Application Of Porters Five Forces Beverage Industry

Question: Discusses how Porters Five Forces Analysis is an important tool for assessing the potential for profitability in an industry. Answer: The essence of this you tube video firmly focuses on five competitive forces that shape strategies regarding Porters forces. In this video Mr. Michael Porter discussed the application of these five forces to the airline industry and the assignment is going to demonstrate the application of these five marketing and strategic forces to the lower profitability industry (Cgma.org. 2016). Here, United States based beverage industry is selected for the analytical experiment and the application of Porters five forces on this industry is going to be discussed. The five forces are as followed: Competitive Rivalry: The beverage industry is the lowest profit gaining industry in United States. Thus, if the Porters five forces are applied to this industry then it will be able to gain huge profit from the competitive marketplace. Threats of new entrants: Firstly, the beverage industry should start with the notion that describes the managers should concentrate on the direct competitors whereas most of the time they took this narrowly (Cgma.org. 2016). Many new industries are hampering the benefit. Threats of the substitutes: From the industrial aspects it has been found that the rival make the competition more difficult and threats of the substitutes cannot be over changed. Other drinking products have unique flavor which a tough threat to US beverage industry. Suppliers bargaining power: The entry barriers are low and tendency of the consumer switching is high due to huge entry of other food industries. As individual industry have separate economic fundamentals and demand thus, it is very difficult to discriminate the customers choice. Bargaining power of the buyers: The major ingredients used for the product must include unique flavor to mitigate the rivalry throughout (Cgma.org. 2016). They should innovate, new technologies to acquire customer loyalty. The industry should concentrate on the bargaining power of the buyers. References Cgma.org. (2016).Porters Five Forces of Competitive Position Analysis - CGMA. [online] Available at: https://www.cgma.org/Resources/Tools/essential-tools/Pages/porters-five-forces.aspx?TestCookiesEnabled=redirect [Accessed 25 Jul. 2016]. https://www.youtube.com/watch?v=mYF2_FBCvXwfeature=player_detailpage