Poter’s Five Forces- Haidilao Hotpot

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Poter’s five forces

1, the bargaining power of suppliers
Haidilao Pot has its own four large modern logistics center and a raw material production base, it uses Backward Integration Strategy on its raw material, the company is a large enterprise with national chains in China, the need for raw materials is large, enhance their ability to bargain, recently some vegetables (cabbage, etc. ) oversupply, causing prices to fall, this is good for the company’s business; Shuanghui clenbuterol issue regulations require companies to make safety requirements for food, meat supply is under attack, but also good for the company’s business. It means suppliers has low influence on the company.

2, the bargaining power of buyers
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China is a large catering country, it has many companies in this industry, for new entrants, existing businesses will not have much reaction,barriers to enter or exit are relatively low, so it is competitive. Barriers to entry the hot pot area are relatively small, the company does not need to spend too much production equipment, so it will attack more competitor in entry into this area. In this case, the companies need to make their own characteristics, to occupy a favorable position.

4, the threat of substitutes Catering enterprises are those like KFC, McDonald's, Wallace and a variety of fast-food-style class hotels, buffet, etc., they have similar services to the Haidilao Pot, such as KFC and McDonald's standardized production processes, they open 24 hours, the customers will be based on their own preferences, consumption timing, convenience and price to consider the consumer sites they will choose. Haidilao Pot has its own characteristics, so they can get a part of loyal customers, coupled with the company's service differentiation, it is also very attractive, therefore, the substitutes would not have a big influence on the market share.

5, Competition within the industry
China has top ten hot pot brands: Little Sheep Hot Pot, Tokusho pot, Qin Ma hot pot, Oriental Beef King, Little Swan Hot Pot,etc. Because of the low barriers to entry, it will get more competitors, As an individual company in this industry ,Haidilao positioned in the low

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