The restaurant industry and the 5 forces

Topics: Porter five forces analysis, Strategic management, Management Pages: 7 (2017 words) Published: April 21, 2014


Table of content

Introduction………………………………………………………………..….pg2 Explanation of Porter’s five forces……………………………………….. ..pg3 Applying Porter’s Five Forces in the Restaurant industry in Ireland…….pg4 Pest analyze in the restaurant industry…………………………………….pg5 Recommendations……………………………………………………………pg6 Conclusion………………………………………………………………….....pg7 Reference list………………………………………………………………….pg8

Introduction
In this assignment we are going to analyses the restaurant industry in Ireland and we are going to apply the Porter’s Five Forces and Pest on this industry for to be able to write a report to give some advice to a new restaurant that is trying to enter in the market.

The restaurant industry
To have a restaurant in the past before recession, was easier than nowadays .An equipped kitchen, one room and a kitchen chef and owner with a supply list were enough for to work Monday to Friday lunch time and pay the staffs, and Monday to Saturday dinner for a profit. When Ireland was hit by recession in 2008 the restaurant industry suffers as much of any other industry in the world. The disposable income money wasn’t there anymore so customers started to cook at home as they could not afford to pay 36 euros for a Steak. Restaurateurs have to adapt the whole organization for to survive in the market. With over 2,500 restaurants in Ireland, the Restaurant sector employs 64,000 people and contributes €2 billion to the Irish economy each year. Restaurateurs had to start to pay attention on customer’s needs and wants, trying to meet and satisfy then with an affordable price. Restore consumer confidence in the country is another important factor to be considered.

2. Explanation of Porter’s five forces
Porter’s five forces is a powerful tool that helps analyses the level of power of five important factors in a specific industry. Understanding where power lies, is easy to take advantage of a situation of strength and improve a situation of weakness, avoiding the wrong steps. It works by looking at the level of power of five important forces that affect competition: The five forces that affect competition are:

Supplier Power
In here is important to analyse how easy is for suppliers to increase the prices, it depends on how unique is their service or product, the number of suppliers in the market, the cost of switching to another supplier. The fewer the suppliers choice you have, and more you need their help, more powerful your suppliers are. Bargain of Buyer power

In this case needs to be taken in consideration how easy is for buyers to drive prices down. This can happen if the number of powerful buyers is few, so they can often dictate terms to you. Competitive Rivalry

The number and the capability of your competitors are the main driver in this case. If you have many competitors, and they have equally attractive product as you have, thus you have a little power in the situation, because consumers and suppliers can go elsewhere if they don’t get a good deal from you. But if you are in the other position of to have a unique product, you can have a huge strength. Threat of substitution

This is affected by the ability of your consumer to find a product similar as the one that you sell with a better deal. If substitution is easy and viable, then this weakens your power. As example we have Coke that can be substitute by Pepsi. Threat of New Entry

The power of the business can be also weaken by the facility of competitors to get into the market. If is not expensive, and not many barriers are imposed new competitors can quickly enter your market.

Figure 1 - Porter's Five Forces

3. Applying Porter’s Five Forces in the Restaurant industry in Ireland Rivalry
The restaurant industry is extremely competitive as the growing of customers demand is very slow and there are no charges for to swap restaurant to dine, and people tend to do that as there is many kinds of...
Continue Reading

Please join StudyMode to read the full document

You May Also Find These Documents Helpful

  • Essay about Porters 5 Forces of the Retail Industry
  • Essay on Porter 5 Force on Travel Industry
  • 5 Forces Research Paper
  • Essay about Porter's 5 Forces Restaurants Pattaya
  • Global Automotive Industry- Porter's 5 Forces Essay
  • Porter 5 Forces Analysis of Computer Industry Essay
  • The Tobacco Industry
  • 5 Forces of Michael Porter Research Paper

Become a StudyMode Member

Sign Up - It's Free