According to Porter, Rivalry among existing competitors is one of the five forces determining the attractiveness...

According to Porter, Rivalry among existing competitors is one of the five forces determining the attractiveness of an industry. Assess the strength of this force for the restaurant industry. Make sure to discuss all factors that have an effect on the strength of rivalry. Be specific and provide relevant examples to support your arguments.

Expert Solution

Industry rivalry or rivalry among existing firms is one of Porters five forces used to determine the intensity of competition in an industry .These factors are as follows: Barrier to entry ,Bargaining power of buyers,bargaing power of suppliers,threats of substitutes they are the source of attractiveness for an industry as companies feel pressure or see opportunity to improve their position .For example price competition in telecom service providing companies can be a wand to capture a larger market share .Restaurant business is a service providing business if all the restaurant in an area are balance in strength will engage in competitive battle and try to capture market.The impact for the restaurant business can be positive if the rivalry is related to increase in advertisement will increase demand .Also the negative impact on industry I'd when there is price compitition which will results in decrease in profits.The other factor is restricting the entry of new business and to form a cartel in order to exploit the market. Hence to form an oligopoly sometimes threat of substitute is also used as a factor of rivalry as a new recepie of new food item with reasonalble price can be used to counter compitition. Bargaining power of buyer means some powerful buyers influences the bargaining capacity they are those who belongs to larger market segment hence they will also increases strength of rivalry rasturants will cater to the need of such buyers to have a compititive advantage similarly bargaining power of suppliers is also a contributor to the strength of rivalry as in case of rasturant business the suppliers can be providers of ingredients they will ask for more price and reduce the profitability

Rahul Sunny answered 2 years ago

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