Thornton Case Study

Johnson et al (2008p.59) state that “Porter’s five forces framework was originally developed as a way of assessing the attractiveness (profit potential) of different industries”. Contemplate the chocolate confectionary in the UK the threats of entry are low (fig.3). Being a new brand, trying to enter the chocolate market is difficult. They neither have the equipment nor the experience. Actually there is no real substitute for chocolate although the chocolate industry is a seasonable business and the industry struggles in summer months. But in general the threats of substitute can be seen as low threat. As it is more and more common that supermarkets like Sainsbury’s and Tesco produce their own chocolate brand and to switch easily between the suppliers the power of buyers should be considered as high.   The primary products for chocolate are coca, sugar and cocoa butter. As trade is fair and worldwide today the power of suppliers is low. The competitive rivalry is high. According to Hooley et al (2006p.74) the UK chocolate confectionary for example has “three rivals, Cadbury Schweppes, Nestlé and Mars, all command roughly equal market shares. Competition between them for an extra percentage point of the market is intense, leading to high levels of advertising spend, strong price competition and continuous launch of new products”. The end consumers tend to switch easily between the wide ranges of chocolate bars and according to Jennings (2004p.757) there is a declining growth rate. Therefore the only way to compete is through prices and taste.

Examining the eating habits of today’s population it is probably called a society of consumption. Meaning people eat what they enjoy if so chocolate. Therefore there is and always will be a demand-driven chocolate market. Hence according to the above analysis the industry is still attractive to existing players although rivalry between the already existing players becomes more intensive nowadays. The companies steadily have...