Competitive Analysis of Cargills Food City

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CONTENT Page

Porter’s five forces Model…………………………………………………………01

Factors affect Porter’s Five Forces Model………………………………………02

Cargills Food City at a Glance……………………………………………………03

Analysis of porter’s five forces model in relation with cargills food city ……...03

Threats of New Entrants…………………………………………………………..03

Threat of Substitutes………………………………………………………………04

Degree of rivalry……………………………………………………………………05

Power of buyers…………………………………………………………………….06

Power of suppliers………………………………………………………………….07

References…………………………………………………………………………..07

Porter's five forces Model
It is a framework for the industry analysis and business strategy development developed by Michael E. Porter of Harvard Business School in 1979. It draws upon Industrial Organization (IO) economics to derive five forces that determine the competitive intensity and therefore attractiveness of a market. Attractiveness in this context refers to the overall industry profitability. An "unattractive" industry is one in which the combination of these five forces acts to drive down overall profitability. A very unattractive industry would be one approaching "pure competition", in which available profits for all firms are driven down to zero. Three of Porter's five forces refer to competition from external sources. The remainder are internal threats. It is useful to use Porter's five forces in conjunction with SWOT analysis (Strengths, Weaknesses, Opportunities, and Threats).

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Factors which affect each force of the model

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Cargills Food City at a glance –

Cargills (Ceylon) PLC is a Sri Lankan corporate established in 1844 and built on a strong foundation of values and ethics. Guided by trusted leadership it spearheads the sustainable development of the food industry in Sri Lanka.

Its continuous investment in retail has made the Cargills retail arm Cargills Food City the largest retailer in the island in all categories. Pursuing innovation and food safety its manufacturing brands Cargills Supremo and Cargills Finest (processed meats) Cargills Kist (processed fruits and vegetables) and Cargills Magic (ice cream and dairy products) lead sectoral growth. Its KFC franchise is the largest international restaurant chain in Sri Lanka. Through its marketing and

distribution arm spread across the island Cargills distributes its manufactured brands as well as internationally renowned food and non-food brands.

The Cargills agribusiness model has gained global recognition for linking farmers and entrepreneurs to the market through a sustainable and inclusive value creation process.

Analysis of porter’s five forces model in relation with cargills food city

Threats of New Entrants

Cargills food city’s threats of new entrants are the threat of new retail chains established & self service retail shops by private sector co – op citys which are established by the government.

Objective Analysis –

Factors Degree of impact

Government regulations12

Economies of scale 06

Brand identity02

Capital requirements 05

Access to inputs03

Overall impact28%

Subjective Analysis –

As government provides extensive support to new firms to enter into business there is a tendency of setting up of new firms, therefore there is a considerable impact of government regulations towards the entrance of new firms.

Cargills food city operates in large scale as a result of that they are able to sell their goods at very low prices. (“Lowest price in the market”)..Therefore new entrants find it difficult to compete with this, therefore very low impact to cargills from the new arrivals.

Cargills food city has built up a good brand name since 1844.Therefore new entrants find it difficult to compete with this brand name as buiding a bran name takes a considerable amount of time &...
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