Question

The Campbell Soup Company is an American producer of canned soups that are sold in more than 100 countries around the world. For each of the following examples, identify which of the five forces is relevant with regards to the Campbell Soup Company (Current Competitors, Potential Entrants, Suppliers, Customers, Potential Substitutes) and briefly explain your reasoning.

A. The company's products are generally resold to consumers in retail food chains, mass discounters, mass merchandisers, club stores, convenience stores, drug stores and other retail, commercial and non-commercial establishments. Campbell does have the choice to switch to another retailer, but their actual power to affect prices is very small. In general, major retail buyers such as Wal-Mart affect the food and beverage industry more significantly because they have the ability to offer sales or price discounts on certain products in a way that affects product sales.

Answer 1

The customer force is most relevant to the Campbell Soup Company's situation, with large retailers having significant negotiation power over product sales and prices. Competition from current and potential entrants and the existence of substitutes also play a role in shaping Campbell's market dynamics.

Step-by-step explanation:

The scenario described in the question refers to the Customers force within the five forces framework concerning the Campbell Soup Company.

Major retail buyers like Wal-Mart hold significant influence over the food and beverage industry because they have the leverage to negotiate prices and offer sales or price discounts on products, directly affecting product sales. While Campbell Soup Company has the option to switch retailers, its power to impact prices is limited compared to these large-scale buyers.

Market competition is also relevant as the presence of Current Competitors and the threat of Potential Entrants shapes Campbell's market strategy.

If Campbell earns positive economic profits, it may attract new competitors, leading to increased competition and potentially influencing market prices or the introduction of innovative products.

Lastly, the need for firms to differentiate themselves in markets that are not perfectly competitive, reflected by varying Potential Substitutes such as other innovative food products, impacts Campbell's ability to maintain its market share.