Fast Food Industry: Five Forces of Success

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Table of Contents

Introduction
Force 1. The competition flanked by existing markets
Force 2. The Threat of Entry
Force 3. Buyer Power
Force 4. Supplier Power
Force 5. The Threat of Substitutes
Conclusion

Introduction

Quick Restaurants or Fast Food Industries belong to places where consumable food is paid for by patrons. The food purchased could be taken on-site or it could be taken away or it could be delivered by the food company on request. Much of the sales recorded in food industries are franchise supported or are delivered by stores owned by the company. This paper will discuss five forces that drive successes for Fast Food Industries, namely:

The competition is flanked by existing markets.
The customer’s existent market power.
The supplier-seller impact in the market.
The possible threat of market saturation by new sellers inflowing the market.
The product substitute threat to an existing market.
The emphasis here will however be on Entry Threats, Supplier Power, and Buyer Power.

Force 1. The competition flanked by existing markets

The strength of rivalry or competition in the food industry as franked by existing markets is a pronouncement that helps in the determination of the existent value of the market at any instance. Otherwise, this is a pivoting force that depicts the flow of the market. This force is pushed externally by competitors who may decide to threaten the industry with substitute products.

Force 2. The Threat of Entry

A barrier created by entry is complicated and does not support the feasibility of economy for an outside’s replication of the position of the incumbent. The most familiar shape of barrier entry, apart from a legal obstacle or physical intrinsic, is thus stated:

Scales of Economies: These include benefits accrued to massive purchases;
Entry’s Cost: This is identifiable with technological investments;
Channels of Distribution: This is notable of competitor’s effortlessness of entrance;
Advantages of cost are not linked to the company’s size: this is shown of expertise and contacts;
Legislations by the government: an example includes new government policies and laws which may abate the position of company’s competitiveness;
Differentiation: this includes the inability to copy certain brands.

Force 3. Buyer Power

Buyer Power is linked with the horizontal forces which push the value allocation of an industry. Apart from this, the rate at which information is channeled to the buyer (either in a differentiated or concentrated form) supposes the power of the buyer. It is always essential to identify visibly the disparity involving the readiness of a purchaser to use purchase power for produce from buyer power which is likely. This force is nearly elevated in a situation where there exist intermediating retailers in the market. It is also clear in a situation where small suppliers dominate the market and where there is reduced cost of interchange between suppliers.

Force 4. Supplier Power

Supplier power is an expression of the control articulated by the purchaser. Hence, it is typical to hub on the volume that links the suppliers’ attentiveness to members in the industry and a second-degree differentiation of abounding inputs. There is usually an indication of market characteristics that follows the capability to determine prices for customers linked with value differences created to detect prices for buyers.

Force 5. The Threat of Substitutes

The threat which stands in place of product’s profitability rests on the ratio relativity of price-to-performance for diverse kinds of services or products that customers can rely on with total confidence.

Conclusion

This paper has discussed five forces that drive the success of Fast Food Industries through market analysis which includes the identification of sources that propel a competitive market. The tendency and ability of a market to break barriers amid competition require strategies which are defined by the market forces discussed above.

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