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    Porters Five Forces:: The Mcintire Investment Institute Fundamental

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    This document outlines Porter's Five Forces framework and applies it to analyze the competitive environment of the fast food industry. It discusses that the fast food industry has high barriers to entry, high bargaining power of buyers, low bargaining power of suppliers, high threat of substitutes, and high rivalry among competitors. Porter's Five Forces is a useful tool for assessing an industry's structure and evaluating company strategy.

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    Porters Five Forces:: The Mcintire Investment Institute Fundamental

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    chuacas
    74 views10 pages
    This document outlines Porter's Five Forces framework and applies it to analyze the competitive environment of the fast food industry. It discusses that the fast food industry has high barriers to entry, high bargaining power of buyers, low bargaining power of suppliers, high threat of substitutes, and high rivalry among competitors. Porter's Five Forces is a useful tool for assessing an industry's structure and evaluating company strategy.

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    This document outlines Porter's Five Forces framework and applies it to analyze the competitive environment of the fast food industry. It discusses that the fast food industry has high barriers to entry, high bargaining power of buyers, low bargaining power of suppliers, high threat of substitutes, and high rivalry among competitors. Porter's Five Forces is a useful tool for assessing an industry's structure and evaluating company strategy.

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    74 views10 pages

    Porters Five Forces:: The Mcintire Investment Institute Fundamental

    Uploaded by

    chuacas
    This document outlines Porter's Five Forces framework and applies it to analyze the competitive environment of the fast food industry. It discusses that the fast food industry has high barriers to entry, high bargaining power of buyers, low bargaining power of suppliers, high threat of substitutes, and high rivalry among competitors. Porter's Five Forces is a useful tool for assessing an industry's structure and evaluating company strategy.

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    The McIntire Investment Institute Fundamental

    Presented by Shilpee Raina

    PORTERS FIVE
    FORCES:

    A guide to industry analysis


    What are Porter’s Five Forces?
     Developed by HBS professor, Michael Porter:
    Competitive Advantage: Creating and
    Sustaining superior Performance
     Extensive framework utilized to assess an industry’s
    competitive environment
     Incredibly useful in determining a company’s
    positioning and evaluating its strategy
    The Five Critical Factors
     Threat of Potential Entrants
     Bargaining Power of Buyers
     Bargaining Power of Suppliers
     Threat of Substitutes
     Rivalry Among Competitors
     Apply to: FAST FOOD INDUSTRY
    Threat of Potential Entrants
    • Ability of new firms to successfully enter the market due
    to level of BARRIERS TO ENTRY
    – Economies of scale, capital requirements, cost & distribution
    advantages: International Food Chains
    – Product or service differentiation: Happy Meals
    – Psychological factors: Burger King brand name
    • Fast Food Industry: HIGH barriers to entry,
    LOW threat of entrants
    Bargaining Power of Buyers
     The buyers ability to drive down prices, demand
    higher quality goods, and play competitors
    against each other
     Power GAINED by:
     High concentration of Buyers relative to companies: several
    fast eating options for mainstream consumer
     Products/services are undifferentiated: burgers are burgers
     Purchases represent significant fraction of buyer’s cost: fast
    food is inexpensive, lower buying anxiety
    Bargaining Power of Buyers
     Power REDUCED by:
     Differentiate Product or Services by raising
    SWITCHING COSTS: chalupas, happy meals,
    whoppers
     Avoid dependence on one buyer: kids, teens, and
    adults
     Fast food industry: HIGH Bargaining
    Power of Buyers
    Bargaining Power of Suppliers
     The suppliers ability to raise prices, or reduce
    quantity and quality of inputs
     Power GAINED by:
     Supplier’s industry is concentrated: input foods are
    common goods
     Buyer is not important to supplier: several food chains
     No substitutes: numerous food wholesalers
     Power REDUCED by:
     Supply flexibility: relationships with many wholesalers
     Backward integration: develop own farms
     Fast Food Industry: LOW
    Threat of Substitutes
     These are products/services that perform the same
    function, but are in different industries: grocery
    stores, fast casual
     Availability of substitutes limits industry profitability
     To REDUCE threat:
     Product/service differentiation: dollar menus, brands
     Collective industry response: healthier foods, low prices
     Fast Food Industry: HIGH
    Rivalry Among Competitors
     Competition is intensified when:
     Competitors are numerous and equally balanced
     Slow industry growth: fast food is saturated
     High fixed costs: need to sell high volumes to
    recup
     Standardized products/services: intense price
    competition, $1 menus
     Fast Food Industry: HIGH level of rivalry
    In Summation
    Fast Food Industry is highly competitive
    due to: high barriers to entry, high
    bargaining power of suppliers, significant
    substitutes, and intense rivalry.

    QUESTIONS?

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