Perform a Detailed 5 Forces Model
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Perform a Detailed 5 Forces ModelPerform a detailed Porter's Five Forces analysis
a) Buyer Power: Customers have low bargaining power since they typically can't bargain for the price of their coffee but there are numerous coffee shops in the area. Overall there is high buyer power.
b) Supplier Power: low because there are many suppliers available giving us multiple options to chose from
c) Threat of Substitutes: High since there are multiple coffee shops in Winston Salem offering our primary product: coffee. Starbucks, Crankies, Panera Bread, Gas stations...
d) Rivalry Among Existing Competitors: High, refer to c.
e) Threat of New Entrants: High since start up costs for coffee shops are relatively low.
Analysing this from the perspective of our cafe, given the location - Near the school, on Deacon Blvd and near the stadium here is what I think
Buyer Power - Low, the population visiting this area is high, there are not many coffee shops around.
Supplier power - Our suppliers are the bean suppliers, we still want to go and get stock from those who sold the same variety as in our grandpa's age. We may not have a lot of option ?!
Threat of substitues - NC being a warmer place, there is always treat from substitues like Soda and other cold drinks. There is a Ihop and a few other gas stations close by.
Rivalary - Hmmm ... lots but not in that area. We are in a relatively safe location, but the cafe should not run out of business bcos of my incompetency :(
Threat of new entrants - This area is attracting a lot of new shops.... one of it can be a coffee shop. The probability is high.