Porter's Analysis

Porter’s 5 competitive forces

 In 1979, Harvard Business Review published “How Competitive Forces Shape Strategy” by a young economist and associate professor, Michael E. Porter (Porter, 2008). Porter's Five Forces of Competitive Position Analysis was developed as a simple framework for assessing and evaluating the competitive strength and position of a business organization (CGMA, n.d). This theory is based on the concept that there are five forces that determine the competitive intensity and attractiveness of a market. Porter’s five forces help to identify where power lies in a business situation. This is useful both in understanding the strength of an organisation’s current competitive position, and the strength of a position that an organisation may look to move into (CGMA, n.d). Porter’s five forces of competitive position analysis use the force shown in the diagram below.

[pic 1]

Diagram 1: Porter’s five forces of competitive position analysis

(Source: http://www.cgma.org/Resources/Tools/essential-tools/Pages/porters-five-forces.aspx)

PFCF analysis based on JPNP  Canteen

1. Rivalry among existing competitors : Low

Rivalry among existing competitors is driven by the number and capability of competitors in the market. For examples, many competitors, offering undifferentiated products and services, will reduce market attractiveness. According to the information provided, there are no other restaurants or food cafes that are in operation within the radius of 3km from JPNP canteen premise. Therefore, rivalry among existing competitors that JPNP canteen faces is currently considered low. However, in the near future if any new restaurant or food café opens up at ABC University the level of rivalry from customers. Hence, it is important for JPNP canteen to maintain their food prices, quality, and variation at its optimum level at all times in order to ensure customer satisfaction and to overcome rivalry from competitors.

1. The threat of new entrant High

In the business world, it is common for profitable markets to attract new entrants, which erodes profitability. The F&B industry in Malaysia is an industry that grows by heaps and bounds every year. According to the Executive Direct of The Business Magazine of the Malaysian-German Chamber of Commerce and Industry, Malaysia and food is a love relationship that has brought a huge variety of tastes and dishes to this part of Southeast Asia. Some people will even build their daily schedule around meals. (Stedtfeld, 2013). Besides that, the Malaysian education industry has an ambitious goal to reach an international enrolment of 200,000 students  by 2020,  which is a part of the country’s   Vision 2020 programme and is currently  targeting further growth within Southeast Asia, as well as from China, India, and the Gulf Region.(ICEF Monitor,2014). In references to the following statements, the possibility of upcoming and ongoing business to venture into the canteen business at ABC’s University premise is high. Therefore, JPNP’s canteen business faces high treat of new entrant in the near future.