Porters' Five Forces of Fast Food Industry

Topics: Philippines, Fast food, Fast Food Nation Pages: 6 (727 words) Published: August 13, 2010
University of San Carlos
College of Commerce
P. del Rosario St., Cebu City


An Analysis of the Philippine Fast Food Industry using
Michael Porter’s Five Forces


Submitted to:
Ms. Joyce Yang

Submitted by;

Group 9
Awe, Niña Faith M.
Cabasag, Rechel C.
Chua, Hegiño Jr. J.
Lequin, Viktor Xenon O.
Mahusay, Christian T.


July 13, 2010


* Increasing women workforce2
* Nonunionized employees
* Young affluent population1
* Rising disposable income1
* Rising consumer awareness on health and safety concerns3,4

* Filipino’s love for food
* Fast paced life2

* Present but not very significant government regulation

* Technological Advancement (e.g. creations of assembly lines, touch screen monitors, etc.)

* Western influence in the global fast food scene

Bargaining Power of Suppliers


* Easy for the industry player to go to suppliers’ business * Highly competitive supplier industry
* Greater share of customer base by the fast food industry for the suppliers * Low suppliers’ switching costs
* Difficulty of supplier industry to circumvent fast food industry * Cheap and nonunionized labor supply
* Present but not very significant government regulation


* Suppliers’ products are important inputs but any supplier strength that may arise from this is low because of the competitiveness of the industry.

Overall Finding:
Bargaining power of suppliers is WEAK.

Threat of New Entrants


* Existing players’ high differentiation of products and brand identification with buyers * Existing players’ cost advantage over prospective entrants not related to the size of the company (contacts and expertise) * Rising consumer awareness regarding health and safety concerns


* Economies of scale not existing among existing players
* Low capital requirements
* Buyers’ easy switching from one existing fast food to a new one * Easy access to distribution channels (e.g. stalls and rent spaces in malls and other establishments) * Surging demand for fast food:

* Industrialization and growth among the number of women in the workforce * Today’s fast-paced lifestyle
* Young affluent population
* Westernized mentality

Overall Finding:
Threat of new entrants is WEAK.

High Buyer Power


* Buyers’ less price sensitivity when it comes to eating in fast food * Buyers’ decision is not based on price but on preferences (Filipinos love food) * Purchases made are in relatively low volumes

* No standard pricing within the industry
* Buyers’ less knowledge on fast food pricing specifications * Less possibility for backward integration


* Many available and more affordable substitutes
* Products are not necessity to buyers
* Buyers can influence other potential buyers
* Rising disposable income

Overall Finding:
Buyer power is STRONG.
Pressure From Abundant Substitutes


* No trend exists where buyers are more inclined or influence to choose substitutes


* Relatively high...
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