Kraft Foods Porter Five Forces

Topics: Brand, Value added, Marketing Pages: 3 (878 words) Published: August 22, 2013
4.3.1.1 Rivalry among existing competitors
In foods and beverages industry, the average level of profitability is primarily influenced by the rivalry among existing competitors already in the industry. Companies falling into this sector include Cadbury Plc., Coco-Cola, Heinz, Hershey, Kellogg, Pepsi Co., Starbucks, and etc. It is characterised by strong competition and the existing firms constant seek to increase their competitiveness and market share (Hathaway et al. 2006). To increase sales, Firms always need to offer new and innovative products to meet the changing consumer needs which have recently become more health conscious (KPMG, 2012b). Besides that, restructuring processes by eliminating unprofitable products and focusing on value added products have been seen across the company (KPMG, 2012b). However, the highly competitive market has put a lot of pressure to Kraft and limits its profit potential. Kraft realised that they cannot fully compete with price and the way that they can do to increase and maintain their market share is through brand loyalty, diversification and increase product volume (Hathaway et al. 2006). 4.3.1.2 Threat of new entrants

The foods and beverages industry has already experienced in a large scale consolidation and move into the mature stage. It is difficult to enter the market with existing firms have already developed within the industry. They have established brand name awareness and earned high levels of customer loyalties. The threat of new entrants is very low and they may find it difficult to compete within this large economy of scale (Hathaway et al. 2006). Even if new comers were able to enter, they might not able to overcome and acquire large market share because they might need to offer superior quality products at low price to compete with Kraft. Also, starting a food and beverage company can be a daunting task with the high start-up costs and fixed costs such as costs of production, distribution networks, and...
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