Porter’s five forces analysis will help in the identification of the competitive environment within the industry company is operating which affects the operations of the business and need to be considered for the execution of the operations of the business in an effective manner.It is of great use in generation of the understanding of the organisational strengths due to the current competitive position and helps in the determination of the attractiveness of the market in which company is operating (Global, 2010).Porter’s five forces are as follows:
Barriers to the entry or the threats of the new entrants:every industry has certain rules and regulations for the purpose of entry and exit from the industry. There are certain barriers over the entry in the wine industry which restricts the entry of the new wine makers in the industry. The wine makers need to comply with the rules and regulations of the industry in which they are operating. For starting a wine company need funds as well as equipments to conduct the operations of the company and there are laws which restrict the wine makers from providing low quality products to the customers (Cernusca et al., 2012).
Power of the buyers:due to the availability of the large number of companies in an industry the power of the buyers increases which affects the sales of the business. The term buyer can be used for the customers, distributor as well as the retailers. The distributors and retailers come up with majority and affect the business. Framingham Wines need to consider this aspect in respect to the retailers and the distributors which are the link between the end customer and the company.The retailers hold power which affects the production process of the Framingham Wines (Centonze, 2010). The buyers hold power which affects the performance of the organisations.
Threats of the substitutes:substitutes can be explained as those goods which can be used at the place of each other. In the wine industry, there is lack of brand loyalty among the customers. The customers can prefer other wines over the wines provided by the Framingham Wines to them as there are various factors which will create impact over the choice of the customers and results in shift in the demand of the customer towards the other products or the substitutes of the product offered by Framingham Wines available in the market. Framingham Wines need to use strategies which help in coping with the competition and dealing with the substitutes of the products available in the market. Various other wine manufacturers are manufacturing different brands ofwine so as to satisfy the needs of the customers.