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Analysis of Porter’s Five Competitive Forces Model

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Threat of New Entry:
• Not too expensive to enter the industry
• Experience needed but training is easily available
• Some economies of scale
• Some cost of benefits if in business for some times
• No technology protection
• Low barriers to entry
• New entry quite easy

Supplier Power:
• Moderate number of suppliers
• Supplier large
• Similar products
• Able to substitute
• Able to change
• Neutral to supplier power

Threat of Substitution
• Some cross-product substitute
• Ability to impart food
• Some substitution

Buyer Power
• Few, Large supermarkets
• May be co-operatives?
• Very large orders
• Homogeneous product
• Extreme price sensitivity
• Ability to substitute
• High Buyer Power

Competitive Rivalry
• Very many competitors
• Commodity products
• Low switching costs
• Low customer loyalty
• High costs of leaving market

The main purpose of Porters Five Forces is to find a position in an industry where a company can defend itself against competitive forces or it can influence them in its favor.

Based on the information above, I rate each competitive force as high, medium and low in strength and rate as follows.

If we look at the situation of Martin Johnson, the five forces could be rated as follows.

Rivalry among existing competitors is high because it is a commodity product and it has a lot of competitors.

The threat of new entrants is seen as medium, based on the information though it needs skills to do it but training is readily available.

The threat of substitutes could also be seen as medium with other product alternatives not having the same quality, taste and availability in the market.

The bargaining power of buyers could be rated as high as consumers have a wide variety of products to choose from and buy for the best product price in the market in order to save.

The bargaining power of suppliers is low.   Since it is commodity product not just one supplier but many can satisfy the...

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