Chiquita Case

Topics: Banana, Economic growth, Economics Pages: 4 (1169 words) Published: November 16, 2011
1 a) Buyers have high power in the banana industry because they choose the company that has the best customer service and the lowest prices to stock in their stores. This means that the supermarkets can directly impact who has the most market shares in the industry.

b) Suppliers have low power in the banana industry because they are at the mercy of the buyers, FDA, government import laws, and mother nature. All these factors creates little control for the supplies, and anyone thing can destroy a company.

c) There is a low threat of new entrants in the banana industry because the banana industry is control by three major companies that control 60% of the industry. Not only is the industry controlled by these companies, but it is also an industry that has a high risk involved. With shipping produce from one country to another, the importer has to deal with the possibility of the product spoiling before it reaches the consumer. Another thing that people importing food have to deal with is the FDA regulations. The FDA can completely refuse a shipment based on the product not meeting the food inspection standards or is contaminated with something that will effect the US agriculture. One final reason there is a low threat of new entrants in this industry is from the relationships that supermarkets form with the preferred venders in order to insure the quality and supply needed for their stores, and breaking into market as a new company would be hard to create those relationships need to survive in the industry.

d) The threat of substitutes is high in the banana industry because there are other fruits the consumer can choose. For example, if the cost of bananas increase the consumer could choose to consume apples or oranges, both of which are relatively the same price . Other reasons that consumers would choose a substitute is because the quantity and quality is not up to the standards of the consumer.

e) The intensity of rivalry in the...
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