Parmalat Dairy Company: Use porter Five forces model

Suppliers

Famers are the main suppliers of the dairy products to Parmalat. Because there are many farmers in Australia, they do not have much control of the prices in the market. The companies have much influence on the price as compared to farmers, thus farmers are not a threat to the dairy industry although their contribution is of paramount important.

Buyers

The numerous dairy products in the market, makes the buyers to have high power because they can switch from one seller to the other with very minimal cost. There are also numerous sellers thus the customers can easily choose from the suppliers with the right products and price that suits the customer. Because of the power of the buyers, it is very important to ensure that the product meets the desires of their client. This means that the organization should conduct market research in addition to use of the information that is given by the customers in order to manufacture products that will suit the clients.

New entrants

As a well established organization with strong brands in the industry, new entrants do not pose a great threat to Parmalat. First and foremost, investing in a dairy industry requires huge investment to establish a manufacturing plant. Additionally, establishing a strong brand in the market is expensive and requires dedication.

Substitute

There are diverse products in the market that can be used to substitute dairy products thus posing a challenge to the brands in the market. The substitutes of dairy products may include dairy products that are manufactured in a different form or totally different products such as juice and mineral water.

Rivalry

The dairy industry is faced with stiff competition both locally and internationally. In Australia, the Dairy companies are large scale which requires Parmalat to engage in diverse tactics to counter the stiff competition. Parmalat has also over the years engaged in acquisition as a strategy for expanding its operations and reducing competition. In the recent past, the CEO signed a new acquisition of Harvey Fresh dairy process facility, but decided to maintain the brands of the company (Díaz 2012).

 

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