Porter S 5 Forces
Porter’s 5 Forces
Jasmine Tomczak - 1152995
Porter’s 5 Forces Re: Fast Food Industry
Commerce 4PA3 - C03
Jasmine Tomczak - 1152995
September 25, 2014
Porter’s 5 Forces
Jasmine Tomczak - 1152995
The fast food industry is one which affects many lives in Canada. The following is a
Porter’s 5 Force’s analysis that will determine how attractive this industry is as a whole.
To determine the threat of new entrants, one must first consider the barriers to entry.
Firstly, the start-up costs associated with the fast food industry are relatively minute. This acts as a low barrier to entry. In this industry, the top four companies account for 37.4% of the total revenue. Although that is not a percentage of mind-changing significance, a business entering this industry must be able to uniquely establish itself with product differentiation. That being said, it is believed that the industry concentration is relatively low. Accordingly, high barriers to entry arise from government regulations, specifically including health and food service as well as occupational health and safety issues, along with a high amounts of competition within the fast food industry. Overall, the barriers to entry can be determined as low resulting in a high threat of new entrants.
Next is establishing the power of the buyer. The fast food industry has been impacted by the decreasing demand for fried food and subsequently the increase for healthy options. This change in consumer trends along with a high variety of fast food places to choose from assume high power of the buyer. Secondly, it has been determined that the products sold in the fast food industry are luxury goods - goods that are purchased more-so when economic times are “good”.
In turn, when economic times are “rough,” consumers will choose to eat less fast food and more home cooking. Overall, the power of the buyer within the fast food industry is high.
Thirdly, the threat of substitutes must be determined. Substitutes for the fast food
Jasmine Tomczak - 1152995
Porter’s 5 Forces Re: Fast Food Industry
Commerce 4PA3 - C03
Jasmine Tomczak - 1152995
September 25, 2014
Porter’s 5 Forces
Jasmine Tomczak - 1152995
The fast food industry is one which affects many lives in Canada. The following is a
Porter’s 5 Force’s analysis that will determine how attractive this industry is as a whole.
To determine the threat of new entrants, one must first consider the barriers to entry.
Firstly, the start-up costs associated with the fast food industry are relatively minute. This acts as a low barrier to entry. In this industry, the top four companies account for 37.4% of the total revenue. Although that is not a percentage of mind-changing significance, a business entering this industry must be able to uniquely establish itself with product differentiation. That being said, it is believed that the industry concentration is relatively low. Accordingly, high barriers to entry arise from government regulations, specifically including health and food service as well as occupational health and safety issues, along with a high amounts of competition within the fast food industry. Overall, the barriers to entry can be determined as low resulting in a high threat of new entrants.
Next is establishing the power of the buyer. The fast food industry has been impacted by the decreasing demand for fried food and subsequently the increase for healthy options. This change in consumer trends along with a high variety of fast food places to choose from assume high power of the buyer. Secondly, it has been determined that the products sold in the fast food industry are luxury goods - goods that are purchased more-so when economic times are “good”.
In turn, when economic times are “rough,” consumers will choose to eat less fast food and more home cooking. Overall, the power of the buyer within the fast food industry is high.
Thirdly, the threat of substitutes must be determined. Substitutes for the fast food