Porter's Five Force Analysis Essay

The ‘Porter’s five forces analysis’ helps a business determine the long term attractiveness and profitability of the industry it is operating in, (Cite Magazine/Textbook) but also allows a business to examine the amount of power it has over a number of factors in its immediate environment. (Cite Magazine/Textbook) The five forces analysis examines the threat of new entrants to an industry, the threat of substitutes to a business, the bargaining power of suppliers, the bargaining power of buyers and the extent of rivalry among existing competitors. (Cite Hoang)

For this research project, this analysis will be used to identify whether the intensity of the competition is a significant problem and the need for relocation as a strategic decision. …show more content…
The ability of firms to continue to earn profits within a market, depends on the desire and ability of competitors to set up and compete. (Cite: Textbook/Magazine) This intensifies competition in an industry. (Cite Textbook/Magazine) The threat of new entrants is dependent on the barriers to entry, which must be analysed. Some barriers are natural and exist due to the nature of the industry.
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An industry can have barriers to entry that range between high and low. In this case, the barriers to entry are very low.

The fourth force to be analysed will be the threat of substitutes. The threat of substitutes is very high

The last force to be analysed will be the intensity of rivalry with the existing competitors. This depends on the amount, or degree, of competition and the type of competition. (Cite Magazine/Textbook) (Cite Magazine/Textbooks) The degree of competition is very high because of the lack of product differentiation. The only way to be competitive through this would be to rely on price competition. (Cite Magazine/Textbook) Ottherwise, new products must be developed within the same market and innovation will be needed. This restaurant could begin to offer South Indian meals, which would also