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INDUSTRY ENVIRONMEMT OF THE US CANDY INDUSTRY
Analysis of the Industry Environment of the US Candy Industry Laquita Robinson Union University
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INDUSTRY ENVIRONMEMT OF THE US CANDY INDUSTRY
Abstract According to Harrison (2004) the nature and level of competition in an industry is primarily associated with three stakeholders: customers, suppliers, and competitors. There are many firms producing candies by producing different flavors and they are taking into consideration the health issues patterning candy consumption in the country and many flavors which are sugar free are currently being produced. According to Harrison (2004) the groups or clusters of similar competitors are called strategic groups. In the candy industry, there do exist some strategic groups that do compete with each other in selling of candy which includes: super/hypermarket, online stores, and convenience stores among others in this market. Boundaries of the US Candy Industry The US candy industry has been continuously growing due to increased consumer spending and high rate of urbanization growth in which many people are continuously moving to towns. The target market for candies are majorly children and young population of up to 17 years of age. The increased demand can be accredited to the availability of variety of candies such as chocolate and non-chocolate candy products. Candy industry can be said to be a monolithic industry because it is indeed one product with different flavors in the market or industry. Level of threat from new entrants to the US Candy industry In the candy industry just like other industries, there do exist different threats such as stiff competition in which different must a different strategy for its survival. According to Porter, (1998) competition helps in sustaining profitability level. Some of the threats that do exist in candy industry include and not limited to introduction of a better alternative for candy, new laws, entrance
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INDUSTRY ENVIRONMEMT OF THE US CANDY INDUSTRY
of firms which sell the products at a lower price, rise of cheaper products that are similar to candy, introduction of a healthy product that can be a substitute for candy, branding, and increase of taxes among others. The US candy industry should take advantage of the economies of scale within the industry through cost advantage. This will help the industry keep their customers and focus on building a stronger identification of brand and innovation of the products offered from new entrants. These threats are mostly attributed by free market in US which creates certain characteristics such as free entry into the market, homogeneous products, forces of demand and supply, presence of government, high number of buyers and sellers, speculation and expectation, and high profit which are enjoyed in short run which attracts more firms into the industry and therefore increased threats as a result. Power of Suppliers from the US Candy Industry There are several powers of suppliers in the US industry market which includes: New threat of entrance, bargaining power of suppliers, threat of substitutes, competitive rivalry, threats of complementary, forward integration, number of suppliers relative to buyers, high cost of production and increased tax among other primary factors in the candy industry, and the availability of suppliers for immediate purchase. New entrance may put a lot of pressure on suppliers of candy’s as the prices will fall, bargaining power of suppliers may create a very conducive environment for production of more candy and a stable prices and cost of production.
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INDUSTRY ENVIRONMEMT OF THE US CANDY INDUSTRY
According to Harrison (2004) consequently, the manufacturing costs, performance characteristics, and innovativeness of candies are in the hands of suppliers. The results make the bargaining power of suppliers a greater force within the industry. The US candy industry can go after the bargaining power of suppliers by establishing close relationships with the suppliers and both can benefit, multiple suppliers, or purchase raw materials from suppliers at a low cost. Power of Buyers from the US Candy Industry Powers of buyers according to Potter includes: Bargaining powers of buyers, numbers of buyers relative to suppliers, dependence on a particular supplier by specific buyers, switching costs, backward integration, product differentiation, availability of substitute products, and bulk purchase among others. The quality of the products is very important to the buyers, which in return these buyers make frequent purchases. This means that the buyers in the candy industry are less price sensitive. Even during a pandemic, the candy consumption seemed to not be greatly affected by the crisis. Even through tough times or whatever the economic situation may be, buyers will continue to buying candy. They will keep buying candy because of the relation to rewards and most greatly moments of joy and that is something that buyers want to hold on to which results in the bargaining power of buyers a weaker force within the candy industry. Threat of Substitution faced by the US Candy Industry Substitution threat is usually high when the rival companies or firms from outside the nation provides more attractive products to the buyers at lower price due to lower cost of production for instance. This consist of: barriers to entry, bargaining power of buyers, bargaining
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INDUSTRY ENVIRONMEMT OF THE US CANDY INDUSTRY
power of suppliers, and industry rivalry. Substitution threats can be solved through finding a new market share, increased innovation and coming up with new product, carrying out a research on a particular brand of a product, carrying research on consumer preferences among other factors. The US candy industry this means that there is no cap on the maximum profit that the industry can earn. In result, would make the threat of substitution a weaker force in the US candy industry. Level of Inter-Firm Rivalry in the US Candy Industry
Competition is usually healthy as it motivates to examine their cost structures, and eliminate inefficiency in the market where they do operate. Some of the inter-firms rivalry includes entry barriers, substitute threats, bargaining powers of both suppliers and buyers in the market. However, these inter-firm rivalries can be influenced by the following factors; High presence of competitors, slow growth of the industry, high cost of storage, lack of differentiation, increased capacity in large companies, high strategic stakes and exit barriers. In the candy industry the competition extends beyond the current competitors. This is also consistent according to Porter (1998). For better environment for both suppliers and buyers to exist, the rivalry up to certain circumstance must be tolerated. With the US industry at a steady growth, they can put the focus on new customers rather than focusing on winning over the existing ones.
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INDUSTRY ENVIRONMEMT OF THE US CANDY INDUSTRY
References Harrison, J. (2014). Foundations in Strategic Management, 6th ed. Cincinnati, OH. South-Western. Porter, M. (1998). Competitive Strategy: Techniques for Analyzing Industries and Competitors. New York. The Free Press.
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