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Porter Five Forces Analysis is a strategic management tool to analyze industry and understand underlying levers of profitability in a given industry. Tate & Lyle Plc managers can use Porter Five Forces to understand how the five competitive forces influence profitability and develop a strategy for enhancing Tate & Lyle Plc competitive advantage and long term profitability in Food & Beverage industry.
Tate & Lyle Plc is one of the leading firms in the Food & Beverage. Over the years Tate & Lyle Plc has redefined the ways of doing business in Consumer Goods. Tate & Lyle Plc is listed at London Stock Exchange (LSE) and have a market cap $ 4040.48 million (USD).
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In his revolutionary article in Harvard Business Review (HBR) - "Five Forces that Shape Strategy", Michael Porter observed five forces that have significant impact on a firm's profitability in its industry. These five forces analysis today in business world is also known as -Porter Five Forces Analysis. The Porter Five (5) Forces are -
Porter Five Forces is a holistic strategy framework that took strategic decision away from just analyzing the present competition. Porter Five Forces focuses on - how Tate & Lyle Plc can build a sustainable competitive advantage in Food & Beverage industry. Managers at Tate & Lyle Plc can not only use Porter Five Forces to develop a strategic position with in Food & Beverage industry but also can explore profitable opportunities in whole Consumer Goods sector.
New entrants in Food & Beverage brings innovation, new ways of doing things and put pressure on Tate & Lyle Plc through lower pricing strategy, reducing costs, and providing new value propositions to the customers. Tate & Lyle Plc has to manage all these challenges and build effective barriers to safeguard its competitive edge.
All most all the companies in the Food & Beverage industry buy their raw material from numerous suppliers. Suppliers in dominant position can decrease the margins Tate & Lyle Plc can earn in the market. Powerful suppliers in Consumer Goods sector use their negotiating power to extract higher prices from the firms in Food & Beverage field. The overall impact of higher supplier bargaining power is that it lowers the overall profitability of Food & Beverage.
Buyers are often a demanding lot. They want to buy the best offerings available by paying the minimum price as possible. This put pressure on Tate & Lyle Plc profitability in the long run. The smaller and more powerful the customer base is of Tate & Lyle Plc the higher the bargaining power of the customers and higher their ability to seek increasing discounts and offers.
When a new product or service meets a similar customer needs in different ways, industry profitability suffers. For example services like Dropbox and Google Drive are substitute to storage hardware drives. The threat of a substitute product or service is high if it offers a value proposition that is uniquely different from present offerings of the industry.
If the rivalry among the existing players in an industry is intense then it will drive down prices and decrease the overall profitability of the industry. Tate & Lyle Plc operates in a very competitive Food & Beverage industry. This competition does take toll on the overall long term profitability of the organization.
By analyzing all the five competitive forces Tate & Lyle Plc strategists can gain a complete picture of what impacts the profitability of the organization in Food & Beverage industry. They can identify game changing trends early on and can swiftly respond to exploit the emerging opportunity. By understanding the Porter Five Forces in great detail Tate & Lyle Plc 's managers can shape those forces in their favor.