Comprehensive Case Study Chobani: Porters 5-Force Model

Comprehensive Case Study – Chobani
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March 11, 2017
Chobani
Today, Chobani is perhaps, one of the biggest Yogurt Company in the US (if not, the world). Hamdi Ulukaya, its founder, have started by only buying a small factory which was closed by Kraft Company back in 2005. Now, it has over 3000 employees and its net worth is about 1.71 Billion dollars. Now, this poses the question ‘how did Chobani thrive and become a billion dollar industry, in spite of the saturated Dairy industry in the US?’ In order to further this hypothesis, the analysis in this paper would utilize different analytical tools, such as Porter's 5-Force Model, Macro-environment conditions, differentiation, and cost leadership.
Porter's 5-Force Model
In Porter’s Five-Force Model, it is greatly believed that the origins of profitability is the same, no matter what industry is in question. This similarity refers to the Five-forces that should be taken into consideration in order to make sure that profitability is in check. Namely, these five forces are: Competitive Rivalry, Bargaining of power of suppliers, bargaining power of customers, Threat of new entrants, and Threat of Substitute products and services (Arline, 2015). In the case of Chobani, it is apparent that the company faced a very difficult task to enter the U.S. Dairy market back in 2005, since the Concentration Ratio – or the percentage of share owned by the top four firms – is about 43% (Shields, 2010). As for the Bargaining power of customers, it could also be said that Chobani was at a disadvantage back then, because the number of customers (demand) is just enough from the quantity and variety of products to choose from. Another force where Chobani was at a disadvantage when it was still beginning was the Bargaining power of Suppliers. In Porter’s model, it is stated that the more suppliers there are, the lesser power they have in controlling the prices. Back in 2005, the top 50 suppliers/cooperatives provides 79% of the whole Dairy volume being supplied in the U...