Exhibits and Works Cited

Exhibits and Works Cited - Appendix Exhibit 1:Food Truck...

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Unformatted text preview: Appendix: Exhibit 1:Food Truck Industry Diagram Exhibit 2: Fast Food Industry Diagram Exhibit 3: Five Forces Food truck Industry Factors Underlying Rivalry Effect on Industry Score (1-5) Rank Are exit barriers high? No; trucks can be sold and food inventory is relatively liquid. Therefore the industry is relatively easy to get in and out of which increases the rivalry. 2 4 Is demand high? No food trucks tend to frequent places like construction sites and sporting events where there are high concentrations of people for a short amount of time. (Zwolak 8) However as the economy makes a comeback there should be more demand for the service. Furthermore highly differentiated gourmet food trucks are becoming a trend I the past few years. Thus demand will probably remain relatively constant increasing rivalry power. 3 1 Is the diversity of competitors low? All competitors serve the same basic good, food and drink. Many even serve similar types of food. However there is a large difference in the type quality and price of the food served. Therefore it is low threat the industry because competitors can differentiate themselves. (Zwolak) 2 5 Is the industry consolidated / high interdependencies? No There are no major players. In fact, the majority (78%) of mobile food truck operators employ 4 or fewer people. This indicates that the industry is dominated by many small mom and pop style competitors and not consolidated. (Zwolak) This indicates that is very little interdependence and increases rivalry. 1 6 Is capacity added in large increments? Up to a point. Each new truck is a significant new investment and could be viewed as adding capacity in large increments. However increasing the amount of food that can be served by an individual truck is also rather easy as all it would involve would be the purchasing of more raw materials and finding the room to store it (easy if the truck is not at capacity). 3 2 Is the rate of FC/VC high? Fixed costs are the cost of the trucks (28.9% of revenue). Variable costs are wages for employees and the food purchased to sell are 45.7%. The ratio is 0.63 (Zwolak) This increases rivalry in the industry. 3 3 Conclusion (from Level 2 2 Analysis) Level 1 Analysis for Supplier Power Factors underlying Supplier Power Effect on Industry Score (1-5) Rank Supplier Group =Food providers Concentration Ratio relative to the Industry’s Concentration Ratio There are many food trucks and many possible suppliers. Because these trucks are mainly mom and pop shops they may buy food supplies from local supermarkets or food warehouses such as Costco or smart and final. Therefore there are many buyers and many suppliers making this a low force for supplier power....
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This note was uploaded on 02/13/2012 for the course CAPSTONE 1 taught by Professor Staff during the Winter '10 term at Santa Clara.

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Exhibits and Works Cited - Appendix Exhibit 1:Food Truck...

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