Report on the Use of Porters' Five Forces Model for Analysis of Dhaka City

Assignment on: Use of Porters Five (5+1) forces for analysis Fast Food
Industry in Dhaka city (Dhanmondi)
Submitted to: Bobby Hajjaj (BhJ)
Lecturer, Dept. of Management, North South University
Submitted by: Md. Afnan Hussain
NSU Id # 1811360630 Date of Submission: February 16, 2022
Introduction:
In this report I use Porters five forces to analyze the fast-food industry in Dhaka more
specifically I choose Dhanmondi for my research. The model allows industries to classify and
examine the five forces that form the industry and evaluate the competitive strength and position
of a firm. The fast-food industry is already dominated by numerous international Quick Service
Restaurant chains such Burger King, KFC and Pizza Hut. All the forces (5+1) of Porters model
are described below:
A. Threats of new entry: The threat of new entrants is moderate in the fast-food industry due to
barriers.
First of all, capital requirements may be medium or low to create a well-established business in
the fast-food sector; Achieving economies of scale as new entrants is challenging since they join
the industry with a small market share and are obliged to take high fixed costs Therefore, in most
cases new entrants may be discouraged to enter as the global fast-food industry is dominated by
numerous international Quick Service Restaurant Chains such as KFC, Burger King and Pizza
Hut. (Moderately attractive)
Secondly, because the fast-food sector goods are homogeneous (Commodity), new entrants have
the capital to aggressively engage in advertising and promotion to develop brand awareness,
whereas established enterprises have the benefits of brand recognition and consumer loyalty. As
a result, new entrants may find it difficult to compete with entrenched enterprises. (unattractive)
Thirdly, as already mentioned, big chains have the capital to respond forcefully with price cuts,
discouraging new competitors from entering the market. As a result, new entrants may choose to
enter a less prominent market in order to avoid revenge. (unattractive)

Finally, new entrants may face additional costs in their search for a dependable and desirable
supplier, as established enterprises have tight and extended relationships with their suppliers.
Because fast food restaurants are assessed by their suppliers, a well-known supplier is a symbol
of good quality cuisine. However, for new entrants to discover and build a viable distribution
channel, cash may be required. (Moderately attractive)
Overall, the danger of new entrants into the fast-food business is moderate due to low early
capital and fixed expenses. As a result, it encourages new entrants to participate, but they must
be financially secure in order to bring distinctive goods and earn economies of scale. So, from
this analysis I can conclude that this is a moderate attractive industry.
B. Rivalry between existing competitors This force determines on how competitive and
profitable an industry is. The level of rivalry depends on determinants such as costs,
concentration in the industry, industry growth rate, differentiation and switching costs.
1. Costs: Because fixed costs are high in the fast-food sector and switching costs are low, rivalry
may grow. Furthermore, large fixed expenses push fast food restaurants to cut their rates. When a
result, as prices fall, competition will heat up. (unattractive)
2. Sector concentration: The fast-food industry is competitive because the industry has ideal
competition owing to limited product difference among rivals, therefore competition is great.
Furthermore, the great number of competitors in the business defines the high degree of rivalry
because each firm is attempting to entice and target the same consumer. (unattractive)
3. Differentiation: The level of differentiation also influences the intensity of the industry's
competitiveness. As previously stated, the fast-food industry is a perfect competition market
because firms compete with little product differentiation. In other words, fast food restaurants
will be fighting for the same target demographic, therefore competition will be fierce. As a
result, it all boils down to price rivalry being dominating among enterprises, particularly amongst
value meals. To be more specific, changing customer preferences are a response to value meals.
Furthermore, brand power produces the most competitiveness in fast food market. (unattractive)
4. Switching Costs: As previously stated, switching costs have an influence on the degree of
rivalry between companies. In other words, if a client changes from KFC to Burger King because
of the price. Overall, as previously stated, the drivers of robust competition include a large
number of enterprises providing similar items and low switching costs. As a result, the fast-food
business suffers as a result of this circumstance. (unattractive)
Overall, the restaurant business has tremendous competition thanks to the presence of fast-food
chains and countless small-scale enterprises. Fast food behemoths with larger marketing and
product innovation budgets are able to retain a competitive advantage over their smaller peers.
Furthermore, consumer loyalty is quite low, which allowing customers to simply transfer
between restaurants. So, the industry is unattractive.