of firm, thus the bargaining power of supplier is not harmful for Yakult. Furthermore,
Yakult uses backward integration, where they have their own manufacturing factory to produce their probiotic beverage. The main ingredient in the probiotic dairy beverage, liveLactobacillus caseistrain Shirota is carefully cultured and tested in Yakult own laboratory. In other words, Yakult does not rely on outsider to get their main raw material, but they produced it themselves in their own laboratory and factory. In a nut shell, Yakult is immune with the power of supplier, as they having few suppliers instead of rely on one supplier.
d) Bargaining Power of Buyers
Buyer power is one of the forces that shape the competitive structure of an industry. When the power of buyer is strong, they can pressure the sellers to lower down the prices, improve product quality or better service. In contra, weak bargaining power of buyer will often makes an industry less competitive and increases the profit potential for seller. In this case, Yakult are facing high bargaining power from their buyers. Firstly this is because there are available substitute and large range of probiotic drink in the market that offered similar benefit to the customers, for example Vitagen, Nestle Yogurt drink, and probiotic supplement beverage. Yakult is not the only firm that produce probiotic daily beverage. Customers can easily switch to other product that available in the market, customers switching cost is low.
Secondly, customers are price sensitive towards the beverage. If Vitagen probiotic drink is having promotion and the prices are much cheaper than Yakult Ace drink, customer will simply switch to purchasing Nestle yogurt drink. Thirdly, Yakult probiotic daily drink is not highly differentiated and standard. It become a daily basis for some consumer, thus consumer can switch to other brand that provide the same function as Yakult. In a nutshell, the bargaining power for Yakult buyer is relatively high.
e) Threat of rivalry
The intensity of rivalry among competitors in an industry refers to the extent to which firms within an industry put pressure on one another and limit each other’s profit potential. High intensity of rivalry means competitors are aggressively targeting each other’s markets and aggressively pricing products. While low intensity of competitive rivalry makes an industry less competitive and increases profit potential for the existing firms. The rivalry in probiotic beverage is minimal. Firstly this is because few competing firms are roughly doing the same size and serving the same amount of customers.
Yakult, Vitagen, Nestle are sharing the almost similar market share. Secondly, there are lack of product differentiation for the existing brand in the market, Yakult, Vitagen, Nestle are offer the almost similar probiotic daily beverage in the market. This three probiotic beverage different in some ways but they do share the similar characteristic as well, which are help strengthen immune system and smoother the digestive system. Thirdly, customer brandloyalty is not significant, customer who consume Vitagen beverage might switch to consume Yakult on some day, and same goes to consumer for Yakult. In a nutshell, the threat of rivalry is minimal for Yakult Company.
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