Five Factors In Porter's Five Forces In The Australian Dairy Industry

796 Words 4 Pages
Compared to the general environment, the analysing of industry environment is likely to have direct influences in the organization’s competitiveness. There are five factors in Porter’s Five Forces Model to determine the profitability potential within industry including the threat of new entrants, the power of suppliers, the power of buyers, the threat of product substitutes and the intensity of rivalry among competing firms (Hitt, Ireland and Hoskisson, 2016). The effect of those factors will be applied in this industry in order to evaluate the attractiveness and profitability within Australian dairy.
1.1. The threat of new entrants:
Some outstanding advantages of dairy industry for manufacturers are stable and profitable growth. Firstly, the company must have product specification
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The intensity of rivalry among competing firms:
The competition within Australian dairy market is highly competitive between the four large processors such as Murray Goulburn Co-operative Co Limited, Lion Pty Ltd, Fonterra Australia, and Parmalat Australia Pty Ltd. According to IBISWorld, milk, cheese, butter and cream processing has a high level of competition while milk powder manufacturing is just at medium level. Australian dairy firms are also pressure to lower prices from large supermarket at retail level. In addition to domestic competition, those processors also face to a strong competition in global market in term of manufacturing cheese and butter, and exporting milk powder. Therefore, the intensity of rivalry among competing dairy firms in Australian is consider as moderate.
2. Competitive advantage quantitative analysis
2.1. The cost of the production of dairy products in Australia versus the return on sale of these products.
There are four main segments in dairy industry including milk and cream processing, manufacturing dairy product such as butter, yoghurt, and condensed milk, manufacturing of cheese, and milk powder. Table 1 shows data collected from

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