Q4

Analysis of Key External Factors in the Market

· Threat of Substitute Products or Services: All-natural pet food is a traditional market that has seen growth due to demand for natural options rather than synthetic options.  While a large-scale entry into the market is not feasible for most, targeting an online presence does leave JGJ open to vast competition as e-commerce becomes the predominant form of shopping throughout the world.  Currently, there are many competitors in the sector; however, there are currently not many targeting an online-only audience and distribution network.

· Bargaining Power of Suppliers: With a market like pet food, suppliers do not have as much bargaining power.  Considering the product is using all agricultural resources, the bargaining power of the supplier is in the supply itself.  When supply is strong, the material market would be vastly competitive with the buying power of large organizations like Nestle or Blue Buffalo (Contributing Author, n.d.)

· Threat of New Entrants: This market in an e-commerce environment could see a medium to high level of threat of new entrants.  The FDA does not have strict standards for the production or distribution of pet foods, removing some barriers to market entry for competitors.

· Bargaining Power of Buyers: Buyers will exert power by choosing options that offer them the highest quality pet food.  Since the market is all-natural, most consumers will want the highest quality product they can get, which will be dictated by their belief in the presentation and accurate data regarding the offerings.

· Rivalry Among Existing Competitors: The market has a limited range of creativity and leeway in how it is presented to consumers.  Most raw materials do not fundamentally change, so competitors rely on creative ways to make their product superior to the others (Contributing Author, n.d. “The five forces”).

· Other macroenvironmental external factors for JGJ to consider mostly relate to current economic conditions surrounding the global pandemic and the aftermath.  With tensions high as inflation rises and new financial systems become more prominent, volatility can and should be expected.

Required Internal Resources and Competencies to Compete in the Market

                To enter this market successfully, JGJ will require both a production facility and warehouse facility from which the product originates prior to online ordering and delivery.  The production facility would need to include all necessary equipment to process raw materials and bake them into a final product.  The facility will also require both the equipment to pack the product and transport it across to either a dock or to an attached warehouse facility.  While required capital should be calculated to ensure viability, it is likely to be several million dollars amortized over a period of time (Staff Writer, 2021).

                Internally, multiple teams with a robust knowledge of key areas will be required: customer service, product development, distribution, operations, and management.  A significant amount of capital will need to be initially fronted to both hire and train employees.  Additional expense will be incurred during the process of locating these candidates and screening them for viability.

Required Licenses, Patents, and Rulings or Legal Requirements to Compete in the Market

                The FDA does not have stringent requirements regarding pet food and any licensure required would be from the state, city, or county where production will occur.  The patent required would be for the recipe and formula of the food itself, especially if JGJ becomes a serious market competitor.  In fact, the FDA (FDA Author, 2020), does not require premarket approval.  However, the FFDCA requires pet foods to be produced under sanitary conditions and be truthfully labeled.  JGJ’s chosen state of production would dictate the necessary licensure.

 

References:

Contributing Author (n.d.).  The five forces.  Harvard Business School.  Retrieved from https://www.isc.hbs.edu/strategy/business-strategy/Pages/the-five-forces.aspx

Contributing Author (n.d.)  Blue Buffalo Pet Products, Inc. Porter Five Forces analysis.  Fern Fort University.  Retrieved from http://fernfortuniversity.com/term-papers/porter5/analysis/588-blue-buffalo-pet-products--inc-.php

FDA Author (2020).  Information on marketing a pet food product.  U.S. Food & Drug Administration.  Retrieved from https://www.fda.gov/animal-veterinary/animal-health-literacy/information-marketing-pet-food-product#:~:text=There%20is%20no%20requirement%20that%20pet%20food%20products,contain%20no%20harmful%20substances%2C%20and%20be%20truthfully%20labeled

Staff Writer (2021).  How to start a pet food business.  TRUiC.  Retrieved from https://howtostartanllc.com/business-ideas/pet-food