Analyzing The Industry Forces That Affect Competition And...

INDUSTRY FORCES One way to determine the profitability of a firm is to analyze the industry forces that affect competition and drive profits down. Michael porter proposes a framework to analyze the level of competition within an industry; according to porter these forces directly influence the system profitability. The stronger the forces are the less profitable the firm becomes. The forces are defined to be strength of competition, barriers of entry, the power of buyers, power of suppliers, and the substitute products. In the other hand, complementors, cooperation with buyers and suppliers, and coordination among competitors will be the forces that drive the firm profits up. This framework will be followed through to perform the analysis of Whole Foods Market firm, to determine the firm’s profitability and future returns for the long-term investor. The first step in the Porter’s framework is to define the industry boundaries to which the forces affect the firm. Whole food market is d efined to be in the grocery industry by its technological similarity and the market interdependence, it can be inferred that the firm falls in the grocery business targeting the consumer interested in healthy organic products. Whole Foods Market strives to distinguish themselves among competitors by offering high quality organic products, with good customer service and introducing proprietary brands that offer a higher profit margin and quality to the consumer. In an industry that faces highShow MoreRelatedThe Framework Developed By Michael Porter999 Words   |  4 PagesThe Five Forces Model The framework developed by Michael Porter, which identify and analyze the competitive landscape in an industry that impacted by five forces. These forces are the existing competition in the industry, threat of new entrants, the power of suppliers, the power of buyers, and the threat of substitutes. The model helps to determine the profitability of an industry and create a competitive strategy for the business. If the five forces in an industry are strong, this industry will beRead MorePorter Five Forces Analysis1500 Words   |  6 PagesPorter five forces analysis From Wikipedia, the free encyclopedia A graphical representation of Porters Five Forces Porter five forces analysis  is a framework for industry analysis and business strategy development. It draws upon  industrial organization (IO) economics  to derive five forces that determine the competitive intensity and therefore attractiveness of a  market. Attractiveness in this context refers to the overall industry profitability. An unattractive industry is one in which theRead MoreWest Lake Home Furnishings Ltd1166 Words   |  5 Pagesintending to stay at top of its business and is very eager to grow. After analyzing the benefits like increase in profit, growth of sales, market penetration, effect of reduced price on other businesses and the rapport with the wholesaler, it has been decided to accept the offer. Large and promised order for a year is the justification for accepting the reduced price in the offer. The main objective of the company is to maximize the profit. In order to achieve this at retail price of $29.99, quantity ofRead MoreWhat Is An Industry? Essay1397 Words   |  6 PagesWhat is an Industry? So, what is an industry? This sounds like an absurd question. At least that was what I thought while I twirled my pencil around while sitting in my MBA economics class at 7PM. However, when the professor began to discuss the renowned Harvard Professor Michael Porter and his â€Å"Five Forces† model, I immediately became more interested. The diagram of his five forces model shown below is widely used to analyze the intensity of the competition and the profitability and attractivenessRead MoreMarketing Environment Of Cardswap, Canada s # 1 Site For Discounted Gift Cards1575 Words   |  7 Pagesmarketing environment of CardSwap consists of factors and forces that affect the business’s ability to build and maintain successful relationships with customers (Marketing Teacher, 2014). Marketing environment is made up of the Microenvironment and macroenviroment. The Microenvironment refers to the internal factors of the business, such as the company, suppliers and marketing intermediaries (Marketing Teacher, 2014). Through analyzing CardSwap’s strengths, weaknesses and their opportunities andRead MoreToy R Us Analysis: Five Forces.1965 Words   |  6 Pagesthe on the Internet. Being in the specialty online retail industry of toys and hobbies, firms within this industry must analyze various parameters that could influence their attractiveness in the market. Once a firm understands their own specific industries environment, they can make strategies that will ultimately provide them with a competitive advantage to outperform their rivals. In order to understand the online toy retail industry, John Barbour, the CEO of Toyrus.com must look at the variousRead MoreEssay on Analysis of Ocbc Banking Industry2548 Words   |  11 Pages[pic] Topic Of The Report: The Analysis Of Porter’s Five Forces Model Towards OCBC Banking Industry Table Of Contents Table Of Contents...................................................................2 1. Introduction.........................................................................3 1.1 Introduction of the work......................................................3 1.2 Relative backgrounds of OCBC Bank............................Read MoreGlobal Competition1344 Words   |  6 PagesGlobal Competition Starbucks is the unquestionable market leader in the U.S. and is in the early stages of an international expansion plan that could lead to more revenue coming from international than domestic locations within the decade (www.beta.fool.com). Starbucks has significant strengths in coffee business. It is the current market leader with over 17000 stores worldwide. It has no debt and uses internal cash flow for expansion. Also since all of its stores are company-owned, itRead MoreThe Nature of Competitive Advantage4497 Words   |  18 Pagesfactors e. Physical/Environmental Factors IDENTIFICATION OF INDUSTRIES OPPORTUNITIES AND THREAT pg. 7 a) A Model For Industry Analysis- Porter’s Five Forces b) Rivalry c) Threat Of Substitutes d) Buyer Power e) Supplier Power f) Barriers to Entry / Threat of Entry g) Generic Strategies To Counter The Five Forces INTERNAL ANALYSIS pg. 13 a) SWOT Analysis Read MoreMktg522 Marketing Plan3311 Words   |  14 PagesUniversity MKTG522 Situation analysis When it comes to marketing the idea of a drive through grocery store there are several advantages and disadvantages to look at. This would include the current idea through company such as The Tesco concept store which is currently a drive through concept established in Baldock, Hertfordshire. The concept used is similar to the idea of my store but does not offer the complete idea of a grocery