Analysis of Breakfast Cereal Insdustry

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Introduction

In order to smoothly and successfully entering into any industry, it is highly important for manufacturers to conduct detailed analysis of the specific industry. In underlying report, the analysis of breakfast cereal industry has been carried out to assess the prospects of success for new entrant. The analysis has been carried out by assessing the macro environment of the industry by following PESTEL framework and Porter’s Five Force framework. Additionally, overall behavior of consumers towards breakfast cereal has also been investigated to make assessment of industry attractiveness. The discussion has been supplemented by making suggestions for new Breakfast Cereal Company to deal with industry forces in each section. 

Macro Environmental Analysis of Breakfast Cereal Industry 

PESTEL Analysis

Political Environment: The changes in Governmental regulations and political situations of the nation can substantially affect the way in which businesses operate. Recently, the global situation of political turmoil is witnessed based of COVID-19 outbreak, which is likely to disrupt the supply chains in international market (Oxford Analytica, 2020). However, the breakfast cereal is only aiming to target the Australian market, whereby recent pandemic might lead to changes in business regulations. The instability is evident in political sector, which should be considered while entering into the industry.  

Economic Environment: The economy is witnessing one of the major challenges of this century as, income level is declining at national level, based on lock down of many industries. The interest rate has declined at global level and inflation is also witnessed (Oxford Analytica, 2020). However, the grocery industry has not been affected much, as it is the most prioritized in the times of pandemic (McKibbin & Fernando, 2020). The breakfast cereals still remain one of the core item spending items for consumers, and effect of income level is not evidently affecting this market. 

Social Environment: The lives of people are undergoing constant change, as more people are choosing to work from home. The breakfast cereal makes up an easy option for them and consumption of this item is increasing (Schwartz et al., 2008). Additionally, based on enhanced health concerns of consumers, they need a nutritional and healthy option for their breakfast, as it is the most important meal of the day (Devi et al., 2014). The demand for healthy and nutritional cereals is thus enhanced and it offers attractive opportunity for players in this industry (Louie et al., 2012)

Technological Environment: The rapid changes in technology are changing face of all industries, including the manufacturing sector. The new equipment are being used to enhance the efficiency of production and thus breakfast cereal production can become efficient while embracing the new and advanced technology (Devi et al., 2014). Based on the advent of technology, the requirements for training and development also arise, which needs substantial commitment of financial resources. 

Ecological Environment: The changes in natural forces of environment can heavily affect the way in which businesses operate. The recent businesses are compelled to follow practices which can lower the adverse effect of their practices from environment. For instance, being a manufacturing business, the carbon and water footprints should be traced and kept to the lowest possible limit. The compliance with environmental regulations is thus crucial for succeeding in the industry. Additionally, any natural disaster, such as COVID-19 outbreak, can have substantial effect of the business and thus consideration of such unforeseen events is necessary prior to initiating the business (McKibbin & Fernando, 2020)

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