Financial management

Sample Solution

This factor determines to what consumers can choose between the products and services as businesses are price taker (My Accounting Course, 2019). There are actually very few substitutes that are available because many milk industry have A1 and A2 milk together whereas A2 company only cater A2 milk contents. This means that the threat of substitute is low. Furthermore, A2 milk pricing is much cheaper than milk of high quality. This shows that consumers are not likely to change brands, causing the threat of substitute to be low. To sustain competitive advantage in this industry, A2 milk can further promote their products with more distinct products. Differentiating its products from other products by providing unique benefits to meet consumers needs.

The bargaining power of buyers

This factor determines to what extend which buyers can influence the pricing of goods and services. When there are many buyers in the market, the competition low because consumers can go with the business that meets their needs at the lowest price and vice versa (My Accounting Course, 2019). The number of suppliers that supplies A2 milk contents in Australia is actually very little. This means that consumer have few choices to choose form. Furthermore, as mentioned in the substitute section, consumers are unable to find substitutes in the market. This makes the bargaining power of consumers low. To sustain competitive advantage in this industry, A2 Milk can ensure that their products are differentiated as well as quality, this will ensure that the company continues to attract them. A2 Milk can also continue to create more new products.

The bargaining power of suppliers

This factor determines the extent to which suppliers can influence the price on organization. When there are a lot suppliers in the industry, organizations can switch from one supplier to another as long as the price is the lowest in the market and vice versa (My Accounting Course, 2019). The number of suppliers in the milk industry is a lot. This means that A2 Milk h