Question

What is the five forces porter of the campbell soup company ?

Answer 1

Campbell soup company is a successfully leading company dealing in processed and packaged goods. The five forces of Porter can be defined for this company as follows:

- Threat of new entrants- New entrants in the business of processed and packaged goods has a great possibility. They can enter the market with innovative attractions, low prices, reduced costs and new propositions for the customers. These strategies may attract the consumers and become a threat for the company. For this threat Campbell soup company will have to keep working on product development and low costing strategies.

-Threat of subsitute products- Though this force is not high on the company yet new products can be brought which will replace the need of products supplied by the company and be a threat to its profitability. To avoid such a situation Campbell soup company will have to understand the needs of the consumer in long term and not focus only on their product line, they will have to keep quality service along with the product quality and make the switching cost higher for the customers.

- Suppliers' bargaining power- This business depends on the suppliers to a high level hence they enjoy a dominant position and a high power to bargain. They use their negotiating power and increase prices of the raw material they provide leaving the company with no option than decreasing the profitability of the business in packaged and processed goods. Campbell soup company can deal with this force by having build a supply chain with different suppliers at one time, testing and making options open for different product designs in which raw materials usage varies and making long term and healthy relations with suppliers so that they do not utilise with the power of bargaining very often.

- Buyers' bargaining power- The customers bargain over the prices they are paying for the products by having other options available in the market for the same product. Lowering the prices as per the customer's demand effects the profitability of the business in long run. The company can build a large base of customers as small base gives a larger scope of bargaining. They can also introduce new products in the market as this will reduce the bargaining power of the buyers.

- Rivalry amoung customers- The competition in the industry of processed and packaged goods is high. Competitors use different strategies to attract customers and this effects the overall profitability and growth of the company. To avoid this situation the company can adopt a differentiation in the market to sustain its position for long term, building scale for better capability to compete and increasing the market size and collaborating with competitors to avoid the competition.