Thorntons Company Analysis - Essay Example

Despite the fact that Thornton has been in the industry for a lengthy period, competitors like Cadburys and other related companies in the same industry. However, thorntorns enjoys a loyalty from its clients and this eases the rivalry to some level. Thorntons has only one percent share of the total market indicating that it is facing a pressure from rivalry and must make moves to survive. The high rivalry is probably a result of the slow market growth. There is a marked slow growth in the market for confectionaries.

Most of Thornton’s products sell during festivities and this makes sales seasonal. In addition, the company produces perishable goods that last in the market for a short period, a factor that increases rivalry. At some instances, low switching costs may be the cause to the rising rivalry since a customer can switch to a Cadbury product easily. Thorntons is facing a threat from the existence of substitutes. Customers can choose from a wide variety of gifts. The fact that a variety of gifts exists presents multiple substitutes.

A customer can willingly opt from any other. Substitutes are product s from a different industry but that offer potential competition in the market. During festivities, customers do not limit themselves to confectionaries. This factor causes a rise in rivalry for Thorntons. Substitutes affect the prices of a company’s products. This is the case because if a substitute is cheaper then the company must consider lowering prices in order to compete more efficiently. The company also experiences the effect of the buyer power.

The buyers do not need confectionaries as a basic need. People buy confectionaries mostly during festivities and can go without them the rest of the year. Then buyer can also choose from a wide variety of gifts. Although Thorntons enjoys a level of loyalty from buyers, the buyers have the potential to affect the prices of products (Hill and Jones, 2009: 51). It is likely that buyers can turn sensitive to the prices at times and the company cannot underestimate the power of the buyers. The power of the suppliers is another critical aspect that determines the efficiency with which a company can compete in the market.

Thorntons faces a great effect from the suppliers. For its raw materials, it depends on two suppliers. In addition, the cocoa comes from developing countries that suffer the effects of political instabilities. The suppliers can exercise power over the company because Thorntons cannot substitute cocoa for anything else. In addition, the supply business likely makes more profits than the buying industry. Thorntons has no choice and experienced rising cocoa prices, a confirmation of the power of the suppliers.

Concerning the threat of new entrants, Thorntons seems relatively safe. It has been in the market for a long time and has earned loyalty from buyer and established brand name for itself (Hill and Jones, 2009: 44). These form barriers for new entries. In addition, the market portrays slow growth and this scares away new ventures. The existing government regulations limit new entries as well. This industry faces must observe strict health and nutrition measures. Having existed for a long time, the company has established distribution channels that new companies cannot penetrate easily.

In order to