Porter's Five Forces Example

Topics: Porter five forces analysis, Ice cream, Complementors Pages: 5 (1837 words) Published: November 4, 2012
‘Take an industry of your choice, perhaps one you would like to work for, and assess it in terms of:

(a) concentration
(b) Porter’s model of five forces.

From this analyze one or more of the major competitors in terms of their chosen competitive strategies’

Since the nineteenth century, ice cream with its beautiful, cold, happy and sweet feeling has been loved by people all around the world. In 2007, data shows that the ice cream consumption in the world’s largest ice cream consumer the United States is 23kg per person, Australia is17kg, Japan is 11kg, while there is only 1.7kg per person in China. Currently the world’s largest ice cream production is still U.S., however, due to the gradual warming of the climate and its rapid economic development, China's ice-cream industry is also developing very fast. The huge potential of the Chinese ice cream market, strongly attract the multinational manufacturer of ice cream to invest in the ice cream market in China. This essay attempts to analyze the unique marketing strategy of Haagen-Dazs in China using an analysis of market concentration and Porter's five forces. Moreover, it analyzes other major competitors of Haagen-Dazs and their competitive strategies. Concentration

Market concentration is concerned with the number of firms that account for the total production within a specific industry. In the Chinese ice ream market, the distribution of Haagen-Dazs is mainly through the form of store sales, the other brands using the same sale form are include DQ, Cold tone and Yogen Früz etc. Although some low-end ice cream brands will not bring large threat to Haagen-Dazs, but still segment large percentage of ice cream market. As a result, Haagen does not control an overwhelming percentage of the market, so its market concentration is very low. Porter's model of five forces

In order to analyze the industry and environment of Haagen-Dazs, Porter’s five forces model will be used to assess its competitiveness in the market. Porter's five forces is a framework for industry analysis and business strategy development formed by Porter in 1979. Five forces analysis concentrates on the bargaining power of customers (buyers), bargaining power of suppliers, threat of new entrants, threat of substitute products or services and intensity of competitive rivalry. Haagen-Dazs, General Mills’ only ice-cream brand, is positioned as a luxury product and claims to use only high-quality natural ingredients (Mintel, 2009a). Due to a global demand for the product, Haagen-Dazs quickly spread internationally in over 50 countries and it was first launched into Hong Kong since 1984, but venturing on to the mainland in 1996 introduced a completely different set of challenges (Haagen-Dazs, 2010). The following analysis helps Haagen-Dazs to analyze the strength of competitive threats. First, the bargaining power of buyers. Buyers are people or organizations who create demand in an industry, here the buyer power is moderate because the food retail in Chinese market is fragmented, meaning that Haagen-Dazs can sell its ice-cream to a large number of direct buyers. However, most retailers have their own-label ice-cream and a vast number of similar products and the lack of protection for innovation lead to indifference between various domestic products. Customers are able to substitute one brand of ice cream to another or from ice cream to other foods altogether at any point in time, which can pose a threat for Haagen-Dazs. Moreover, ice-cream is just a seasonal product and not a significant part of food retailers’ business, which strengthens the buyer power. However, the positive aspect for Haagen-Dazs is the fact that Haagen-Dazs has a high level of demand and the brand is sold to consumers directly through 160 Haagen-Dazs shops in China (Business today, 2012). In addition, because Haagen-Dazs need pure natural raw materials for their manufacture processes, all the...

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