CASE STUDY

Title: Adopting Porter’s 5 Forces in the Farm Industry

Names: Susie, Rachel, Jessica

Section: Case Study

Lecturer: Dot MacKenzie

Date: 23rd August 2016

Contents:

• Introduction to Porter’s 5 Forces

• Adopting Porter’s 5 Forces in Farm Industry

Porter’s Five Forces

No. Topic Answer1 Definition A simple but powerful tool for understanding where power lies in a business situation.2 

Analysis No. Name Meaning Example1 Supplier Power

 How easy it is for suppliers to drive up prices. 

Number of suppliers Size of suppliers Uniqueness of service Ability to find substitute supplier Cost of changing supplier

2 Buyer Power 

How easy it is for buyers to drive prices down.

Number of customers Size of each order Differences between competitors Price sensitivity Ability to find substitute buyer Cost of changing buyer

3 Competitive Rivalry 

Number and capability of competitors. Number of competitors Quality of differences Switching costs Customer loyalty Costs of leaving market

4 Threat of Substitution 

Ability of customers to find different way of doing what you do.

Ability to substitute Cost of change Quality of differences

5 Threat of New Entry 

Ability of people to enter your market. 

Time & cost of entry Specialist knowledge Cost advantages Technology protection Barriers to entry

Moderate number of suppliers

Many similarities in product

Easy to substitute

Supplier Power

Large size of suppliers

Low cost of changing

4

5

Few supermarkets

Large size of each order

Sensible price

Buyer Power

Large size of supermarkets

Small differences between competitors

4

5

Easy to substitute and low cost of changing6

Numerous competitors

Low switching costs

Low customer loyalty

Competitive Rivalry

Similar quality of products

High expense to leave market

4

5

Some cross-product substitution

Imported food available

Threat ofSubstitution Low cost of change

Affordable to enter industry

Low barriers to entry

No technology protectionThreat of

New Entry

Need some time to prepare

Some cost advantages if in business for long period of time

4

5

Specialist knowledge needed but easy to learn

6

Bibliography

• Overall, C.S., Butt, S. & Metcalfe, J. (2015) BME

Working with Cases (4th edition). Birmingham:

Birmingham International Academy