Mgt599 Module 2 Session Long Project Essay

1813 Words May 18th, 2013 8 Pages
Porter’s Five Forces & PEST

Course Number: MGT599
Trident University

May 6, 2013

Abstract
Porter’s Five Forces and Political, Economic, Sociocultural and Technology (PEST) analyses are key components used to complete an environmental analysis for the packaged food industry. This paper provides a brief summary of the components of each analysis and provides recommended sources to complete the required components within each system. Accessing federal and state government resources, journals, newspapers and industry financial records provide adequate resources to complete each analysis that will ultimately lead to an accurate environmental analysis.

Porter’s Five Forces & PEST
Porter’s Five Forces and Political,
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Powerful suppliers, including suppliers of labor, can squeeze profitability out of an industry that is unable to pass on cost increases in its own prices (Porter, 2008). An analysis of the company’s manufacturing process inputs will identify a variety of suppliers that have potential to impact profits. Reviewing the availability of ingredients for the packaged food products and taking note of any specific uncommon ingredients provides insight into the power of suppliers. Additionally, a company’s labor force also represents the power of suppliers. Through the company’s website and financial documents; an analysis of the labor force experience requirements and organization will indicate further supplier power. Then using Guides for Advertising Allowances and Other Merchandising Payments and Services 16 CFR 240.1 available from the Federal Trade Commission website we will be able to compare available sources (Gwin, 2001).
Bargaining Power of Buyers The flip side of powerful suppliers is powerful buyers. They can capture more value by forcing down prices, demanding better quality or more service (thereby driving up costs), and generally playing industry participants off against one another, all at the expense of industry profitability. Buyers are powerful if they have negotiating leverage relative to industry participants, especially if they are price sensitive, using their clout primarily to pressure price

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