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Microenvironment – The Porter’s Five Forces Model

In document WE ARE THE FITZ (página 57-61)

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2.2. External Analysis

2.2.2. Microenvironment – The Porter’s Five Forces Model BARGAINING POWER OF CUSTOMERS

The bargaining power of The Fitzgerald's consumers could be said to be high on the one hand because The Fitzgerald competes in a very competitive sector, so customers can switch restaurants or other options to satisfy the need for food very easily.

However, this would mean that customers have a lot of bargaining power, but this is not the case, because the power is medium. This is because the purchase volumes of the customers are small and many customers make the purchases, therefore, on that side, they do not have so

much power. If The Fitzgerald had a limited number of customers, they would have a lot of power, but since it has a large number of small customers, the bargaining power is low. To this must be added the differentiation of the products, which give it greater prestige, giving it much more power over customers.

Therefore, since on the one hand, there are many different options for customers to choose from, giving them a lot of power, but on the other hand, their purchase volumes are small and there are many of them, the power is medium.

Illustration 39 – Representation of Porter’s Five Forces

Illustration 39 – Representation of Porter’s Five Forces

Source: Own Elaboration

Graph 11 – Influence of Each Factor of The Five Forces of PorterSource: Own Elaboration


The Fitzgerald works with a large number of suppliers, as it needs to have a large number of different raw materials. But since these are very common raw materials such as meat, bread, vegetables, potatoes... there are many different options of suppliers.

The Fitzgerald is a company with a good market share in the catering sector, so any supplier would be willing to work with them. So, there is strong competition to get The Fitzgerald as a customer, which means they have very low

bargaining power. Because it is The Fitzgerald who decides what he wants, how he wants it, and can even force to establish at what price he wants it because of the good turnover it will generate for the supplier.

However, some "exceptions" suppliers do have strong bargaining power over The Fitzgerald. Because they offer products that The Fitzgerald can only get via them and that customers place a high value on. An example would be the suppliers of Coca-Cola or Oreo since they are products in high demand and can only be obtained through the producing company itself. The Fitzgerald could switch to another supplier such as Pepsi or a private label, but this could negatively affect customer satisfaction. THREAT OF NEW ENTRANTS

The Fitzgerald is in a market where it is very easy to establish itself, with low financial risk, and as a result, rapid customer growth. Therefore, new competitors tend to appear very easily and quickly. So, you have to take into account the barriers that exist for new competitors seeking a niche in the same sector as The Fitzgerald.

One of the most important barriers to entry is the initial investments, to get a restaurant like The Fitzgerald restaurant with the latest equipment to be more efficient, unique design, size of the premises, production capacity ... requires a strong investment, however, there are restaurants that with very little investment in all these attributes get a great turnover.

Another barrier that a new restaurant faces when competing with The Fitzgerald is economies of scale, which was also an obstacle for The Fitzgerald in its beginnings. But it is now working with economies of scale because of the large number of sales it achieves.


The Fitzgerald has standardized production processes, with the philosophy of becoming increasingly productive and efficient. In addition, it has alliances with suppliers and market agents, which guarantee lower costs.

Overcoming this barrier for new restaurants is a challenge, as it requires a lot of investment and finding good suppliers in terms of both cost and quality.

The last barrier that a new competitor has to overcome is the brand value that The Fitzgerald has achieved over the years. The Fitzgerald has become well recognized and highly valued by customers, which means that customers are often not receptive to trying new options that are not as well known.

Therefore, the threat of new competitors is moderate because it is very easy to enter the hospitality sector, but it is more complicated for them to compete with The Fitzgerald because of all the barriers they have to overcome. THREAT OF SUBSTITUTE PRODUCTS

The threat of substitute products is very high. Because the supply to satisfy the need for food is very wide, as citizens can satisfy it by going to another restaurant or simply cooking themselves at home.

Consumers have a very high propensity to substitute Fitz products. Even if they have loyal customers, this relationship can be broken very easily for different reasons such as the level of disposable income or other fashions that give more prominence to other products such as the new popularity of sushi.

On the other hand, the prices of substitute products are mostly low. For example, it is much cheaper to prepare a burger at home than to go to a Thr Fitzgerald restaurant, however, in this case, the consumer is losing the added value of going to the physical restaurant.

The switching cost for customers is very low because if one day they decide to go to McDonald's instead of The Fitzgerald's restaurant, it will not cost them anymore unless the restaurant is further away, which would mean a higher cost, for example, of gasoline for the car.


However, The Fitzgerald does have a positive point concerning the substitute products that threaten it, and that is its high differentiation of both products and restaurants.

This makes consumers often choose The Fitzgerald's restaurant over a different one, although this positive point

does not offset the other negative points that affect the threat of substitute products, which is still very high. RIVALRY BETWEEN COMPETITORS

The Fitzgerald Burger competes in an increasingly competitive market for gourmet burgers, but with a fast-food service.

As time goes by, new restaurants are appearing that offer more gourmet burgers due to the growing trend of consumers who are more concerned about the quality of the products and their appearance.

With this change of trend and the increase of competitors, the rivalry in this market is very strong, with all restaurants seeking to get the maximum market share, with a more striking burger and with very tight prices.

It should be added that even the large fast-food chains are being renewed and even they are beginning to offer gourmet burgers. This makes the rivalry much greater and more aggressive since they have the capital to invest in new recipes, advertising, and premises that a The Fitzgerald restaurant cannot compete with for the moment, although it is necessary to rely on the differentiation of their products, which is what most attracts their customers.

Threat of new entrants

Bargaining power of customers Rivarly between

competitors Bargaining power of

suppliers Threat of substitute



Source: Own Elaboration

Illustration 40 – The Fitzgerald’s Levels of CompetenceSource: Own Elaboration

Graph 11 – Influence of Each Factor of The Five Forces of Porter


In document WE ARE THE FITZ (página 57-61)

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