Buyers are fragmented and have no particular influence on the product or price.
Are weak because of the standardized products that are bought by RMCF. Customer is weak. The gourmet chocolate industry is an extremely important customer of its supplier group. The bargaining power of the suppliers is reduced because of the importance of the gourmet chocolate industry as a customer.
Threat of new entrants
When profits have increased the way they have in the gourmet chocolate industry we would expect additional firms to enter the market to take advantage of the high profit levels, over time driving profits down for all firms in the industry. Proprietary knowledge at RMCF such as recipes and certain ingredients are considered to be a barrier to entry for potential competitors. The Gourmet chocolate industry and RMCFs requires asset specificity creating another barrier to entry for potential competitors that are reluctant to make investments in highly specialized assets. Additionally, the expense and network that must be present to obtain access to distribution channels is an entry barrier for new companies. A new company must acquire distribution channels for their products. This requires the company to create a network of buyers, which is time and money intensive. Further, the new companies have to compete for shelf space in stores with the larger players in the industry that have existing distribution channels already established. This requires the company to create a network of buyers, which is time and money intensive.
The threat of substitutes
The gourmet chocolate industry must compete with numerous substitute products that can threaten the industrys profitability. Alternate cooking flavors are a substitute product to chocolate. These flavors include vanilla, lemon, butter, or mint flavoring.
Another significant category of substitutes is snacks. Many non-chocolate snacks are available, View More »