Topic > Supplier Power and Buyer Power - 1682

A Porter analysis examines five different forces that influence the success of a particular industry. This analysis is then used to determine whether a particular industry is attractive to potential shareholders and investors. The following will elaborate on supplier power and buyer power in the “family restaurant” industry; including restaurants such as: Boston Pizza, East Side Mario's and etc. The different strengths and weaknesses of these forces depend on many different factors which will also be summarized. Finally, the overall influence of each force on this sector will be specified to provide a greater understanding of the strength of this sector in relation to its suppliers and buyers. First, the power of suppliers in the “family restaurant” industry will be discussed. To be successful, a catering business must have the right equipment, the desired furniture, decorations and tableware, and of course, the right food. Other companies supply all these products to this industry. However, in North America and around the world there are many different companies that are in the business of selling restaurant supplies. With so many different companies having the same intention, the restaurant industry has a lot of choice to buy from. For example, if a restaurant is not satisfied with the price of a company's bar stools, the owner can easily find another company with a better price for the bar stools. The glut of companies supplying restaurants reveals that these suppliers do not have much influence on the success of the restaurant industry. Additionally, most supplies needed for the restaurant industry are not unique from restaurant to restaurant. Different companies don't need different types of plates to be successful. The lack of rarity found in all types of catering supplies, from food to furniture, demonstrates that once again the power of suppliers is weak in this respect. Additionally, if a restaurant is not satisfied with a certain product, many other suppliers are available to choose from, as stated earlier. Suppose a company like Boston Pizza decides to purchase pizza dough from a different supplier due to a price increase from its current supplier. This change requires the company to find a supplier with a similar type of pizza dough at a better price. This change of suppliers is relatively easy for Boston Pizza due to the large number of other companies that supply pizza crusts to restaurants at competitive prices.