Bauhinia: Milk and Specialty Food Industry Essay

665 Words Nov 26th, 2013 3 Pages
Q1) Discuss the competitive forces in the dairy processing industry. Identify the other industry that Bauhinia has entered and highlight the key differences in the competitive forces between the two industries. Comment on their comparative attractiveness in Hong Kong.

Five forces model
a)Potential new entrants high barriers: laws on food safety customer loyalty to established brands of leading market players dairy products are mostly perishable, which requires high turnover,reliable supply chain and distribution channels.
Economics scale is achievable by building new capacities in jumps in the dairy industry. It cohere mainly with specialized equipment, which is used for production of milk and milk product.
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d) Threat of substitute products
It is possible for consumers to replace conventional milk products with vegetable alternatives, such as soya milk, almond milk, rice milk, oat milk, coconut milk.
The vegetable alternatives are often available as powdered milk drinks. Cow’s milk can be also replaced by goat milk, sheep milk or buffalo milk. Butter can be substituted either by other animal fats or by vegetable edible fats and oils.

e)Bargaining power of suppliers
The dairy processors are dependent on one major raw material – milk. There are no basic substitute inputs for the dairy processors. It means that the dairy industry must face bargaining position of dairy farms.

Bauhinia has also entered the specialty food industry.
The key differences in the competitive forces between dairy and food industry:

a)Potential new entrants
Concerning capital requirements, the dairy industry does require relatively large amounts of capital, compared to specialty food industry, because of strict regulations for hygienic milk processing and packaging.

b)Rivalry among existing firms
Compare to dairy industry, the market in specialty food industry is more fragmented and there are many rivals with no dominant firm, in contrast, there are only three dominate company in dairy industry.

c) Bargaining power of
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