Porter's Five Forces Model Framework

Porter’s Five Forces Model Framework

To understand better industry and market, it’s strong and weak sides it is recommended and very helpful to use Porter’s Five Forces Model Framework. It is essential to examine coffee industry using this Framework to be able to see the future perspectives of the industry.

• The threats of new entrants or barriers to Entry:

In the present modern world where coffee is set to be really popular among different kinds and types of people more and more people and companies are getting involved into coffee business. If the farmers are not getting enough funds and it is rather hard for them to survive retailers are doing so much better.

In general is it wouldn’t seem really hard to entry the industry by opening a

The biggest retailer Nestle is a well-known company that made a great impact in the life of the industry.

It is definitely easier to entry for the companies with the name brand like Coca Cola because of its name recognition and available resources. Coca Cola, the world’s largest soft drinks company decided to launch a number of coffee energy drinks under the Full Throttle energy drink brand in the US.

McDonald’s is also setting up the coffee machines and baristas in their restaurants that can show the prove that for the bigger and known name brands it is easier to entry the industry. They also have existing Marketing strategies to their advantage.

So, as a conclusion it is fair to say that the barriers to entry are rather high and difficult unless the company have a good marketing team, name recognition and financial advantages, otherwise it is harder for the new unknown chains to enter the industry.

• The bargaining power of suppliers:

In general power of suppliers is very limited. Since the suppliers come from the developing countries they are not always have adequate funds and not in the position of raising the

In the Asian countries the coffee makers are still trying to convince people to drink more coffee instead of tea, but it just goes historically in those countries.

Countries like United Kingdom that are known to be a tea drinking society are drinking quite a lot of coffee these days and also considered to be a big coffee drinking culture in Europe.

• Power of Customers:

Power of customer is very big and important in this industry. Customers are the ones that the whole industry depends on. It is very important to satisfy the consumer and make him feel good and happy, so he will come back again.

Word of mouth is a very important aspect in this part of the mode. If the word spread about the certain coffee or certain coffee shop people will want to try it and in case they like it-to try it. Customer has always to be satisfied and that’s why the growers should grow more different types of coffees and the retailers should find new ways of making coffee to appeal the customer’s attention.

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