Table of ContentsOpportunities for Spur CorporationThreats for Spur CorporationConclusionStrategic management is necessary to plan appropriately and ensure that organizations outperform their rivals. When analyzing an industry, it is important to understand the environment you are studying. In this essay, the Spur Corporation industry will be analyzed. Specifically, using the Porter Five Force Model to help understand Spur Corporation, as well as provide potential opportunities and threats to the organization. Say no to plagiarism. Get a tailor-made essay on “Why Violent Video Games Should Not Be Banned”? Get an original essayAccording to Venter et al (2014:147-148), an industry can be defined as a group of companies offering products and services that are similar in nature and purpose, i.e. products or services that meet to the same basic customer needs. The basic customer needs satisfied by a market define the boundaries of an industry. The Spur Corporation Integrated Report (2018) states that Spur Corporation operates in the restaurant industry as a franchisor. It does not own or manage any of its global outlets, which are instead run by independent franchisees and entrepreneurs who pay franchise fees to the group. Porter (2008) identifies customers, suppliers and competitors as the main determinants of competition in the industry. Therefore, competitors encompass a broader spectrum that includes existing competitors, potential competitors and substitute suppliers. Porter also added two additional factors: the role of government and that of supplements. Accordingly, we have seven forces widely present in an industry, as identified by the University of South Africa (2018:45), namely: customers, suppliers, existing competitors, potential competitors, products and services substitution, government intervention and supplements. Each of these elements will be discussed in more detail below. Customers: If the purchasing power of customers is high, it will increase the competitiveness of the sector and reduce the profitability of the sector. Buying power is high when: (a) buyers can produce the products or services themselves; (b) they are few in number or able to buy in bulk; (c) the product or service is similar and can be purchased from other suppliers; and (d) the value of buyers' purchases represents a significant portion of the seller's total income. Spur Corporation owns a number of restaurant chains offering specific types of foods: John Dory's (seafood), RocoMamas (burgers), Panarottis (pizza and pasta). The variety of products offered caters to different tastes and palates, and the proprietary sauces and flavors prevent buyers from duplicating the products elsewhere. There are also monthly and weekly promotions and specials that promote brand loyalty. This has successfully created demand for products, which gives the company pricing power through product differentiation, exclusivity, brand loyalty, and hype around promotions. Supplier power: Powerful suppliers can increase industry competitiveness and reduce industry profitability. Supplier power is high when: industry supplies are not similar, making it difficult to switch to alternative suppliers; there are a few major suppliers and they are very concentrated in relation to the sector they serve; there are few options for other products. or services; purchases made fromsuppliers constitute a minority of supplier revenues; and suppliers can move up the supply chain. Each restaurant owned by Spur Corporation is sold the brand's unique sauces, which are manufactured by the group's sauce factory. In this way, it sells its products to its own points of sale, and sometimes directly to consumers through grocery stores. Existing Industry Members and Rivalry: Continued rivalry tends to increase industry competitiveness and reduce profitability. Rivalry may depend on how quickly the industry grows as well as its size, competition and capabilities. Competitive rivalry is strong when: there are a large number of rivals of relative size and power; the industry stagnates, resulting in a struggle to support existing customers instead of seeking new customers; and their rivals have excess capacity. According to the University of South Africa (2018:23), Spur Corporation, Famous Brands and Taste Holdings are the three largest players in the South African restaurant market. However, the majority of Spur Corporation's restaurants are sit-down restaurants, unlike the other two players which are primarily take-out outlets. This provides a double benefit, since sit-down restaurants offer a unique atmosphere, while takeout offers faster service which can often be more desirable. Despite strong competition, Spur Corp. has successfully created demand for all of its POS products, giving the company pricing power through product variety, guaranteed brand loyalty and unique customer service. Potential Competitors and Threat of Entry: Ease of entry will increase the industry. competitiveness and negatively affect profitability. Barriers to entry are used to mitigate potential competitors and provide protection to existing industries. There are six barriers to entry, namely: required capital; access to distribution; cost disadvantages not related to size; economies of scale; government legislation and regulations; high switching costs. Spur Corp. has over 575 outlets worldwide and has plans to open an additional 38 franchises in South Africa and a further 12 internationally. The large surplus of outlets has successfully created demand for its products, giving the company pricing power through product differentiation, ensuring brand loyalty and positive recognition. It has also managed to create a group of loyal customers who easily identify the brand and are therefore willing to pay more for this familiarity. Suppliers of substitute products and services: An increase in substitute products from outside the immediate industry has the potential to replace the industry. products, thereby increasing competitiveness and reducing the profitability of the industry. Spur competes with other restaurants that serve similar products (burgers, steaks, pizza, etc.) at lower prices, or with delivery services, etc. Spur uses its own unique sauces to add individuality to its products and promote its brand. Government intervention: regulations and policies that affect the structure, competitiveness and profitability of industries, particularly when interventions are industry specific. Spur Corp. is proud to comply with food and safety standards regulated by the Department of Health, the Department of Labor and the South African Bureau of Standards, University of South Africa (2018:24). Complements as strengths..