Submitted by: Baron, Jaster

Caraang, John Carlo

Decena, Crissle Dave
Dela Cruz, Jio
Dulin, Jerryck

Submitted to: Engr. Ma. Nina Sales

CHAPTER 5 INDUSTRY AND COMPETITOR ANALYSIS
A. Determining the attractiveness of an industry using the Five Forces Model. (20 pts.)
1. Select an industry (company).
2. Determine the level of threat to industry profitability to each of the forces (low,
medium or high)
3. Use the table to get an overall feel for the attractiveness of the industry.
4. Identify the threats that are most often relevant to industry profitability.

Industry: Drone
Threat to industry profitability
Competitive Force
Low Medium High

Threat of substitutes 

Threat of new entrants 

Rivalry among existing 

firms
Bargaining power of 
suppliers
Bargaining power of 
buyers

-In the emerging industry of drones there is a medium threat to its industry
profitability. The great factors that cause these threat is by having high fix cost and
drones today is not really one of the priority and has a great importance to the
buyers. Due to its high cost some person can really afford to buy the product or
service. In an industry having a high fixed cost needs a higher volume of their
product to reach the break-even point. Also being not really important, buyers may
prefer to buy the product with lesser cost.

5. Identify the direct competitors, indirect competitors, and future competitors of the
industry/company you selected.
-Drones today usually used in surveillance, film making and recreational
activity such as drone racing. One of the direct competitor of these product under
surveillance is the CCTV cameras. Because drones are usually used for having a
bird's eye view of the scene. Also under the recreational activity such as racing the
great competitor is the existing industry of RC Cars which is less cost. The future
competitor of these drones maybe the existence of flying microbots which is easier
to transport.
B. Case 5.1 Panera Bread: Occupying a Favorable Position in a Highly Competitive
Industry. (30 pts.)

Discussion Questions
1. How has Panera Bread established a unique position in the restaurant industry? How
has this unique position contributed to the firm’s success? Do you think Panera Bread
will reach its goal of becoming a leading national brand in the restaurant industry?
Why or why not?
-Panera Bread established a unique position in the restaurant industry by
developing itself with various approaches. Panera Bread has observed that the
consumers were increasingly looking for products that were “special”, and noted
that although consumers were tiring of standard fast-food fare, they didn’t want to
give up the convenience of quick service, or in other words, consumers always
wanted good food quality and speed/fast services. This gave Panera Bread an
opportunity to reposition itself by pioneering the new category in the restaurant
industry, called "fast casual". This category provided the consumer the alternative
they wanted by capturing the advantages of both the fast-food category and the
casual dining category. Panera Bread pioneering this new category also led itself
to this favorable position. This new category has made Panera Bread’s position not
only unique but also contributed to its success. Panera Bread did a lot of things to
establish itself as the leader in the fast-casual category and to distinguish itself from
its rivals such as adding specialty food, catering service, providing an inviting
neighborly atmosphere, and suggesting new time of day to eat specialty foods,
calling the time between lunch and dinner "chill-out time". Panera Bread serves
nearly six million customers a week systemwide and is currently of one of the largest
chains in United States. In our opinion, we think that Panera Bread will reach its goal
because the company is counting on its unique position strategy, its signature foods
and savvy execution which led them to their current position and will surely help
them accomplish their goal, a leading national brand in the restaurant industry.

2. Analyze the restaurant industry using Porter’s five forces model. In what ways has
Panera Bread successfully positioned itself against the forces that are suppressing
the profitability of the restaurant industry as a whole?

Threat of Substitutes:
Panera Bread focused on the service they can provide rather than just being
product oriented, by offering specialty foods and providing an inviting neighborly
atmosphere.
 Threat of New Entrants:
Panera Bread is the pioneer of the fast-casual category in the restaurant
industry making them capable of manipulating what is the standard in their
category, making new firms have a hard time profiting which can discouraged
them to continue.

Rivalry among Existing Firms:

Panera Bread has lessened the threat of rivalry of existing firms by positioning
itself to a new category which is fast-casual category that appeals to both fast-
food consumers and casual-dining consumers.

Bargaining Power of Suppliers:

Panera Bread has been serving customers for a very long time before it
entered the fast-casual category, and with their success in entering the fast-casual
category, made the company bigger and capable of providing the supplier the
right amount for the supplied goods they have to offer.

Bargaining Power of Buyers:

Panera Bread was able to capture their customers by providing the product
and service the customers really want/need.

