The company has dominated the market by creating and selling popular designs, and bycreating global operations of manufacturing, licensing, and retail.Threat of Substitute Products:Substitution plays a large role in the scope of Polo’s marketing strategy. Some ofits direct competitors attempt to introduce new styles to increase demand, while othercompanies try to mimic the designs created by Polo. In order to compete, Polo Ralph12