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Super Project

In: Business and Management

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Business Risk/Strategic Decisions

Industry attractiveness: Porter’s Five forces. Rated 1(low) to 10(high)
Competitive Rivalry and Threat of substitution: Extremely high(10). The list is endless: other similar Jell-O products, dessert products, snacks, and soft drinks are all substitutes. Food manufacturing firms are competing with an endless amount of products with many produced by rival firms carrying strong brand equity. Businesses in the Food Manufacturing Industry are in constant competition with one another where their products are sold right in front of the view of the customer. The competition in the industry is fueled by limited shelf space in retail stores. So, all of the food manufacturing companies must compete with each other to ‘get into’ stores and stay there. In the soft-drink market, for example, this often leads to self-cannibalization of shelf space by the creation of new products. It is better for Coke space to be replaced by Vanilla Coke than for it to be replaced by Pepsi.

Threat of buyer power: Medium (5). The buyer power is a product of the industry competition and readily available substitutions. Buyers have a large degree of indirect influence. Everyday people will respond to price changes by simply switching to the many alternatives created by rival firms causing the retail stores to buy less of a product to put on their shelves. In a sense, Food Manufacturers are both business-to-business and business-to-consumer. Also, if a dominant retail store arrives, they will directly negotiate prices down to their liking.

Threat of new entrants: Low(3). Anyone can produce food. However, to mass-manufacture it, there is a huge initial outlay involved with PPE. Even with using only excess capacity, it cost $200,000 to set up super project in 1967. Adding in inflation, the 2013 equivalent of this is $1,400,461.08. Also, many food

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