Question

Dean Foods is one of the largest dairy food manufacturers in US. The main problem the company is facing is that due to competition from retailers, their milk supply has decreased in revenue by a huge percentage.

List how each of Porter's 5 Forces relate to Dean Foods' situation. What solutions can you recommend Dean Foods can do based off of Porter's 5 Forces analysis?

Answer 1

List how each of Porter's 5 Forces relate to Dean Foods' situation

Bargaining power of Suppliers-

• Since they are the dairy manufacturers, they own their own dairy farms
• So this threat is not high due to absence of suppliers

Bargaining power of Customers-

• Customers have many alternatives in market
• Hence this threat is high as customer's switching cost is very low

Threat of new entry-

• Since there are less barriers to enter into dairy food manufacturers business
• Hence this threat is also high

Threat of substitution-

• With the prescence of many competitors and new entrants
• This threat also is very high

Competitive Rivalry-

• There is a high competition from existing retailers
• Hence this threat is also high

What solutions can you recommend Dean Foods can do based off of Porter's 5 Forces analysis?

• Dean Foods should adopt differentiation of products to overcome competition
• Dean Foods should understand the needs of customers to provide them better
• Dean Foods should cover more segments of target market through advertising