It’s getting late and I’ve to churn out one last blog post…and all I’m thinking of right now is CHOCOLATE (for some reason unbeknownst to me). So, I shall proceed to blog about chocolate. Or rather, the chocolate industry and I’m going to apply Porter’s 5 Forces to see if it’s profitable for another (hypothetical) chocolate brand to break into the industry.
My new brand of chocolate will be in the form of a chocolate bar. It’s insides will be filled with Nutella, marshmallows, gummy bears and all things sweet. 😉
Barriers to entry are pretty high, because a lot of capital will be needed to start up a well-equipped factory, pay the workers, buy the ingredients etc. Also, brand identity may be an issue because people might be skeptical about this new brand of chocolate and might rather stick to conventional Cadbury or Hershey -.-
Threat of substitutes is pretty low since there aren’t chocolate bars with such fillings around yet. Hence, it’s not very substitutable. But then again, we’re talking about perfect substitutes. If we’re referring to close substitutes, then many other types of chocolate bars would serve as substitutes too.
Supplier power is high because the cost of ingredients are not particularly exorbitant, nor are they rare minerals. Buyer power is questionable, because on one hand, it’s a rather unique flavor, but will it be differentiated enough for the masses to purchase it? Rivalry is rather high as well, because of the large number of chocolate brands involved in the market and also high startup costs.
In conclusion, my analysis shows that…the chocolate industry isn’t attractive enough for my (hypothetical) chocolate brand to move into. Barriers to entry are high, chocolate bars are easily substitutable due to the numerous brands around, buyer power is low since my brand of chocolate bar is admittedly not differentiated enough from other brands and rivalry is high too. Okay, guess my chocolate business won’t be working out anytime in the near future until I think of a better plan. Till then…
Leave a Reply