ExpertMedium2 marksMultiple Choice
Syllabus A: The business organisation and its external environmentSyllabus APorter's Five ForcesCompetitive Environment
ACCA · Question 04 · Syllabus A: The business organisation and its external environment
Section A
GhostBites operates a network of 'cloud kitchens' (delivery-only food preparation facilities). Recently, meal-kit delivery services (where customers cook pre-portioned ingredients at home) have surged in popularity. In the context of Porter's Five Forces, which force does the rise of meal-kits primarily represent for GhostBites?
Section A
GhostBites operates a network of 'cloud kitchens' (delivery-only food preparation facilities). Recently, meal-kit delivery services (where customers cook pre-portioned ingredients at home) have surged in popularity. In the context of Porter's Five Forces, which force does the rise of meal-kits primarily represent for GhostBites?
Answer options:
A.
Bargaining power of buyers
B.
Threat of new entrants
C.
Threat of substitute products
D.
Competitive rivalry
How to approach this question
Identify that meal-kits are not direct competitors (they don't sell hot, ready-to-eat food) but they satisfy the same underlying consumer need (convenient meals). This defines a substitute.
Full Answer
C.Threat of substitute products✓ Correct
Substitute products are goods or services from outside a given industry that perform similar or the same functions as a product that the industry produces. Meal-kits substitute the need for ordering delivery from a cloud kitchen.
Common mistakes
Confusing 'Threat of new entrants' with 'Threat of substitutes'. Entrants do the same thing; substitutes do something different that achieves the same goal.
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