Britannia Industries Limited (BIL) was established in 1892. It is known for the quality product it produces and the continuous innovation they are bringing in the market. Britannia got itself associated with Fonterra which is one of the largest Dairy Company in the world in 2002. The market of Britannia is not only residing in the country of India but also captures a large among of audience in Middle East, Seychelles, Singapore, Ghana and USA (Sarkar, 2016). The company is moreover producing bakery products including biscuits and breads as well in addition to the dairy products including cheese and butter.
Porter’s Five Forces Analysis of Britannia
In order to look for the company profits and prospects, one must consider the competitors of it. So therefore things that must be consider in order to make a company prosper and flourish, Michael Porter established five forces that are necessary to consider in the strategic plan of a firm. These includes
1) Competitive Rivalry
2) Bargaining Power of Suppliers
3) Bargaining Power of Customers
4) Threats of New Entrants
5) Threats of Substitutes
As it can be seen that the competitors rivalry is in the center as it is the most important force that influence the business and market share of a firm in its respective industry. Whereas the other four forces are residing around the intensity of rivalry and they can be considered as the contributing factors.
The BIL can be analyzed as well on the basis of the five powers of the porter which are listed below.
Competitor Rivalry
BIL possesses approximately 38% of the market share. Moreover the growth rate of Britannia is 27%. Britannia has large number of competitors including Parle and ITC majorly due to the same nature of the products both are creating. The core earning of Britannia is from the biscuits they produced and Parle and ITC are also known for their biscuits products (Dr. V. Suresh Babu, 2016). Britannia is also producing the dairy items side by side. In terms of dairy products the competitors of BIL are Amul and Nestle. The leader of dairy industry is Amul. Moreover the baking sector has a high percentage of competition. So the rivalry sector of the Britannia is very high.
Threats of New Entrants
When we talk about the dairy industry and the disorganized baking sector, the new comers are easy to come in market. But on the other side of the picture when it comes to the dairy industry at a larger scale and a well-organized baking sector, the new entrant requires a massive amount of capital to start up the business. Moreover to earn a place in the market, the new comer has to face an intense competitive environment. It also has to take measures to possess the distribution channels. The regulation that are provided by the government when it comes to food seems to be quite unappealing. Huge revenues are expected to be earned by baking industry while considering the latest trends. This factor might pave a way to attract the new entrants. So by the discussion we conclude that the threat for the new entrants is moderate.
Threats of Substitutes
Threats of substitutes are the threats and risks that are expected to occur from the companies that are producing similar products and goods and have more attractive services to offer to the customers. Hence there exists a chance of the audience to turn their faces to those firms. The substitutes of Britannia are savory snacks, crisps, cereals, fruits and other fast food items which can be used in replacement to the biscuits of the company (KITT, 2014). Dairy products have even more percentage of threats than biscuits due to the ingredients that are used in them as most of the audience in any part of the world are conscious of their diet and their weight. Hence the percentage of the risks that might occur from the substitutes for Britannia is moderate.
Powers of Buyers/Customers
This force is specifically focusing on the ability of the customer to bargain about the prices and let them down. It is effected by the magnitude of the customers, audience or buyers that how important the presence of the customer is for the organization and how much the reduction of the cost or earning of the firm will occur when he will switch from one company to the other company. The smaller and more powerful number of clients means the more influence they have over the success rate of the company. (Dr. V. Suresh Babu, 2016) Talking about the buyers/customers of products and goods that are produced by Britannia can include the retailer or the consumer. The price has a huge impact on the dairy industry as well as on the bakery industry. So increasing a meager amount of price of the products can tend to shift a customer from one brand to the other brand. So in such circumstances the power of the buyer is considered very high.
Power of Suppliers
This particular force address the question that how easily the prices of the supplies provided by suppliers can have an influence on the increase rates of the products. It is chiefly affected by the number of factors which includes number of suppliers for a product, uniqueness of the supplies and the cost of switching from one supplier to the other. If the company has less number of suppliers, the impact of them will be more. The significant supplies of Britannia bakery items are wheat and sugar. It also includes the other agricultural products. On the other hand, considering the dairy items, the supplies are milk (Sarkar, 2016). The bargaining with these suppliers is tough as the cost of them are significantly impacted by the production of the inputs. Due to the increase demand of such products, the prices are also increasing to a great level. Besides them, there are other suppliers as well which are utilized for packaging materials.
So we conclude that there are many well-known brands that are existing in the market which pose a moderate level of threat of the new entries and substitutes. The force of the suppliers is moderate in contrast with the customer power which is considered to be strong. So the rivalry in this manner is considered to be high as it is the center of all these forces.
References
Dr. V. Suresh Babu, G. C. D., 2016. A STUDY ON CONSUMER PREFERENCE TOWARDS BRITANNIA BISCUITS IN MADURAI, s.l.: Shanlax International Journal of Arts, Science & Humanities .
KITT, 2014. www.slideshare.net. [Online]
Available at: https://www.slideshare.net/abhinavtushant/strategic-analysis-britannia
[Accessed April 2016].
Sarkar, A. K., 2016. Liquidity Analysis of Britannia Industries Ltd, s.l.: PARIPEX .