Hometown Deli Stage 1 Essay

841 WordsNov 13, 20124 Pages
• Perform a detailed Porter's Five Forces analysis for your Hometown Deli, addressing each force in one or two sentences and defining the force, its impact on the Deli and your strategy or strategies for dealing with it. * Buyer power is, “the ability of a buyer to significantly influence the terms of a purchase.” The buyer power comes from Hometown’s customer base. Because the deli has been a local hotspot and community-gathering place since 1952 there must be a handful of regular customers. With business slowly declining over the last 5 years, a handful isn’t enough. Without an increase in customers, Hometown’s ceiling is limited (Grimes, 2005). * It can be assumed that supplier power is high. Companies that supply goods have the ability to dictate the price of the goods they are providing. The more suppliers charge, the less competitive Hometown will be because it will reflect in the cost of the finished product. Some of the mentioned goods include specialty teas and coffees, ingredients for baked goods, soups, deli meats, condiments, packaging materials etc. * The presence of substitutes can reduce industry attractiveness and profitability. (Porter, 1998) There is a moderate probability that other establishments in the area may offer products or services similar to that of Hometown Deli. If customers are willing to accept substitute services or products what can be done to change that? * The threat of new entrants is high. Fast food restaurants, super market deli departments, and the possible opening of a Wall St. Deli in the area can raise the level of competition and possibly reduce Hometown’s share. * If a rivalry among existing competitors is present, sales and profit could potentially be affected. At this time there doesn’t appear to be any existing rivalries, only the threat of new entrant and current competitors. With the

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