How does strategic group analysis provide a refinement to the five forces model? Key words here are:
UK Bottled Water Industry Buyer power In the UK bottled water industry, buyer bargaining power is high since there are many bottles water lines and many alternatives to consider. There are also no significant switching costs on the buyers.
For instance, price difference between Dasani and Aquafina is so insignificant that buyers can switch the products at no cost.
Brand loyalty is also currently dwindling giving consumers a higher bargaining power. According to the Mintel reports on the UK water, bottled industry the idea that bottled water represents the choice of purity and good health greatly influences their decision to buy.
On a global perspective, the fact that bottled water is the fastest- growing beverage category in the world ensures buyer volumes, which is the case in the UK translates to high bargaining power.
In general, the UK bottled water industry can be said to possess a high customer buying power Forsyth, Threat of new entrants In the UK bottled water industry, the threat of entry of new competitors is low owing to the fact that existing competitors are currently large dominating companies who already own a huge market share of the industry, leading to a stiff defense on market share Forsyth H.
This in turn makes it hard for new entrants in the market to easily break-even. In the UK market share is split among giant companies in the food and beverage industry that have developed brand recognition and loyalty and have achieved low-cost production and distribution capabilities that cannot be matched easily.
It is also expensive to initially develop the infrastructure to produce the product. In strength of the above reasons The UK bottled water industry is therefore considered to have a low threat of new entrants in relation to porters five forces Doria, Threat of Alternative Products The global beverage industry is faced with alternative products and the UK bottled water industry is no exception.
The threat of substitute products is high with numerous bottled and non-bottled products that can easily substitute bottled water existing in the market. Consumers are seeking healthy drinks with no sugar and zero calories as matter of choice between good and bad health.
Examples include soft drinks such as coke zero and diet soda; tap water also poses as a threat to bottled water with many people trusting the tap water to be clean and cheap. Switching costs to alternative products is minimal; this in turn gives an edge to alternative products.
Industry Rivalry Defense of existing market share, availability of alternative products and insignificant switching costs together with the high bargaining power of the consumers creates rivalry among the industry players. As pointed out in the Mintel report there still is room for growth in the industry thus competition is high.
Players put emphasis on their Branding, marketing and distribution strategies to beat completion. Considering the above, industry rivalry comes out as high and reactionary to existing market conditions Lloyd, Supplier power Supplier power in this industry is low.
Firstly as the Mintel reports indicates availability of alternatives and competition has led to discounting at high levels, Secondly with water being basic and readily available the supplier bargaining power diminishes.
Summary In Porter 5 analysis of the UK bottled water industry rivalry amongst the industry players is evident there is a fight for market share and control. This attests to the lucrative nature of the business, that according to the analysis characterized by large sale volumes and a customer base that has the power to purchase for a number of reasons such as health and purity benefits.
Owing to circumstance mentioned above the threat of new entrants has no much influence on the industry as players in the industry are already well established with entry being difficult for starters.
The influence of suppliers is minimal and is under control of the buyer bargaining power and the influence of alternative products and alternative supply channels. Thus, in general examination of the five porter forces at play indicate a high level of competition and rivalry in the UK bottled water industries Porter, A survey of the microbiological quality of bottled water sold in the UK and changes occurring during storage.
International Journal of Food Microbiology48 1 Bottled water versus tap water: Journal of Water and Health Bottled water has become liquid gold.porter five forces Essay. This theory is based on the concept that there are five forces that determine the competitive intensity and attractiveness of a market.
Porters five forces model determine a company’s competitive environment, which affects profitability. The bargaining power of buyers and suppliers affect a small company’s ability to increase prices and manage costs, respectively.
Porter’s five forces model Porter’s five forces model is an analysis tool that uses five forces to determine the profitability of an industry and shape a firm’s competitive strategy It is a framework that classifies and analyzes the most important forces affecting the intensity .
Porters Five Forces Essay Industry profitability depends upon just five factors, the so-called "five forces" argues Michael Porter. Introduction.
Porter's Five Forces Analysis Sample: UK Bottled Water Industry. Buyer power. In the UK bottled water industry, buyer bargaining power is high since there are many bottles water lines and many alternatives to consider.
porter five forces Essay This theory is based on the concept that there are five forces that determine the competitive intensity and attractiveness of a market.
Porters five forces help to identify where power lies in a business situation.