Hawk Leathers Ltd ("Hawk") is a company based in the UK thatemploys around 60 people in the manufacture and sale of leather jackets,jeans, one and two piece suits, and gloves. These are aimed primarilyat motorcyclists, although a few items are sold as fashion garments.

Hawk sells 65% of its output to large retail chains such as Motorcycle City and Carnell's, exports 25% to the USA and Japan, and sells the remaining 10% to individuals who contact the company directly. The latter group of customers specify their requirements for a made to measure suit (they are often professional racers whose suits must be approved by the authorities such as the Auto Cycle Union). The largeretailers insist on low margins and are very slow to settle their debts.

There are around a dozen companies in the UK who make similar products to Hawk, plus very many other companies who compete with much lower prices and inferior quality. Hawk's typical selling price for one-piece suit is £1,000, whereas the low quality rivals' suits retail at around £400. As Hawk say in their literature "if you hit the tarmac, there's no substitute for a second skin from Hawk". Synthetic materials are waterproof, unlike leather, but do not currently offer sufficient protection in an accident.

Sales of leathers in the UK are growing rapidly, mainly due to are urgency of biking from more mature riders of large, powerful machines. Such riders are often wealthy and have family and financial commitments. Currently Hawk, and its rivals for quality leathers are finding it hard to keep up with demand. However, Government policy and EU emissions controls are likely to limit motorcycle performance, and some experts predict that these regulations will cause sales of large motorcycles to level off.

Whilst supplies of leather from Asia, Scandinavia and the UK are plentiful, a key problem is recruiting and training machinists to stitch and line the garments. Hawk has been able to invest in modern machinery to help production but the process is still labour intensive. Hawk has found that the expertise, reputation and skilled labour needed to succeed in the industry takes years to build up.

Although the industry is fairly traditional, there are some new developments such as a website for individual customers to browse and specify requirements, and new colours such as metallic for leathers, and a small but growing demand from non bikers who are interested in recreational' and 'club wear' items.

Required:

(a)Analyse the issues facing Hawk's industry using PEST analysis.

(b)Using Porter's 5 forces, evaluate the strength of each competitive pressure facing Hawk.