Sample Porter 5 forces analysis
Category : Porter's Five Forces
Porter 5 forces analysis
1) Threat of New Entrants
Threat of new entrants into the Fast Food market within Hong Kong is high as there are few proprietary product differences and the cost to enter the market is relatively low. It is assumed that skilled labor would be easily accessible at a reasonable cost given Hong Kong is in a position where GDP/GNI is still low and growing.
Large established companies with strong brand identities such as McDonald’s and KFC do make it more difficult to enter and succeed within the marketplace, however, given the country is yet to be saturated with fast food restaurants there continues to be opportunity. The newcomer to the Hong Kong market could find that they are faced with price competition from existing chain restaurants.
2) Bargaining Power of Buyers
It is expected that consumers in HK do have some bargaining power in that they can choice what type of fast food restaurant they want to go to. However, location and type of food may reduce this bargaining power. Given the small purchase size of consumers it would be necessary to appeal to more people in order to be successful, and as a result fast food restaurants would most likely not do well in remote areas. As consumers would not have access to the same equipment and food supply that the fast food restaurant does it would be difficult for consumers to duplicate the taste of the meal at home, in addition to the atmosphere that attracts them.
3) Threat of Substitutes
This could range from a competitive fast food restaurant to family restaurant to a home cooked meal. However, the greater the fast food restaurant could create for their product the greater the likelihood of success. The more unique a product the fast food restaurant has (i.e. Beak Pork Chock rice, the less the threat of substitutes.
4) Bargaining Power of Suppliers
Bargaining power of suppliers within the fast food industry would be relatively small, unless the main ingredient of the product is not readily available. i.e. French fries made from a specific kind of potato grown in a specific type of soil or a product that is made with a special process. The case demonstrates the lack of pricing flexibility that HK restaurants have, as the cost of seafood is high in HJ.
5) Determinants of Rivalry among Existing Competitors
The fast food industry within HK is growing rapidly, allowing room for competition. However, it does appear to be impacted by the economic stability of the country and by the political feelings towards the country of origin of the company.
The more specialized the restaurant the less the threat of competition, however, the greater the threat of a change in consumer eating habit (i.e. a trend to eat sushi versus hamburgers).
The giants of the fast food industry like McDonald’s, KFC could also influence how successful the business could be by running marketing campaigns to squash their competition