An industry analysis on the Morning glory café using the Porter’s five force approach reveals the business’ balance of power. The approach reveals the five major forces that determine the industry’s competition. It can also be used to measure the potential of profitability in an industry. The Porters five forces plan can be used to analyze the business situation of Morning Glory Café.
Threats from new entrants
Morning Glory Café does not have many competitors. However, there is a chance that investors could see the opportunity and start other similar businesses in Eugene area. This threatens the popularity of the business especially because the business does not have any promotional or advertising mechanisms in the area.
Suppliers’ bargaining power
With few competitors in Eugene, Morning Glory enjoys almost monopoly status when purchasing goods from its suppliers. Most of the suppliers are local farmers, with whom the business has established a cordial business relationship. Therefore, Morning Glory café has a stable bargaining power over its suppliers because of the good relationship. More so it does not have other competitors to worry about losing its suppliers.
Buyers’ bargaining power
Morning Glory Café provides foods that are specialized to meet the demand of a specific group of people at affordable prices. However, the business does not enjoy any advantage in terms of buyers’ bargaining power. Most people are meat lovers, and there are many other bigger cafes in Eugene that can satisfy the demands of many buyers. Therefore, the lack of advertising and promotion mechanisms has led to higher buyer bargaining power. The presences of other big cafes in the city and the café’s specialized services have contributed to higher buyer bargaining power.
Threat posed by substitute products
Morning Glory Café specializes in providing gluten-free, organic and healthy foods. However, these foods face competition from fast foods and meat products. These are substitutes to the products offered by the café hence; the company faces the threat from these substitute products. It must engage in robust promotion and advertisement in order to popularize its products. This will help reduce competition from these substitute products.
Competition from existing rivals
There are several breakfast and lunch restaurants in Eugene that are much bigger than Morning Glory café. This increases the rate of competition in the environment hence; reducing the profitability of the business. The business has to develop new techniques of dealing with the stiff competition from rival businesses. The company needs to explore other methods such as advertisement in order to increase its popularity.
In line with marketing objectives of Morning Glory café, the company can increase its sales level through two ways. The company should resort to advertisement and promotion to raise the café’s popularity and profitability. Advertising raises the café’s competitive advantage against its rivals, reduces supplier and buyer bargaining power and even creates barriers of entry to new entrants. Diversifying the products the café sells could also help the company raise its sales and profits since it will become appealing to a wider group of Eugene residents.
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Vegetarians of Washington. Vegetarian Pacific Northwest: A Guide to Restaurants and Shopping. illustrated, revised. Washington: Book Publishing Company, 2008.