Industry Analysis and Company Competition Position
Essay Preview: Industry Analysis and Company Competition Position
Report this essay
Bargaining Power of Suppliers:
There are a lot of suppliers in the ice-cream industry, so the it is easy to switch suppliers, and the low supplier switching costs positively affect the industry, keep the whole cost low. Also the degree of differentiation of inputs is low, which means a large number of substitute input. So the competitions among suppliers are high and the bargaining power of suppliers is low.
Bargaining Power of Customers:
There are a large number of customers buying ice-creams every year. In the late 2000s, U.S. per capita consumption of ice cream was approximately 21 pounds of ice cream (including regular and low/nonfat) and just over four pounds of frozen yogurt and other frozen dairy products. (“Ice cream and the frozen desserts”) no single customer tends to have bargaining leverage. Limited bargaining leverage helps the industry.
Threats of New Competitors:
The threats are low in the industry. First, strong distribution network are required in the industry. The goods do not go to the end customers directly, and helps to prevent the new enterers. Second, the industry requires economies of scale, and new comers will have higher cost of production and stop them from trying to enter easily. Third, high capital requires from a company to compete in the industry. Whats more, companies like Ben & Jerrys has strong brand name that new competitors must spend a lot of money and time to improve their brand name to be comparable. Last, consumers are loyal to the existing brand.
Threats of Substitutes:
The threats of substitutes are low. First, the substitute products are inferior that consumers are less likely to switch from Ben & Jerrys to other products, there are loyal to this brand. Also, Ben & Jerrys is valued high quality ice-cream producer, customers who value the quality are less likely to switch to another brand. Finally, the comparable competitors in this industry is limited, consumers could not find the similar products that can fulfill their needs easily.
Intensity of competitive rivalry:
The intensity of rivalry is high. First, the variety among products is small, for Ben & Jerrys, its competitors like Good Humor-Breyers, they sell the same flavored and similar quality ice-cream. Moreover, the sustainable competitive advantage through innovation is short, whenever a new flavor is created, it is easy to follow.