Name: Ayesha Arif

Phone number: 03369152891

Email Address: ayeshasalwa777@gmail.com
Question:
Question:
Eat Healthy is an organic food restaurant newly launched in Islamabad, Pakistan,
which offers healthier food options to its customers. It uses organic ingredients to
make sure that customers consume calories in a healthier way. It also offers
customized food for people suffering from chronic health conditions like diabetes and
high blood pressure. Using Porter’s five forces model, analyze the attractiveness of
organic food industry for Eat Healthy. You should use third party sources (e.g. journal
articles, books, or practitioner-orientated materials, articles from authentic websites
like Business Insider, Forbes, BBC, UN, Pew Research Center) to gather material and
substantiate your arguments.

Synopsis
1. Introduction
o Background
o Understanding Porter’s five forces Model
2. Analysis of Implications of Porter’s five forces model for Eat Healthy
3. Conclusion

1. Introduction

1.1 Background

Eat healthy is a recently launched organic food restaurant in Islamabad. This restaurant
aims to provide hygienic food by using organic ingredients. Nowadays, people are getting
more conscious about their health. As food is primarily responsible for good health, people
are more conscious about their diet. Food items usually available in the market are junk and
have bad effects on health. Moreover, the food industry of fast food and other processed food
items is very much saturated as a variety of such items are already available. The organic food
industry is not only beneficial for people’s health but also an incentive for entrepreneurs. This
is an emerging industry that is more likely attractive to customers.

1.2 Understanding Porter’s five forces Model

To understand the attractiveness of the newly established restaurant ‘’ Eat Healthy’’,

Porter’s five forces model can be applied. According to this model, company profitability is
influenced by the following five factors (Figure 01)
 Figure 01

2. Analysis of Implications of Porter’s five forces model for Eat Healthy

The analysis of porter’s model in accordance with Eat Healthy, the following five factors are
responsible for the attractiveness of the organic food industry for Eat Healthy:
1. Power of Customers
2. Power of Suppliers
3. Availability of substitute products
4. Company’s existing rivals
5. The threat of new market entrants

2.1 Power of Customers

According to porter’s model, company profitability depends on the bargaining power of buyers
which is a customer-centric factor. If this power is high then business is seen as least attractive. The
bargaining power of buyers is moderate in the organic food industry in Islamabad. As people are
getting conscious about their health day by day, they are ready to pay higher prices for the sake of
good health.

2.2 Power of Suppliers

The second important factor which influences company profitability is the bargaining power of
suppliers. This factor analyzes how much a business’s supplier is influencing and how much control it
has over the capability to raise its prices, which, in turn, lowers a business’s profitability. The lower
the number of suppliers there are, the more power they have. The bargaining power of suppliers in the
organic food industry can be high. This is because organic food companies require a steady supply of
organic ingredients, which can be difficult to source and may be subject to seasonal availability.
Additionally, the limited number of suppliers of organic ingredients in Pakistan can increase the
bargaining power of suppliers.
 2.3 Availability of substitute products

The third important factor which influences company profitability is the threat of new entrants.
A business is less attractive if there is a higher chance of new entrants. The threat of new entrants in
the organic food industry is low to moderate because it requires heavy investments in research and
development. Moreover, the costly production of organic farming and the limited availability of
organic ingredients make it less attractive for new entrants. Therefore, Eat Healthy can enjoy a
relatively stable market position without the fear of being threatened by new entrants.

2.4 Company’s existing rivals

According to this model, company profitability depends on the availability of substitute products.
A company is less attractive from a profit perspective if substitutes for the products are available in
the market. As organic food industries are small in Islamabad, so it is attractive for Eat Healthy.
Moreover, organic food is unique and cannot be easily replaced by conventional or processed food. In
addition, the concerned health benefits of organic foods make it tough for the substitutes to compete
in this industry.

2.5 The threat of new market entrants

The fifth factor which affects company profitability depends on the power and number of the
company’s competitive rivals. If a business has many competitors, then it does not seem attractive to a
company. In Islamabad, there are low to moderate completion in organic food restaurants. So, the
competition in the organic food industry is not that much tough. However, in the future perspective,
there are chances of having competitive rivals to Eat Healthy.

S.no Five Forces of Parton’s model Ideal Case Eat Healthy

1. Bargaining power of buyers Low Moderate

2. Bargaining power of suppliers High Moderate

3. The threat of Substitute Products and Services Low Low

4. Rivalry among the existing competition Low Moderate

5. The threat of New Entrants Low Low

Table 01: Analysis of Porter’s five forces model for Eat Healthy

3. Conclusion
In a nutshell, the analysis of Porter's five forces model for Eat Healthy attractiveness concludes
that Eat Healthy is a profitable and moderately attractive industry in Islamabad. Moreover, it is a
better choice for people with chronic health conditions. Although some challenges like high prices of
ingredients and the limited availability of organic ingredients are faced by Eat Healthy the detailed
analysis according to Porter's five forces concludes that the implications of this model for Eat Healthy
are profitable and attractive. The five factors which determine the profitability of a business are in
favor of Eat Healthy. Therefore, the organic food industry is attractive for Eat Healthy.