Why is the soft-drink concentrate industry so profitable? Will this continue? To answer these questions, analyze the industry structure using Porter’s 5 forces model. The industry analysis through Porter’s Five Forces reveals that market forces are favourable for profitability. Bargaining power of suppliers is relatively low over the industry while the power of buyers is strong.
The power of buyers can pressure price reductions. Here, the products of the LCD TV industry are nearly equal and largely undifferentiated, and buyers face no significant switching costs in changing vendors. Also, since a television is almost considered a necessity, a large contingent of price-sensitive customers will seek out quality products within their price range. The threat of substitutes can affect profitably. Here, there are several substitutes for what the group provides, both within the industry (other makes and models) and out (computers, laptops, tablets, and other electronics that are more versatile than LCD TVs).
Discount Customers- Discount customers are also frequent visitors but they are only a part of business when offered with discounts on regular products and brands or they buy only low cost products. More is the discount the more they tend towards buying. These customers are mostly related to small industries or the industries that focus on low or marginal investments on products. Focus on these types of customers is also important as they also promote distinguished part of profit into business. Wandering Customers- These are the least profitable customers as sometimes they themselves are not sure what to buy.
When the buyer power is low the customer doesn’t have many options and will pay what the current price is for the product. Right now buyer power is low for UMUC haircut’s since they do not have much competition in the area. With new competition opening up in the area this could affect the competitive advantage in the buyer power for UMUC haircuts. Supplier Power is strong when UMUC haircut’s only has a few suppliers and the more help you need from the supplier, in turn driving the prices up. Suppliers have low power when UMUC haircut’s has many suppliers to choose from and can bargain to... Five Forces Analysis
Buyers’ bargaining power in oil industry is low as there is no price sensitivity and the concentration is very high. Buyers are industrial players and have low power because upstream suppliers can control supply and consequently prices. In Airlines the concentration, the volume of the single buyer, switching costs and the backward integration are low while substitutability is high. Buyers are more price sensitive, except for business travelers who are price-intensive. Suppliers’ bargaining power in oil sector is low, as these industries used vertical integration to control the process, there is no threat of forward integration (as in Airlines) and the concentration is low (there are many plant suppliers and engineers).
In this particular case we can observe how low labor cost contributes to obtain low import tariffs therefore leads to cheaper products. Walmart’s success in Mexico was definitely possible because of the NAFTA implementation. Question 2 NAFTA benefits every company that is willing to operate abroad. This agreement solved some difficulties but Wal-Mart`s inherent competitive strategy was effective in the Mexican Market. As we all know Wal-Mart`s strategy to win against its competitors is its offered prices.
The benefits of accrual basis accounting include equal distribution of expenses paid in advance and in arrears. Cash basis accounting is beneficial to smaller businesses especially when the company does not have to maintain an inventory, there are no customer accounts of returns, and when most of the sales are cash sales. This method of accounting is typically easier and cheaper to maintain. Although there are numerous benefits to both options the business must determine which method is best for them and that is usually based off the
One reason for Jamba Juices success is the fact that they keenly observe their value discipline of operational efficiency and to maintain said operational efficiency with as low a cost as possible. Jamba Juice is known for its low cost juices and snacks in their industry and has changed the way consumers viewed retail fast juices. This discipline has made Jamba Juice the preferred choice of consumers in the retail juice market. Jamba Juice from inception decided on the type of product to offer the consumer market. They needed to offer the product at the right price and with some variety that would stimulate the consumers mind.
Economic growth of any country and economy has a wide impact on demand generally. For Nestle, being in the FMCG segment, most of its products do not get big impacts because of the economy. Few of its products such as premium chocolate, suffers during the recession and record better sales during growth. Most of Nestle products are used on daily basis and they are among basic needs of human life, so economy does not impact too much. I do not say here that it does not impact at all, but the impact is less.