Threat to industry profitability

Competitive Force
Low Medium High

Threat of substitutes 

Threat of new entrants 

Rivalry among existing 

firms

Bargaining power of 
suppliers

Bargaining power of 
buyers
3. What barriers to entry has Panera Bread created for potential competitors? How
significant are these barriers?
-Panera Bread created barriers to entry for potential competitors which includes
Economies of scale, Product Differentiation, and Access to distribution channels. In
Economies of scale, Panera Bread is capable of mass-producing a product which
can result to its lowering average cost. In Product Differentiation, Panera Bread
offers a variety of artisan and other specialty breads, along with bagels, pastries,
and baked goods. In Access to distribution channels, Panera Bread was able to
make branches in different locations that are ideal for Fast-casual restaurant which
covers a lot of customers in United States. This barriers are very significant specially
for any new comers to the industry. Panera Bread being the pioneer to the fast-
casual category, they know every aspect in the industry better than the others. This
barriers serve as an advantage to Panera Bread while disadvantage for new
comers.

4. What are Panera Bread’s primary sources of competitive advantage? In your

judgment, are these sources of advantage sustainable? Why or why not?

Panera Bread's primary sources of competitive advantages are:

 Their position in the restaurant industry. As the leader and pioneer of the fast-
casual category, Panera Bread was able to capture a first-mover
advantage which helped them established their position in the new market.

 Panera Bread's brand recognition. As stated in the text, Panera Bread is

serving for a very long time and the recognition they get is still increasing as
they are considered as one of the largest restaurant chains in the United
States.

 The unique bakery products they are offering. The company has become
known as the nation’s bread expert and offers a variety of artisan and other
specialty breads, along with bagels, pastries, and baked goods.

 They also focused on the service they can provide besides from their
products. They provide an inviting neighborly atmosphere. They were also
able to create a new time of day to eat specialty foods, calling the time
between lunch and dinner “chill-out” time.

-We think that these sources of advantage are sustainable because of what
Panera Bread has accomplished over the years of serving in the fast-casual
category of restaurant industry. They were able to make these sources of
 advantages as the standard of bakery's system. They are exercising these
advantages for many years and were able to make them successful as they
became as one of the largest restaurant chains in the United States. And with these
reasons, we conclude that these sources of advantage is sustainable.

Application Questions
1. What are the ways that Panera Bread can conduct ethical and proper forms of
competitive analysis to learn about potential competitors entering the fast-casual
category?
-Panera Bread's ethical and proper forms of competitive analysis to learn
about potential competitors entering the fast-casual category includes attending
conferences and trade shows, purchasing competitor's products, reading industry-
related books, magazines, and web sites, and talking to customers about what
motivated them to buy Panera Bread's product as opposed to their competitor’s
product. Attending conferences and trade shows to learn what are the products or
services that their competitors may offer that may rival Panera Bread's products and
services. Purchasing competitor's products to learn first hand what kind of services
the customers are experiencing and to judge by themselves what does the
competitor's products possess or lack. Reading industry-related books, magazines,
and web sites because Panera Bread can learn a lot from reading from these
materials for it may contain information on what their competitor's goal and ways
in entering the fast-casual category. And lastly is talking to customers about what
motivated them to buy Panera Bread's product as opposed to their competitor’s
product. This is because you can learn what your customers really think about your
products and services. This could also help Panera Bread learn more about how
could they improve their products and services by asking their customers directly
and to gain their trust with the company.

2. Think of at least two other businesses that have established unique positions in their
industries. How have their unique positions contributed to their success?

AMAZON
Amazon.com, Inc., is an American multinational conglomerate technology
company based in Seattle. It focuses on e-commerce, cloud computing, digital
streaming, and artificial intelligence. It has been referred to as "one of the most
influential economic and cultural forces in the world". Amazon is known for its
disruption of well-established industries through technological innovation and mass
scale. It is the world's largest online marketplace, AI assistant provider, and cloud
computing platform. The company initially started as an online marketplace for
books but later expanded to sell electronics, software, video games, apparel,
furniture, food, toys, and jewelry. Amazon also started distributing downloads and
 streaming of video, music, and audiobooks through its Prime Video, Amazon Music,
Twitch, and Audible subsidiaries. Amazon also has a publishing arm, Amazon
Publishing, a film and television studio, Amazon Studios, and a cloud computing
subsidiary, Amazon Web Services. It produces consumer electronics including
Kindle e-readers, Fire tablets, Fire TV, and Echo devices. In addition, Amazon
acquisitions include Ring, Twitch, Whole Foods Market, and IMDb. And with these
various products and services that Amazon is offering, today, Amazon is the world's
largest online retailer, and in Amazon Web Services it owns the world's biggest cloud
computing business.

