Porter’s 5 Forces Essay Example for Free

Porters 5 Forces EssayThe fast food exertion is one which affects many lives in Canada. The fol funkying is a Porters 5 Forces analysis that will determine how attractive this constancy is as a whole. To determine the threat of new entrants, one must first consider the barriers to entry. Firstly, the start-up be associated with the fast food industry be relatively minute. This acts as a low barrier to entry. In this industry, the top four companies account for 37.4% of the total revenue. Although that is not a percentage of mind-changing significance, a business unveiling this industry must be able to uniquely establish itself with product differentiation. That being said, it is believed that the industry submergence is relatively low. Accordingly, high barriers to entry arise from government regulations, specifically including health and food service as well as occupational health and safety issues, on with a high amounts of competition indoors the fast food industry. Overall, the barriers to entry can be placed as low resulting in a high threat of new entrants.Next is establishing the power of the buyer. The fast food industry has been impacted by the decreasing demand for fried food and subsequently the increase for healthy options. This change in consumer trends along with a high variety of fast food places to choose from assume high power of the buyer. Secondly, it has been driven that the products sold in the fast food industry are luxury goods goods that are purchased more-so wheneconomic time are good. In turn, when economic times are rough, consumers will choose to eat slight fast food and more fellowship cooking. Overall, the power of the buyer within the fast food industry is high. Thirdly, the threat of substitutes must be determined. Substitutes for the fast food industry implicate grocery stores (i.e., eating home cooked meals), full-service restaurants (both single and multiple location based businesses), catering companies, food trucks, bars and night clubs. Due to the incident that the fast food industry consumes a large portion of the food commercialise, it can be cogitate that there is a medium threat of substitutes.Examining the bargaining power of suppliers, one can look at two different groups, (1) large companies and (2) small companies. Large companies within the fast food industry include dominant players such as McDonalds, Subway and Yum Brands. Due to the large size and demand of these companies, they are relatively dependent on those suppliers who can meet their needs. For these companies, the bargaining power of suppliers is high. However, all other smaller companies are faced with many different suppliers that can meet their demand needs.The smaller companies are faced with low bargaining power of suppliers. All in all, one finds the total bargaining power of suppliers to be at a medium level. Lastly comes the examination of industry rivalry. The three leading companies that take up 33 .1% of the market share include McDonalds, Subway and Yum Brands. Furthermore, within the market, the total number of companies is forecast to increase on average 1.5% per year to 17,039 in 2019. Overall, the dominant players along with the size of the industry lead to high industry rivalry. found on the previous analysis and using a scale of 0-10 (0 being very unattractive and 10 being very attractive), the following scores can be determined Threat of New Entrants = 3, berth of the Buyer = 4, Threat of Substitutes = 6, Bargaining Power of Suppliers = 5 and Industry Rivalry = 3. With an average score of 4.2, it is determined that the fast food industry is of medium attractiveness.