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The industry and business analysis of plant based milk in Saudi Arabia - Essay Example

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This is because industries have varying profit margins attributed to the industry structure (Philip & Gary, 2010, P.39). A new business of plant based milk…
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The industry and business analysis of plant based milk in Saudi Arabia
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Download file to see previous pages The company will compete in the dairy market since it will also compete with milk derived from animals. Saudi Arabia dairy market includes retail sales of milk, yogurt, soy products and cheese among others. Since 2007, milk consumption in the country has grown by 6%. Ambient milk dominates over fresh milk and makes 62% of the market compared to 38% of fresh milk. In 2016, the market is forecasted to grow by 4,9% (Marketline (Firm), 2000). This paper will analyze the industry using Porter’s Five Forces and PESTLE Analysis.
The purpose of the Five Force is to know how attractive the plant based milk industry is to the target customers. The analysis will also help the plant based milk company to understand the profitability of its products and identify strength and weaknesses areas (Philip & Gary, 2010, P.108). This analysis consists of the following competitive forces:
According to Pereira, (2013, P. 72) suppliers are in a position to decide the price of milk thus affecting the company’s profit. It is important for the plant based milk to have ways of controlling the power of suppliers. Being a starting company it may face a high risk if the supplies needed for production change suddenly. This risk must therefore be minimized.
According to Philip & Gary (2010, P.82), buyers on the other hand may force the milk prices to fall down. The dairy market has many buyers and with the customers of the plant based milk may shift to its competitors like Almaria and Al Safi if the price is not favorable. This may force the company to lower its prices to win the customers back. However, in order for the plant based Milk Company to retain its customers and reduce the power of buyers; it will need to create a brand that is strong and differentiate its products.
The plant based milk face a high competition from the existing firms in the dairy market. The high ...Download file to see next pagesRead More
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