Threat of new entrants: The threat of new entrants is high. The major barriers for a startup to enter the industry are the economies of scale and the distribution channels necessary to be profitable. Due to the relatively little differentiation among companies in the industry, customers tend to visit the closest and most convenient store instead of sticking to a particular one, which makes wide distribution of the business quite essential for the fast food restaurants. Threat of substitutes: The threat of substitutes is also high. Firms in the fast food industry and home meal replacements have to continuously innovate to maintain various product differentiations and high quality of food and service in order to stand out against competitors.
Luckily, this aspect is mitigated by the fact that Saputo also offers other products such as specialty cheeses, which are more differentiated. Moreover, although it used to be common for milk producers to do morning “milkmen” deliveries, it is now largely replaced by more conventional retail distribution. There is little likelihood that players such as Saputo reverse the trend by integrating forward and sell directly to consumers, which increases the power of food retailers. Nevertheless, dairy products are an important part of most people’s diet, and supermarkets are therefore strongly motivated to keep on carrying these products, which in turns, weakens their buying power. Supplier Power The suppliers in this market are dairy farmers and their power is assessed as being moderate.
Case 2: Whole Foods Market 1. What are the chief elements of the strategy that Whole Foods Market is pursuing? Growth Strategy: Whole Foods has maintained a growth strategy using a combination of opening new stores and acquiring smaller chains that had good management and were in promising locations. Since the company has ran out of attractive acquisition candidates they are focusing on opening 10-15 bigger stores in metropolitan areas ranging from forty thousand to eighty thousand square feet. Their main acquisition was Wild Oats in 2007 for $700 million which gave them entry to five new states.
He goes onto further explain that the industry structure comprises of New Entrants, Suppliers, Buyers, Substitutes, and finally Existing Competitors. We are also told within the article that industries have a gross difference in profitability regarding ROI (Return on Invested Capital). He cites various examples from different industries such as Airlines (6%) vs. soft drinks (38%). Both these industries in this example have the five forces to thank. Porter goes on to say that several combinations of forces help create a low or high return industry.
We shall examine some of the issues that food and beverage manufacturers face. The biggest obstacles for food and beverage processors in terms of adopting Lean manufacturing approaches to improvement. Notwithstanding the many differences to other industries, the food and beverage industry has many similarities to other industries. Not the least of these is the fact that product is processed just like other forms of manufacturing. Health and safety considerations add to the complexity of processes, but do not alter the fact that they
The other issue that is happening is the market share. The company had a market share of roughly 70%, but is being reduced on a significant level. Also, many other companies have emerged and started to manufacture the same products that Covington does. The company has started losing several industries in the United States because of the bad economy and increased competition. The concepts to be used in doing the analysis of the case: The concept that could be used to help do an analysis for this case would possibly be using the Four Approaches to Effectiveness Values.
such as Wal-Mart, target, best buy. • more variety of features. they warehouses have a smaller variety when in comes to the same product Suppliers: Weak bargaining power • many suppliers • low switching cost • many substitutes exist • large quantities are needed Competing Sellers: Fierce competition • buyers demand is growing • buyers switching cost is low • quality better Buyers: weak bargaining power • large membership base • best value Potential New Entrants: low threat • small pool of entry candidates • high barriers to entry • expanding market 3. All three of the warehouse club have similar strategy. Each of the warehouses corporate strategies is growth-concentration, grow and build.
Although many might argue that Wal-Mart is misleading its customers by using the opening price point, I believe that overall Wal-Mart prices are lower than their competitor’s prices. At my work, I conducted a little survey by asking my colleagues if they think Wal-Mart is good for America. My colleague’s responses were based on consumer’s point of view and stated that Wal-Mart is a good store to have, pointing out the convenience and low prices. However, our society is not only comprised of consumers and shareholders. There are also workers and suppliers, who don’t think that Wal-Mart is good for America.
Question Comment on the “tightness” of the control system used by Fit Food, and the effects of this in terms of the (internal) cost and benefits to the organization regardless of whether the accounts are acceptable for publication. Result Controls Fit Food measures the performance of each division based on their achievement of annual operating plans such as divisional growth rate to 7% and bonus on achieved profit targets and stock option offered to corporate managers and divisional presidents. * The 7% divisional growth rate was the desired result – organizations’ true objective. * Bonus and stock options offered by Fit Food was a motivational factor in achieving the set targets. * Behavioural displacement is present in result control i.e.
Supermarkets’ buying power creates a ‘zero-sum’ effect, where not everyone benefits. (Wrong, cited in Allen, 2009, p70) It has a large impact on poorer countries as workers are indirectly forced to work in poor conditions. The selling power of the big supermarkets has a large impact on smaller retailers and businesses which often have to close, leaving high streets and town centres