MBA523 Final Spring 2018 4. (3 points) My business is a SUBWAY SANDWICH franchis
ID: 3376275 • Letter: M
Question
MBA523 Final Spring 2018 4. (3 points) My business is a SUBWAY SANDWICH franchise. The national headquarters for SUBWAY SANDWICH negotiates contracts for all food and suppliers on behalf of all of its franchises like mine. There are 5.000 franchises nationwide and 1,000 more internationaly l own just the one franchise in my neighborhood. The Franchisor (HQ for Subway) negotiates th contracts for food and t contracts when I want to buy food and supplies. supplies using their buying strength as a big customer.I get to use thess you to perform a Competitive Forces Analysis of my Subway shop perform a Porter 5-Forces Model of Competition hired ease on my Subway Shop.Explanation / Answer
Let's perform a Porter 5-forces model of competition on your subway shop:
Competitive Rivalry (Strong): There must be many fast food restaurants in your neighbood including McDonalds, Wendy's etc. which increases the competition. Also, this is due to the low switching costs of customers. Hence, the competition is very high in the fast food segment.
Bargaining power of Customers (Strong): Due to many substitutes to fast food and large number of fast food restaurants providing food like subway makes the bargaining power of customers strong.
Bargaining power of Suppliers (Weak): There might be many suppliers supplying raw vegetables to the fast food restaurants in your area, therefore the bargaining power of suppliers is weak here.
Threat of Substitutes (Strong): There are many substitutes for Subway available in the area such as sandwiches from local bakery etc. People also cook food at their homes. Hence, the threat of substitutes is high.
Threat of New Entrants (Moderate): To get a franchisee of Subway in your local area might be easy but the cost of setting up a restaurant is very high. Therefore, the threat of new entrants is moderate.
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