Cracker Barrel’s Porter’s Five Forces Analysis

NB: We do not resell your papers. Upon ordering, we do an original paper exclusively for you.

NB: All your data is kept safe from the public.

Table of Contents

Threat of Substitutes
Threat of New Entrants
Bargaining Power
SWOT Analysis
References

Threat of Substitutes

Cracker Barrel faces the threat of immediate substitutes in the retail store chain. The business has however tried to mitigate the effects of direct substitutes to its products by creating additional gift shops. In doing so, the risks of low sales because of available substitutes have reduced considerably (Dess, Lumpkin & Eisner, 2009).

Although the business continues to face threats of heightened competition, Cracker Barrel occupies a comfortable position as a family restaurant of choice across the market. This condition leaves Cracker Barrel business advantaged over its peers in the restaurant business (Dess, Lumpkin & Eisner, 2009).

Threat of New Entrants

In spite of the fact that a business may easily enter the restaurant industry, it is increasingly difficult to create a strong franchise that matches Cracker Barrel. Therefore, Cracker Barrel as an established business in the restaurant industry faces fewer threats of new entries into the market. In general, it is difficult for the new entrants to turn around the tables in their favor because Cracker Barrel already enjoys the highest customer loyalty in the market (Ireland, Hitt & Hoskisson, 2011).

Bargaining Power

The industry evaluation demonstrates that the customers have the bargaining power as opposed to suppliers. Although there exists numerous restaurants from which to choose from, customers still have the market authority to decide from which restaurant to eat (Ireland, Hitt & Hoskisson, 2011). This owes to the fact that there is lack of a switching cost when customers select different restaurants.

This scenario demonstrates that Cracker Barrel as a player in this market environment must take an active step to entice its customers to generate loyalty through happiness. This implies that a customer may decide to eat in a different chain given that he or she will experience no cost in the process. It becomes necessary for all the restaurants to practice good customer service in order to leave their customers happy and satisfied (Dess, Lumpkin & Eisner, 2009).

SWOT Analysis

Strengths

Family values remain Cracker Barrel’s greatest strength since the experience most customers, especially families makes it the restaurant of choice. Its differentiated products and services serve as another great strength (Ireland, Hitt & Hoskisson, 2011). It utilizes unique combination of both retail and restaurant chain, which leaves it unique from other restaurants such as IHOP and Denny’s.

Weaknesses- the negative image and reputation that emerged from racist facets throughout its chain affects Cracker Barrel in its business. Additionally, the requirement of its staff to exhibit heterosexual characters during service has attracted heated debates from activists of gay rights.

Opportunities

The ability to respond to the needs and desires of its clientele offers Cracker with a unique opportunity to change its image. As briefed in its weaknesses, Cracker used to demand of its staff to display heterosexual values before. This scenario led to it poor rating on a scale of 0-100 by scoring 15 points in a survey conducted by Human rights campaign in 2008. However, a change in this orientation has put it a notch high to attain a 55-point, which demonstrates improvement to the market.

Threats

Cracker Barrel’s greatest competitor is Dennys. However, although Denny’s registered revenues of 75% less than Cracker Barrel, their net incomes remained less as compared to Cracker Barrel. This indicates that Cracker still sits on a better ground, but potential competition is likely to influence its business.

Strategic business Analysis

Cracker Barrel’s business strategies remain differentiation and strategic expansion. The business has successfully generated advantages through differentiation by creating a unique retail store and restaurant chain combination unmatched by other players (Dess, Lumpkin & Eisner, 2009).

On the other hand, its ability to generate sufficient revenues and subsequent investments in multiple chains in the excess of 600 locations brings Cracker Barrel to the brink of its success. Based on the analysis, the strategies implemented by Cracker would still survive the market tests since expansion and differentiation remain to be suitable, especially in the restaurant industry (Ireland, Hitt & Hoskisson, 2011).

References

Dess, G., Lumpkin, T., & Eisner, A. (2009). Strategic Management: Text and Cases. New York, NY: McGraw-Hill.

Ireland, D. R., Hitt, M. A., & Hoskisson, R. E. (2011). Understanding Business Strategy: Concepts and Cases. New York, NY: Cengage Learning.

Click Here To Order Now!