Australian market including Porter's 5 forces analysis

An overview Of Australian market including Porter's 5 forces analysis Submitted By: Date: An overview of the Australian market including Porter's 5 forces analysis The Australian restaurant market has started to recover over the past five years. The changing social trends have played an important part in this regard. After the global financial crisis which has struck the global economies and the consumers in the market as well, has eventually started to recover and the consumers’ ability to buy luxurious goods and income has improved in the past five years. The industry is expected to grow over a 3.6% growth rate in the current year. The restaurant industry in Australia is consisted of around 8,550 businesses while constituting 68,415 employees overall. The total revenues of the industry are identified as $12 billion in the current year. The social trends has changed and busier lifestyles have limited the time for leisure activities and entertainment. Such trends have given an opportunity for the restaurants to take advantage of these social trend and come up with ideas to combine dinning with leisure activities. Thus, the changing trend and recovering economic conditions have increased the demand in the restaurant industry and became the reason of growth in the industry. Though, the industry have bounced back but the competitiveness of industry must be assessed in order to start a restaurant. The competitiveness of the industry can be assessed by using the Porter’s five forces model for industry analysis. The five forces’ model is based on the five factors. It analyzes these factors for the competitiveness of industry. The porter’s five forces model is illustrated in the following section of this study. Bargaining Power of Suppliers: The bargaining power of suppliers refers to the influence or pressure by the suppliers on a business. The high bargaining power of suppliers suggests that there are a few suppliers in the industry and they have significant influence over the businesses. On the other hand, when the suppliers in an industry are in great numbers, there bargaining power over the business get weak. There bargaining power of suppliers can be affected by several factors like the loyalty to major brands, high fixed costs and scarcity of resources etc. These factors can play an important role in the bargaining power of suppliers. The restaurant industry in the Australia has a low suppliers bargaining power. The reason behind a low bargaining power for suppliers is that the restaurants usually use natural goods as their raw materials, thus the suppliers are in great number and there power to influence the business is very low. Thus, it can be said that the bargaining power of supplier is low for Australian restaurant market as the suppliers are in great number and costs of the raw material is fixed by the government usually. Bargaining Power of Customers: The bargaining power of customers refers to the customer’s ability to influence the prices in any way possible. The prices in a restaurant are usually set by the market forces of industry. This implies that the prices cannot be much higher than the prices of competitors. If the prices of a restaurant were higher the customers would eventually started to turn over to other restaurants. This suggests that the bargaining power of the customers is very high in restaurant industry in Australia. The customers usually set the prices indirectly as they decide at which price they are willing to purchase a meal or dine in. The bargaining power of customers is an important aspect of the Porter’s model of five forces as it determines the willingness of customers for the food and leisure activities as well. Threats of New Entrants: The threat of new entrants in the market refers to the barriers of entry in a specific market. In the restaurant industry in Australia, the threat of new entrants is very high. The barriers to entry in the industry are very low, as there are no government restrictions, no legal issues other than just a permit and no expensive start up costs. The exit out of the industry is not costly, that is why, and more people can enter into the industry without thinking twice the worst-case scenario. Threat of Substitute Products: The threat of substitute products in the restaurant industry in Australia is very high. A large population of the country is not nationals and they come from different cultural background and thus, different food culture as well. This diversity in the population increases the chances of substitute food in the country. Thus, it can be said that the threat of substitute products in the industry is very high and it maintains the competitiveness of the industry. Competitive Rivalry within Industry: The competitive rivalry refers to the competition in the industry. The restaurant industry in Australia is a highly competitive market and the competition in the industry is increasing. As the barriers to entry are low and the exit out of the industry is low as well, more and more people are taking chances and getting into the business. In addition to that, the changing social trends in the industry have increased the competition in the Australian restaurant market. Thus, it can be concluded that the restaurant market of Australia is highly competitive. The factors of five forces model by Porter suggests that the threat of entrants is very low while the threat of substitute is very high. In addition to that, the rivalry in the industry is high and the bargaining power of customers as well. The bargaining power of suppliers is low as the number of suppliers is very high.

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Paper's Detail

Category Business-to-Business Marketing
Paper Type APA
Reference Type other
Words 935

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