SUBSTITUTE PRODUCTS

In the fast food market in Peru, we find several companies that

they are dedicated to serving this market to satisfy this need, in Lima there are some
companies that focused on offering this type of products to the customer, among those companies
we find those that face directly, given by the similar product that
they offer. For example, in the hamburger market, the main companies that
they develop this type of food are:
Bembos Burger
McDonald's
Burger King
It should be noted that while other restaurant chains do not offer directly
burgers to the public, face those from the burger market like
substitute products for being within the category of junk food products,
the same that satisfy the need for hunger, at a relatively low price, and from
quick acquisition (what we know as fast food) those brands that
the following characteristics are present in Lima:

KFC
Pardo's Chicken
Mediterranean Fried Chicken
The Roman
Chiles
Domino's
This list is joined by those local businesses in the city of Lima that offer
prepared food is also considered as substitute products:
Espresso
Roman coffee
Huancahuasi fast food
Taking into account that the fast food market is commonly aimed at
Young people, it is important to mention other activities that are preferred to be carried out.
before going to eat or spending money on food, at the moment of preferring to go with friends to
eating a hamburger, I can spend that money on doing an activity of
entertainment that replaces it such as:
Cinemas
Theater
Go to the stadium

High threat analysis:

Trade-offs in the fast food market.
 Bembos: stop sourcing raw materials of national origin and import them
from abroad, to gain greater acceptance for its quality but without forgetting the
Peruvian touch that makes it special.
Lower the price of your hamburgers
McDonald's: stop offering products solely from abroad to its customers and
adapt to the national requirements of each country, such as the inclusion of Inka Cola or
the flavor of food that adapts to the Peruvian palate.

Burger King: lowering the prices of its products to attract young customers.

Cost of exchange for the buyer

Regarding this field, we can say that hamburgers have a cost.
similar average between them, so the change for the buyer in terms of
fast food is low.
Therefore, we can consider that the threat of substitute products is moderate.

THREAT OF NEW ENTRANTS

When analyzing this force with what fast food is in Peru, it is important
mention what it refers to, and we define it as companies that, although they are not found
in the market, but in the future they could enter with new ideas and capabilities.
For this, it is important to analyze what the barriers to entry are by understanding the
the same as the obstacles that exist to enter the market.
If these barriers are high, it is difficult for new entrants to enter the market.
market, and on the contrary, if the barriers are low, it is easy to enter the market.
Entry barriers for the fast food market in Peru
Economies of scale
The sales level of the main fast food sector in Peru is the
burgers and the sales that companies have reported in their reports, are
clearly high, which leads us to conclude that the level of production is high and
adapts to an increasingly demanding market that meets its sales with production
efficient and effective at the same time.

Differentiation
The existing companies or restaurant chains in the market adapt their seasoning to
Peruvian palate, without neglecting this factor for new companies especially from
Foreigners will find it difficult to adapt Peruvian flavor to foreign food.
Investment
 Companies in the fast food market in Lima have used
significant amounts to establish your brand, and they continue to do so by making
advertising investments, adaptation of premises and hiring of personnel, will not be
easy for new entrants to enter the market with a non-representative capital
Conclusion: high entry barriers, low threat of new entrants, profitability
tall, attractive tall.

Bargaining Power of Buyers

Within the fast food sector, buyers demand better prices, greater
quality, better service; all given the large number of competitors.
It is worth noting that, in the fast food market, the majority is sold
the products directly to the final consumer.
This is how we can evaluate certain factors that increase the power of
buyer negotiation, taking into account the following table:

Table 1

Flavor Good Time Innovation Total Deal

moderate of Environment of the
products wait client
Weighting 25% 20% 15% 15% 5% 15% 5% 100%
Bembos 10 8 10 9 10 10 7 9.1
McDonald's 10 10 10 10 8 10 10 9.7
Burger King 9 10 8 10 9 7 10 9.0
Pizza Hut 10 8 8 7 7 9 9 8.0
KFC 10 10 8 8 9 8 9 8.6
Prepared by the group

Analysis of the factors that influence the high bargaining power of the
buyers.
The products in the sector are standardized or do not differentiate from each other.
A clear factor that applies in this market, buyers can
to find a product that quickly replaces the other.
There are few buyers or each one buys in volumes that are large in
relationship with the size of a supplier.
There is a great demand for fast food in the sector, there is no shortage of
buyers and each customer does not purchase in large volumes. This is not a
incident factor in the bargaining power of buyers.
Buyers must incur few costs to switch suppliers.
 In the fast food market, we can find little differentiation in costs.
so changing suppliers is relatively easy and doesn't bring much
harm to the customer.
Analysis of buyer sensitivity to price.
The product you purchase from the sector represents an important part of your
cost structure or acquisition budget.
In the case of the fast food market, the cost of acquiring any product from
this market is relatively low compared to your other expenses that it could
to have or at the income level that one receives.
Consumers tend to be more price-sensitive if the products that
purchases are not differentiated.
In the fast food market, there is little differentiation, which is why there is
a high sensitivity to price considering this variable.
In conclusion, we can determine that the bargaining power of buyers
he is tall.

QUESTIONS
3. Evaluate the underlying drivers of each competitive force to determine which ones
which forces are strong and which are weak, and why.

Threat of new entrants

Drivers:

Barriers to Entry
Capital requirements
Advantages of established actors regardless of size.

Buyers' bargaining power

Drivers:

Standardized products, little differentiation

Low cost to change supplier.

Rivalry among existing competitors

Boosters

Bargaining power of suppliers

Boosters
Threat of substitute products or services.

Boosters

Cost of change
Trade Offs.

4. Determine the general structure of the sector, and test the coherence of the analysis:

Why is the level of profitability what it is?

Threat of new entrants

Bargaining power of buyers

The level of profitability based on the evaluation and analysis of the negotiation level of the
buyers is low due to the influence of several factors explained with
It is concluded that the bargaining power of buyers is HIGH representing
thus a low profitability in the market.

Bargaining power of suppliers

Threat of substitute products or services.

What are the controlling forces of profitability?

Threat of new entrants
Bargaining power of buyers
Bargaining power of suppliers
Threat of substitute products or services.

Is the sector analysis consistent with the true long-term profitability?

Are profitable players better positioned regarding the five forces?

5. Analyze recent and probable changes in each force, both positive and negative changes.

negatives.

Rivalry among existing companies

Positive
Negative:
Bargaining power of suppliers

Positive:
Negative:

Bargaining power of buyers

Positive: The high competition generated by the high bargaining power of the
buyers can generate opportunities for growth in terms of quality,
service improvement, etc.
Negative: Having a high bargaining power of buyers decreases the
profitability of the market in question.

Threat of substitute products

Positive: Adaptation of the food flavor to the Peruvian palate

Negative: Lowering product prices to attract customers.

Threat of new entrants

Positive: high entry barriers which prevent the entry of new entrants
Negative: Formation of monopolies controlling the market

6. Identify aspects of the sector's structure that could be influenced by the

competitors, new entrants or by your company.

Prices

Production processes

Technology

Clients