Azalea Seafood Gumbo Shoppe

Essay by redfalcon April 2006

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1. What is competition like in the value added seafood industry? What competitive force seems to have the greatest effect on industry attractiveness from the standpoint of packaged seafood producers?

The competition in the value added seafood industry and the industry attractiveness can be evaluated by the Porter's five force model.

I. Barriers to Entry:

* Economies of Scale (Strong): New firms entering into the industry have to compete against the big players in the market as the cost of production of the existing companies would be lower, as compared with a new company.

* Capital Requirement (Strong): Due to the nature of the industry i.e. products are perishable and the risk involved, the new business should have a strong capital supporting business.

II. Bargaining Power of Suppliers:

* Number of Suppliers (Strong): There is a large number of suppliers supplying similar products thus they don't have much bargaining power.

III. Bargaining Power of Buyers:

* Substitutes (Strong): There are large numbers of products to choose from a consumer perspective, as a result giving them a higher bargaining power.

IV. Substitute:

* Switching Cost (Strong): Since there are a large numbers of similar products available there is a low switching cost for the customer.

V. Intensity of Rivalry:

* Numerous Competitors (Strong): There is strong competition in the market as the industry is highly fragmented.

* Exit Barrier (Weak): As there are competitor in the market the machinery used in the production could be sold easily, making exit procedure easier.

Overall the competition in the value added seafood industry is strong as the industry is fragmented, and consumers have high bargaining power.

Industry Attractiveness:

* Increasing number of people eating out and further increase predicted.

* Existing food distributors, taking logistic pressure off the company and giving wider national coverage.