This paper addresses the use of Porter’s Five Forces model and how it can benefit Broadway Cafe by identifying and analyzing the effect of these forces on its business. The benefits include improved decision making, faster time to market, better productivity, improved competitive advantage, more profits and greater customer satisfaction. It also helps in achieving operational excellence.
Porter’s Five Forces Model
Threat of Entrants
Porter's First force is the threat of Potential Entrants. Statistics have shown the industry to be slowing down, therefore making competition high and the threat of new entrants low. Broadway Cafe has a small market presence, but the presence of its competitors like Starbucks …show more content…
Starbucks operate in over 20 countries (Starbucks corporate website). Caribou Coffee operates 16 US States and few in other countries (www.caribou.com). Tim Horton’s has a major presence in Canada and USA (Tim Horton’s corporate website). Broadway Cafe is a local cafe. It is clear that Broadway has to compete against these major competitors in the market. It is also evident that Broadway Cafe, given its volume of operations cannot compete with the industry giants directly. A slowing industry market growth is another threat facing Broadway Cafe. According to the market research firm Allegra, market was estimated to grow at a much slower pace than it did in last ten years. Competitors are selling similar products, including specialty coffees as well as high quality foods. In this slowing market, competition is very high.
By evaluating the Porter’s five forces model, it can be summarized that Broadway Cafe is in a very tough environment. Though the risk of new entrants is low, but the threat from existing competitors is very high. Broadway Café needs to be very focused on the customer relations and the quality of their products. Broadway Café can try to offset high bargaining power of buyers by implementing loyalty program. Given the scale of business and the strong influence of competitors over the suppliers, it is difficult for the Broadway Cafe to have a strong control over its suppliers. Since Broadway Cafe is in a food and