This is why they need the development of powerful advertising strategies. Therefore, the owners of the craft breweries have to focus on attracting consumers. Secondly, people incorrectly link craft beer production with crimes and drug abuse (Kotler, 1997). It is a luxurious product, so people do not have an incentive to buy it regularly. Here is where the businessmen face difficulties. The bargaining power of customers determines the level the buyers can influence the beer industry. This will help to establish a profitable business that fulfills the needs of both: the sellers and the buyers. The well-balanced price levels of inputs and outputs will control the bargaining power of suppliers. According to Rainer and Turban (2009), implementing innovations and using alternative sources can do so. The bargaining power of suppliers can be lowered. Consequently, the final product is more sophisticated yet more expensive. The better the quality of the inputs, the higher the prices. It includes the cost of equipment and raw materials, wages, utility expenses, etc.
The bargaining power of suppliers in a craft beer industry influences the prices of inputs. Considering its factors, business owners can price the products adequately and gain the highest profit. Secondly, the bargaining power helps to set a relatable price for a product or a service. Hence, the group that has more powerful bargaining power has the strongest influence on the entire industry. In the case of the beer business, two parties are suppliers and customers. First and foremost, it determines the ability of one party to affect another. Bargaining Powerīargaining power plays an essential role in business leading. It develops an effective strategy for the owners of beer companies to increase their gains from sales and lower the prices of inputs (Ireland et al., 2008). Porter’s Five Forces model takes into consideration all the factors of the beer industry mentioned above. This affects market sales and lowers profit of the beer companies. Moreover, beer commerce is often mistakingly perceived by people as drug dealing activity (Porter, 1998). The quality of materials they supply affects the quality of the final product the craft breweries produce. Thirdly, the suppliers have a direct impact on the brewery industry. As a result, beer companies remain operatable in a highly competitive environment. Therefore, a wise application of the Five Forces model helps to maintain a high level of market shares. It can explain the brewery industry’s competitive nature. The business owners expect high returns from the production. For example, overcoming their business rivals is a severe issue. On the other hand, craft breweries owners have to deal with a lot of difficulties. On the one hand, this creates more opportunities for the buyers. Thus, consumers have a wide variety of beer brands to choose from. Secondly, the beer industry is highly competitive. It will prevent losses caused by high operating costs. Porter’s Five Forces model will help to conduct a wise analysis. The costs of equipment, labor force and distribution are extremely high for beer production. Beer Industry Analysisįirstly, the beer industry requires vast inputs. The following paper will examine the implementation of the 5 forces model on beer companies. The precise analysis of these elements is vital for any business.
They are the threat of new entrants, the threat of substitutes, the bargaining power of suppliers, bargaining power of buyers, and competitive rivalry. It is useful for increasing profits and gaining a competitive advantage as well. The 5 forces model is a helpful tool in dealing with potential threats. Thus, the maintaining of business on an operatable level is a challenging task. In a modern competitive business environment, the changes occur with an extremely fast rare. Therefore, an effective strategy of influencing a target audience plays a crucial role. The principal aim of any company is to make a profit. Do you want to figure out the principle of the model operation? Check out the following essay on the impact of Porter’s Five Forces on the beer industry.