TESLA
Tesla, Inc. (formerly Tesla Motors, Inc.), is an American electric vehicle and
clean energy company. The company specializes in electric vehicle
manufacturing, battery energy storage from home to grid scale and, through its
acquisition of SolarCity, solar panel and solar roof tile manufacturing. Tesla's first
years was not gaining any profit at all because of how tight the competition is
between other companies in their business category. But Tesla was able to
overcome a lot of barriers with the help of an entrepreneur and the company's
CEO, Elon Musk. Year after year, Tesla is gaining the attention of the consumers
because of company's innovative technology, producing high quality, cutting-
edge vehicles with high-end and creative features. Tesla’s two most popular
vehicles are the Tesla Model S and Tesla Model X, and increasingly, the lower-cost
Tesla Model 3. And because of the increasing number of consumers buying and
eyeing electric vehicles, today, Tesla is considered the largest electric vehicle
company surpassing China's BYD.

C. Case 5.2 Local Dirt: Making It Possible to Buy from Local Producers. (30 pts.)

Discussion Questions
1. Make a list of the environmental trends and the business trends that are working
both for and against Local Dirt and its business proposition.
-There are various environmental and business trends working for against
Local Dirt. In order for this company stay ahead on the curve. They need to
consistently keep up with environmental laws and regulations to business trend.
Local Dirt needs to form new models of consumer engagement. By investing in
electronic and social media based engagement, it offers new and innovative ways
to keep in contact with customers and alert them with new services. The most
important business trends includes starts-up. Involvement in trade association
because it is formed by firms in the same industry that offers further training and
advice.
2. To what degree has Local Dirt established a new approach to interface with
businesses in the agricultural and food sales industries? How well do you think Local
Dirt is executing its approach? What do you think of Local Dirt’s business model?
What are the pluses and minuses of not taking a small commission on each
transaction processed through its site?
-Local Dirt is the first national market place to offer local food online. I do not
believe Local Dirt is executing its approach well because they are not getting the
word but about its service. Also, a lot of participants don’t know exactly what its
service is intended to accomplish. They think is something like eBay. I think their
business plan should be revised because they do not seem to know how to reach
their target audience. Something they need to start doing is to use social media as
a tool to access their future customers. Local Dirt can benefit from taking a small
commission from each transaction because they’ll be able to earn money. On the
other hand they might lose a lot of customers because it will be expensive.

3. What barriers to entry is Local Dirt erecting to prevent competitors from moving into
its space? Do you believe the entry barriers Local Dirt is creating will prevent
competitors from entering the firm’s industry?
-The barriers to entry that Local Dirt is erecting to prevent competitors from
moving into its space are capital requirements and access to distribution channels.
They used capital requirements by when Local Dirt was giving a $600,000 grant
funded by the National Science Foundation in order to start this business. This
investment allowed the business to have full coverage with start-up costs. They also
used access to distribution channels which helps out with the seller to buyer process.
They have mastered their process and have created an efficient and effective way
of getting products from the seller to the buyer. In today’s society it is almost
impossible to have a company or business that does not have competition. Even
with these barriers they have created, within the next few years there will be a
competitor in the running with Local Dirt. It may have different policies that Local
Dirt but could potentially be similar to them.

4. Are you surprised that Local Dirt received $1 million in venture capital funding? What
do you think the venture capitalists that invested in Local Dirt saw in the company
that prompted them to make the investment?
-Local Dirt is a company that is one of a kind that matches local producers
with local food buyers, on thing about this company they have not executed well
through marketing area however, the company shows great potentials if awarded
the opportunity and that is one of the reasons they received the 1 million dollar in
Venture Capital funding. Most of the money was given to them for marketing
purpose.
Application Questions
1. Address the most significant challenges that Local Dirt has in growing and reaching
its full potential. Briefly describe how you’d address each of the challenges.

Following are the most significant challenges before Company Local Dirt:

Customer’s trust
Regardless of whether website of company Local Dirt has a sophisticated
layout and has hired a team of professional designers to create its logo of the
company. The customers will not automatically trust the website. If trust is less, so will
be the sales. Trust factor is more important while selling bug ticket items that carry a
sizeable purchase price and shipping cost.
To overcome this challenge company Local Dirt should make the website
legitimate in the eyes of potential customers. It is possible either by displaying its
physical address and telephone number. If possible, Local Dirt should list the names
and photos of the individuals who support the company’s operations.

Website security
Website security is a very big challenge for Company Local dirt. If website will
be hacked, it will be a disaster for the customers who might find their credit card
and personal information compromised in the systems of the company. To
overcome this challenge company should regularly change database location
and passwords of the company’s customers.

Reliable logistics and supply chain

This is a good challenge for firm. Failure in this area can mean detrimental
damage to the future of the company. This hurts overall brand too. To overcome
this challenge, company should run its operations in collaboration with reputed and
trusted logistics firms. Thus, the above mentioned challenges can affect the
company’s growth in long run due to rising competitive forces in the current
markets.