porter’s five force model

Porter’s Five Force ModelCADBURY

Done by: Janvi Patel

Raveena JethaniNidhi Khiraiya

Anjana ManjunathKarun SondhiKriti Chanchani

VI sem Section A

Five forces industry analysis helps to assess and manage the long-term attractiveness of an industry.

It is designed to explain the relationship between the five dynamic forces that affect an industry’s performance; these are the:

• intensity of competitive rivalry;

• threat from new entrants;

• threat from substitutes;

• bargaining power of buyers;

• bargaining power of suppliers.

Objective

The Five Forcers Analysis model wants to identify what factors shape the character of competition within an industry.

Porter’s Five Forces model targets the assessment of the structural attractiveness of the analyzed industry.

Finally the Five Forces Analysis pinpoints strengths and weaknesses in a company and discovers opportunities or threats within the industry.

PORTER’S 5 FORCE MODEL FORCADBURY

Many businesses are competing against Cadbury and planning to take over the supremacy the company has for several years

The differences of choice depends on the taste and ad preferences of the customers

Several competitors are continuously developing their products and innovating ideas to make competing even harder

Intensity of competitive rivalry

Intensity of competitive rivalry

• Cadbury’s competitors have the power to attract and influence the customers by more attractive substitute, prices and marketing techniques.

• Cadbury is powerhouse in the food processing industry and its rivals are in a constant and continuous battle to outperform one another

• Its competitors spend hundreds of millions of dollars in an attempt to appear more desirable than the competition

Rivalry is fierce in this food processing industry, and this is a good thing for consumers.

As long as these companies continue striving to one up one another, consumers will continue to enjoy ever- improving product lines.

• As Cadbury operates in different geographical markets so threat of new entrants varies in different markets.

• In well developed countries where big players like Cadbury have a very strong hold and brand image, it is very hard for a new entrant to enter the market because of higher cost to set up a business.

• On the other hand in less developed markets, it is

easier to enter as legal requirements and capital needed is not as much as in a developed market.

Threat from new entrants Threat from new entrants

• Cadbury has its presence almost in every market either through its subsidiaries, branches or franchises.

• But its brand image is a strong barrier in the way of new entrants.

• Since Cadbury is already a popular and widely known, it can earn the trust of many countries.

• The only hindrance that might affect the production of Cadbury is to find a good location and gather the Requirements for the smooth entry and the foreign policy that might affect its operation

• Cadbury has its presence almost in every market either through its subsidiaries, branches or franchises.

• But its brand image is a strong barrier in the way of new entrants.

• Since Cadbury is already a popular and widely known, it can earn the trust of many countries.

• The only hindrance that might affect the production of Cadbury is to find a good location and gather the Requirements for the smooth entry and the foreign policy that might affect its operation

Threat from substitutes

Threat from substitutes

• Continuous research and development in the consumer and household products has brought about a revolution in the consumer market and today customers like to try something new and better.

• This trend has reduced the customer loyalty and product lifecycle.

• Cadbury is under a small threat of substitute products and its competitors are already spending huge sums on R&D and new product development.

• Cadbury has to be very adoptive and closer to its customers so as to get what exactly its customers want.

• Cadbury’s buyers are scattered all around the world and they are in billions .

• But it is easy for the customers to switch to a competitor.

• In today’s world the demand for chocolates is not that high because of the existing heath conscious

• The price subjectivity of the products is not a question for the people but the increasing number of competitors that offers the same type of products at a lower cost might be the cause of customer loyalty alteration

• So Cadbury has to be very precautious in deciding about prices and keep the customers satisfied.

Bargaining power of buyers

Bargaining power of buyers

• Cadbury prides itself on creating and maintaining positive relationships with its suppliers all over the world.

• It has many contracted suppliers that can support their on-going operations

• It has a large purchasing power & the suppliers of agricultural commodities offer a product that is far from unique and hence Cadbury has higher bargaining power than its suppliers as the industry relies heavily on a complex agri-business supply chain

Bargaining power of suppliers

Bargaining power of suppliers

Although there is an existing competition, the raw materials like nuts, milk , cocoa or special ingredients are sufficient enough to satisfy Cadbury’s production

• Cadbury prefers to create and preserve long-term relationships with its suppliers as this helps to ensure the quality of the raw materials being purchased

• Cadbury also offers useful advice to its suppliers on how to perform more efficiently to minimize unnecessary costs.

RECOMMENDATIONS TO GEAR UP FOR FUTURE CHALLENGES

Cadbury’s major problems are linked to the need for very responsive distribution network due to the perishable nature of its products. Costs go up and problems like the recent worm episode arise. What we suggest is a revamping of its distribution network to make it more responsive.

Indian consumers mainly consume sweets during some festivals. It must come up with innovative offerings for its chocolates to suit the need during such occasions. e.g.: Come up with shapes similar to Indian Sweets and package it innovatively reflecting the festival colors.

Start exploring newer distribution channels like E-tailing where Hi-value chocolates are sold in specialized packs.