Sectoral Functional Strategies and Competitive Forces: A Case Study in Footwear Manufacturing

Abstract

This study examines the impact of competitive dynamics on production strategies in manufacturing enterprises, using Porter’s Five Forces Model as a framework and focusing on an SME operating in the footwear production sector. As a labor-intensive and low-tech industry, this sector sees its production processes from design to distribution significantly influenced by external competitive factors. A qualitative research method was adopted, with data collected through semi-structured interviews analyzing participants' experiences and observations. Findings indicate that customer bargaining power is the most influential competitive force in the sector, followed sequentially by supplier power, the threat of substitute products, and rivalry among existing competitors. Additionally, factors such as early-stage design processes, the use of natural materials, and supply chain policies directly shape production strategies.

The intensity of competition in the sector has increased due to the presence of low-cost global manufacturers, pushing local producers toward cost optimization and innovation while emphasizing quality and sustainability as key consumer preferences. Rising customer bargaining power forces firms to adopt flexible production and customized product offerings. Supplier power plays a critical role due to raw material quality, price volatility, and challenges in sourcing premium materials like genuine leather. The threat of substitutes has grown with the proliferation of synthetic materials and fast fashion trends, compelling manufacturers to blend traditional and modern designs for differentiation. Intra-industry rivalry remains multidimensional, involving competition over pricing, quality, distribution channels, and brand perception. The study highlights how competitive forces shape sector-specific production decisions and recommends future research to explore supplier perspectives, managerial strategies, and the impact of digital transformation on competitive dynamics. Sustainable production models should also be evaluated for their potential to create a competitive advantage.