Porter 's Five Forces Competition

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PORTER’S FIVE FORCES Porter’s five forces is a framework to analyze level of competition within an industry and business strategy development. It is based on the concept that there are five forces that determine the competitive intensity and attractiveness of a market, this specific one being the crop production industry. The five forces are competition (rivalry) within and industry, bargaining power of buyers, bargaining power of suppliers, threat of new entrants, and threat of substitutes. Competition within the Crop Production Industry In this industry competition is steady, and there are many different topics that stem from competition. One topic that involves competition is ownership, specifically large versus small ownership. Another form of competition in this industry deals with seed production such as where the farmers get their seeds from. The selling of generic store brand food is also a competitor within the crop production industry, as well as the topic of imports. All of these topics play a role in the competition of the crop production industry. Buying/Selling One basis of competition within the industry is importing. Often times the buyers of crops choose to import instead of buying local from farmers. Supermarkets and grocery stores do this because it is a lot cheaper to import rather than buying locally. Farmers lose profit this way because they are not selling as much of their product. ” The vegetables most commonly imported include tomatoes, cucumbers, squash and peppers, in both fresh and frozen varieties. Processed imports are uncommon due to the highly competitive nature of the domestic industry” (IBISWorld, 2014). Since the farmers cannot sell as much of their product, they don’t need to produce as much... ... middle of paper ... ...rocessors Snack or junk food is another potential substitute. People are starting to want healthier options when it comes to food, and the processors of snack foods are finding alternatives. “American food processors are dramatically altering their strategies to serve consumers who are concerned about better nutrition and fewer sugars and fats in their foods. Many chain restaurants are likewise seeing excellent sales from lower-calorie foods. McDonald’s’ soaring success with salads is an excellent example. Snack food makers are likewise offering more and more reduced fat items.” (Plunkett Research, 26 March 2014) Price plays a big role in contributing to this threat of substitution. Although people want healthier food, they do not want to pay the price. For example organic food is very expensive. As an alternative they will buy a McDonald’s salad instead. References
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