An External Analysis Of Porter 's Five Forces Essay

756 Words Jun 29th, 2015 4 Pages
By completing an external analysis using Porter’s five forces, we can learn much about the energy drink industry. The five forces include: a threat of suppliers, a threat of new entrants, a threat of rivals, a threat of buyers or consumers, and a threat of substitutes. The first threat brought to the table is the threat of suppliers. The threat of suppliers is relatively low because the production of energy drinks is not a complicated process, and it also inexpensive to produce. Because there is such a large number of suppliers in the energy drink industry, they do not have strong bargaining power. Next, the threat of new entrants can be argued both ways. In a way, it is actually a strong threat because the barriers to enter are not high. When discussing barriers to entry, the first thing that comes to mind is how expensive the industry is to invest in, and production of energy drinks are cheap. The threat of new entrants could also be argued as somewhat weak because some firms have historical uniqueness, and it would be extremely difficult for any new company entering the industry to attempt to compete. Third, the threat of rivals is high because there are multiple competitors with comparable financial capabilities. Red Bull, Monster, and Rockstar, which are the leading competitors in the industry, use very similar marketing strategies making them direct rivals. Fourth, the threat of buyers is low because there are such a large amount of consumers. Because there…

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