Essay Porter's Five Forces Analysis Of The Food Industry

INTRODUCTION

In this essay, I will perform a five forces analysis on the food industry. There is a wide range of both large and small firms in the food industry. This is one of the reasons why firms such as Kerry Group produce such a rich variety of foods and food ingredients in their sector, e.g. LowLow, Dairygold, Charleville, Denny, etc.

FIVE FORCE ANALYSIS OF THE FOOD INDUSTRY

Firstly, I will analyze the buying power of customers in the food industry. Customers can have a big influence on the suppliers in the food industry, not only directly but through retailers also. If customers reduce the amount of a product they buy due to its cost, it may have very little impact on the retailer, but should the retailer stop selling it or try to reduce the costs of obtaining it from the supplier, it could have a massive impact on the supplier. Customers can easily switch between retailers in the food industry due and this makes them quite powerful. In 2007, Dunnes Stores cut their ties with Whelan’s Foods as they wanted to reduce their costs and Whelan’s ended up having to close down as a result.

Secondly, I

It is quite stiff, therefore in order to be successful, firms have to differentiate their products and brand from their competitors. The fast food industry is quite sodden so firms do not grow at great speeds. The intense price competition amongst firms such as McDonald’s, Burger King, KFC, etc. makes it even more difficult for firms in the industry to grow. The high fixed costs in the food production industry for firms such as Kerry Group make for intense competitive rivalry. Furthermore, because Kerry Group and Glanbia produce many ingredients and flavourings for foods consumers may be totally unaware that the products they are purchasing have Kerry Group or Glanbia ingredients therefore brand loyalty is insignificant which further intensifies the industry