Business StrategyPorters Five-Forces Model for Snack Food Industry Free Essay Example, 1250 words

Businesses have to be wary of the potential power of suppliers to alter certain things in the market. Suppliers may place themselves in a strategic position to gain the capacity of exploiting industry profits. This means that they can choose to supply products at relatively higher prices. This is especially the case in the snack food industry, which a few suppliers of some of the ingredients used, and when the product in question has limited availability. In other cases, suppliers take advantage of the fact that it is expensive for businesses to switch to new suppliers and increase the prices (Rice, 2011). Therefore, a business must understand the level of power exhibited by the suppliers. Evidently, customers are the most important group of people in any business. There are instances when customers can exhibit a high level of bargaining power and introduce pressure in the market, compelling businesses to reduce prices. Customers can have such power when alternative suppliers are ma ny, and when they can place large volumes of the product. According to experts, the number of customers is inversely proportional to their bargaining power. We will write a custom essay sample on Business Strategy:Porters Five-Forces Model for Snack Food Industry or any topic specifically for you Only $17.96 $11.86/pageorder now For example, large supermarkets can exhibit a high bargaining power of customers because they order large volumes of snacks. This may compel suppliers to lower prices (Rice, 2011). Snack food companies must understand the intensity of rivalry in the industry. When the intensity is high, they are compelled to engage in competitive price reductions as well as focus on innovation and further differentiation. High intensities of rivalry also mean that snack food companies have to invest in advertising and promotion (Rice, 2011). This implies that increased rivalry in the industry serves to increase the costs for businesses hence lowering the profit margins. Therefore, snack food companies have to understand the structure of the industry carefully if they are to thrive and make profits.