Conducting a five forces analysis

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Recommended: Competitors of chocolate industry

The market for chocolate bars is a highly competitive field within the fast moving consumer goods sector. Also in the Fairtrade market the number of producers is rising and competition and demand increase. The attractiveness of an industry influences a firm’s profitability effectively and competition within the industry can be described by conducting a five forces analysis as suggested by Porter (1985). This framework addresses the following fundamental factors: Threat of New Entrants, Threat of Substitute Products, Determinants of Buyer Power, Determinants of Supplier Power and the Rivalry among Existing Firms. (Porter, 1985) Analysis of these forces shows that the retail market for standard chocolate bars is rather static and highly competitive. Although the threat of new entrants and supplier power are both really low, the power of buyers, threat of substitution and rivalry are major difficulties for firms active in this industry. In the Fairtrade market nevertheless, the picture looks a bit different. Due to the relative small volume of the Fairtrade chocolate market compared with standard chocolate bars, new competitors can easily enter the market and establish new product lines, etc. Many producers, long established in the standard chocolate market, e.g. Néstle’s KitKat, can easily enter the Fairtrade market because they possess the financial and knowledge resources. Such brands are able to offer Fairtrade products at a much lower price due to large economies of scale and an established customer base. Additionally, as the number of private label Fairtrade products increases, this increases competition on the one hand, but also brings new opportunities for Business to Business sales for chocolate producers as Divine on the o... ... middle of paper ... ...vailable from: http://www.fairtrade.org.uk/press_office/press_releases_and_statements/february_2012/responsible_capitalism.aspx [Accessed 29 February 2012] DIVINE CHOCOLATE LTD., 2012. Annual Report 2009/10 [online]. Divine Chocolate Ltd. Available from: http://www.divinechocolate.com/sites/www.divinechocolate.com/assets/1703.pdf [Accessed 29 February 2012] IDEALO.DE, 2012, Milka Süßigkeiten & Schokolade. Available from: http://www.idealo.de/preisvergleich/ProductCategory/12452F913341.html [Accessed 3 March 2012] GEPA – THE FAIRTRADE COMPANY. 2012, Kakao & Schokolade – Verführerische Vielfalt aus Schokolade [online]. Available from: http://www.gepa.de/p/cms/media/pdf/aktuelles/GEPA_Schokobroschuere.pdf [Accessed 3 March 2012] TONY’S CHOCOLONELY. 2012, Available from: http://webshop.tonyschocolonely.com/product/chocoladerepen?product_id=72 [Accessed 3 March 2012]

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