1. Problem/Key Issue
How to maintain the competitiveness of the Thai Sugar Industry in a dynamic and volatile global market?
Porter's Five Forces Analysis on Global Sugar Industry
Threat of new entrants - LOW
The industry requires sugar manufacturing firms to have necessary capital investments such as land and building, warehouses, factories, labor, etc. Moreover, these facilities can be utilized for sugar production including its by-products (i.e. molasses and bagasses) only. This represents the high exit barriers.
Threat of substitute products - LOW
Substitutes to sugar do exist in the market. These substitutes such as artificial sweeteners, starch syrup are available but are not widely used all over the world.
Threat of buyers' growing bargaining power - LOW
Up to extended consumers (end users), they do not exert much control on the prices since the demand for sugar is inelastic which represents no significant power of buyers.
Threat of suppliers' growing bargaining power - RELATIVELY LOW
Sugarcane growers are considered as suppliers for sugar industry.
Since the world's plantation of sugarcane has been constantly increasing, especially from Brazil, this signifies low bargaining power from suppliers (i.e. sugarcane growers).
Threat of intense segment rivalry - VERY HIGH
Sugar industry can be classified as a consolidated industry. The rivalry among the nations to be prevailing in the global market is exceedingly intense.
SWOT Analysis for Thai Sugar Industry (2006-2007)
Geographic location - proximity to global sugar market
Inelastic domestic demand
High technology and procession
Increase in the area planted to cane
By-products of sugar cane
Significant decline in world oil prices leading to lower transportation cost
Exchange rate fluctuation.
Considerable tariffs on sugar exported to Russia
Significant decline in world oil prices resulting less interest in the use of alternative...