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Porters Five Forces


Trine Andersen

on 21 January 2013

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Transcript of Porters Five Forces

Competition + Many competitors and substitutes
+ Strong buyers
- Weak suppliers
+ Low degree of product differentiation
+ Many products at the end of the PLC-curve
- Low exit barriers

High competitive rivalry Porter's Five Forces Buyers Suppliers + Not possible to substitute cocoa beans
- More than 4.500.000 cocoa farms world wide*
- Most are family owned and the average farms size is 3-4 hectares*

Low bargaining power of suppliers *Cocoa Farming - An Overview (n.d.) Potential entrants Substitutes SWOT Strengths Weaknesses Opportunities Threats Definition of industry Identification of participants Scope of products
Geographic scope Competitors*
Potential entrants + Easy access to raw material
+ No need for special know-how
+ Low switching costs for buyers
- Capital requirements for starting up production
- Strong brands
- Difficult to access distribution channels

Medium threat of new entrants B2C:
- Small order size
+ Many buyers

+ Large order size
+ Many suppliers to choose from
+ Many substitutes

High bargaining power of buyers + Many substitutes (candy, biscuits, crisps, pop corn...)
+ Substitutes satisfy the same needs
+ Substitutes match price well

High threat of substitutes Medium threat of potential entrants Low bargaining power of suppliers High bargaining power of buyers High threat of substitutes Problem statement
Porter's Five Forces
Porter's Five Forces in relation to Toms Gruppen A/S Toms Gruppen A/S •Know-how in producing chocolate, caring about social and environmental issues
•Well-established cooperation with suppliers
•Knowledge about, and contacts to the German market through Feodora and Hachez •Toms loses control when distributing through retail chains, or specialized stores
•The brand Toms is unknown in Germany •0,5% of all cocoa beans are sold as fair trade
•The Germans look very positive upon Danish brands (specialized products)
•Sustainability is a big trend in Germany
•The urban population is forecasted to increase with 0,4%
•The disposable income in Germany is forecasted to increase •The German chocolate industry is forecasted to decrease with 2%
•Increasing concern about health in Germany
•The German government asks companies to take responsibility and care about issues concerning obesity
•Some competitors already have fair trade products Germans have a tendency of choosing fair trade and sustainable products. We would therefore like to analyze, whether it would be a good idea for Toms Gruppen A/S to introduce a fair trade Guld Barre to the German market, and how they should meet the needs of German fair trade chocolate consumers. Problem statement Porter's Five Forces in relation to the fair trade Guld Barre from Toms Gruppen A/S Competitors: Fair trade and non fair trade products

Threat of substitute products: Fewer fair trade substitutes.

Bargaining power of buyers: Relations to retailers

Bargaining power of suppliers: Fewer fair trade suppliers -> higher bargaining power. High competitive rivalry Sources GMID: Chocolate Confectionery in Germany (November 27th 2012). Table 6 Chocolate Confectionery Company Shares 2008-2012. Retrieved from http://www.portal.euromonitor.com.esc-web.lib.cbs.dk/Portal/Pages/Search/SearchResultsList.aspx

Cocoa Farming – An Overview (n.d.). Retrieved January 20th 2013 from The European Chocolate and Cocoa Industry: http://www.cocoafarming.org.uk/cocoa_farming_bw_v8_uk.pdf *GMID: Chocolate Confectionery in Germany (November 27th 2012)
**Cocoa Farming - An Overview (n.d.)
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