Dakota growers pasta Industry analysis and recommendation according to Porter's five forces

Essay by shabujUniversity, Master'sA-, April 2004

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Attractiveness analysis of Durum Milling and Pasta Industry

Rivalry within the industry

Factors to consider:

·Price is an issue for the undifferentiated product. Here the durum milling and pasta industry is of same kind of industry. Because of the price volatility attractiveness goes up for the larger companies and it goes down for the small companies as large companies gain economies of scale, they can still provide a competitive price.

·Number of competitors is an issue here. There are 13 major milling firms in the whole industry. Among this 4/5 are vertically integrated. And these firms are holding 60% of the total market share. Apart from vertically integrated milling and pasta producers there are 141 small dry pasta producers.

There is another issue here that needs to be considered. This is size of competitors. It is like that some large companies have bought some other companies for coordinating their selling working.

This results few companies in the whole durum milling and pasta industry. For this reason the industry has become condense. Small producers being innovative capturing the retail brand supply.

·Then there is demand issue. Here for the increase of the dual working parents the demand is growing high for the pasta products. And the demand is increasing day by day.

·Brand loyalty does not exist to that extend in the pasta industry. Though there is some preference for the Italian pasta, people are not that much brand conscious here.

·Because of the preference of the Italian pasta, imports of Italian pasta and Italian manufacturers setting up plants in USA are making the Durum milling and Pasta industry more competitive.

Bottom line

The cost factor is making the industry attractive for vertically integrated farms and unattractive for the smaller firms who have to buy semolina flour from...