Neat And Clean Solutions The Growth Challenge Case Solution

1. Porter’s 5 Forces Analysis

i. Threat of New Entrants

The cleaning services industry in India comprises of numerous small players. These specialize in their local areas and are a threat to neat and clean solutions. It is easy to set up a cleaning services company as the equipment is not expensive, and minimal training is required (Allied Market Research, 2015; Suresh, 2018).

ii. Bargaining Power of Suppliers 

The soap for neat and clean solutions was purchased from 3 suppliers. Purchase of cleaning material to be used in cleaning expensive fabric was done from Amazon.com, Inc. In terms of cleaning material, the dependency on a few suppliers meant that they had increased bargaining power. However, when it comes to suppliers of equipment, there were a large number of suppliers. The owner's experience resulted in neat and clean solutions to buy equipment at the lowest quoted price. For equipment, suppliers had less bargaining power.

iii. Bargaining Power of Buyers

The buyers in the cleaning services market had a number of service providers to choose from. However, very few cleaning services use cleaning equipment and material that preserves the fabric. Hence, good quality cleaning services are difficult and increase the switching costs for buyers. This reduces the bargaining power of buyers and can explain why people were using the services provided by neat and clean solutions, despite the fact that no discounts were offered.

iv. Threat of Substitute Products

A substitute to cleaning services is self-cleaning and the equipment that is sold for this. Self-cleaning is not growing as rapidly as cleaning services due to changing consumer lifestyles. Another substitute for cleaning services is domestic workers or maids that do the cleaning for Indian households. These have been on the rise, especially in high income households (WIEGO, 2019). People buy their equipment and have their domestic workers clean the house. This is a threat to the cleaning services industry. 

v. Competitive Rivalry

The competition in the industry came from two sources. First amongst these were street level shops. These provided less rivalry to neat and clean as these were unbranded. These also used equipment and cleaning material that resulted in damaged fabric. The other source of competition was from branded players, which included Guardini, V S Evesure Services, Perfect Cleaners, 5 Star Services, The Service Master Company, ABM Industries Inc., and Excellent Cleaning Solutions. The competitive rivalry is high in this segment, with larger players that are about 50, generating around 30% of the industry’s revenue. On the other hand, smaller players provide competition due to their expertise in local areas (Allied Market Research, 2015).