The porters five forces model can improve the current position of Grupo bimbo and help the organization to look after the opportunities and threats and take some wise decisions ahead.

The porters five forces model can improve the current position of Grupo bimbo and help the organization to look after the opportunities and threats and take some wise decisions ahead.

Threats of new entrants

The new market players are always a threat to existing market holders. If the organization can generate higher profits and the barriers to organization is minimum, then it will have higher attractions to the customers and as a result the lower chances of new players to enter the market.

The factors that can reduce the threat of new entrants for  Bimbo:

• New entrance in the market will require high funds and resources investment. This will led to bimbo’s advantage as it loses the grip of the product price and consumer may place great importance to the extraordinary experience.
• To keep the minimal threat from the new entrants, loyal customer norms should be made through the existing brands and build a better brand value.
• If the network and distribution channel is unaccessible then it will be very tough for new entrants to grab the market share.

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Grupo Bimbo may face higher threats  for the following factors: 

• If the new comers gets the support from existing regulations
• Customers can switch to new brands due to unawareness
• High investments initially
• If its very simple to built the network distribution

Threat of Substitute Products or services

Any substitute product or service in the market can build a competitive environment for Grupo Bimbo and others. High threats represents that consumer can choose alternative products from the other organization to fulfill their needs. The factors that determines the threat for the organization are:

Threat of Substitute Products or services is higher when;

• Product with low cost from other industry
• The delivery cost or the cost of resources is low in other organization
• If the product offers the equal quality or better quality and the services are similar to Grupo Bimbo.

However, the above  threat  can be low for Bimbo when;

• If the alternative products cost is higher
• Consumers cannot differentiate the quality and performances from the
• Alternative product as they come from Grupo Bimbo’s production

Rivalry among existing firms

The existing firms represents the higher competency against Grupo Bimbo. But now in the current market Grupo Bimbo can resist the pressures from higher industries which can reduce each others profit and growth. In this type of industries usually the profit margin is less due to price strategies against one another.

The Rivalry amongst existing firms can be low for  Bimbo ;

• If the market have only few competitors
• If the growth is rapidly increasing
• If the products are highly characterized and each market owner aims different segments
• If the price of the products are high in other brands

Bargaining Power of Suppliers

When the bargaining power of suppliers are high the cost to the buyers are more and it reduces the profit margin whereas if the bargaining power is low then the industry can earn more profit and grow rapidly. It can be done by varies strategies such as lower the quality or higher the prices or sometimes product unavailability.

Bargaining power of suppliers may be high for  Bimbo:

• When the concentration is more than the buyers in some specific locations
• When the demand is high and the supply is low
• If not aware of the sensitiveness of price and have less market knowledge

Similarly, the bargaining power of suppliers can be low for Bimbo if:

• Expert knowledge on market is more
• Highly sensitive to price
• Resources cost are low
• Alternative products are available

Bargaining Power of Buyers

When the bargaining power of buyers are high the company becomes more competitive and generates low profit similarly when the bargaining power of buyers are low the company gains more profit and becomes less competitive. The bargaining power is exerted by the customers on the organization to get better quality in regional prices.

Some factors that hike the bargaining power of buyers:

• If the sellers are more than the buyers then it will impact the bargaining power of buyer in Grupo Bimbo
• Purchasing large volumes of products can increase the bargaining power of buyer
• Low costs for alternative products also increases bargaining power of buyer