Introduction

Porter's view is that there are five forces that determine the long-term profitability
consequences of a market or market segment. The idea is that the corporation must
evaluate its objectives and resources against these five forces that govern industrial
competition.

During this document we will present Porter's 5 forces applied in a very recognized
and millionaire company of today, as well as the advantages and disadvantages of
using them. In this case of Bimbo, a company created almost 74 years ago, Grupo
Bimbo is a 100% Mexican multinational company, which has become the largest
bakery in the world. This company has presence in 32 countries in America, Europe,
Asia and Africa and generates an annual sales volume of 15 billion dollars.
1.-Supplier Power

There are many suppliers of flour and wheat in Mexico. This is a weak force for the
industry, as there are many suppliers.

One of the strengths of Bimbo is the selection of its suppliers, where it can afford to
select those that provide the best cost-benefit to the company, but always following
the guidelines of its quality policy. The company in the document considers that it
does not depend on any supplier, which causes them to compete to give a
competitive price to Bimbo, fulfilling the conditions of purchase on the margin, thus
arriving at a rigorous system of acquisition

The Group has established a rigorous material procurement system, which includes
specifications for each input and packaging materials, receipt of a quality certificate,
analysis of materials in laboratories and a supplier audit system. It also maintains
long-term relationships with those suppliers that adhere to its very high quality
standards. The Group seeks to maintain low supply costs, but without sacrificing the
quality of raw materials.

2.-Buyer Power

Bimbo's clients are the general public; they individually have no power against
Bimbo. Large scale buyers have very little power over them. It is a weak force
because of the general public. Bimbo product has taste, softness, select ingredients,
hygiene, guarantee, etc. so customers prefer it.

Analyzes customer sensitivity

“Our Clients and Consumers are the essence by which we exist. Their satisfaction
is essential to our success. Therefore, the quality and safety of our products as well
as our service are the main commitment to them. Threat of substitute products and
services.”

The U.S. sector has been impacted by the emergence of low-carbohydrate and
similar diets, which although not as popular in 2007 as they were a few years ago,
still caused a significant reduction in demand for bakery products. One of the
challenges for the sector was the emergence of diets, which caused consumers to
avoid consuming trans fats and carbohydrates.

People began to consume dietetic products and stopped buying Bimbo, so Bimbo
took out whole grain products so that people started buying Bimbo whole grain
products. This has been a threat that Bimbo has had to face and has taken it upon
itself to remain a leader in the industry.

3.-Competitive Rivalry

Grupo Bimbo founded in 1945 is a leader in the production and sale of packaged
bread and pastries in Mexico. Bimbo has maintained a stable market share of 90%
in the packaged bread market over the past ten years. Grupo Bimbo's competitors
in the bakery sector are Wonder, Marinela and Tía Rosa, but all of these brands
belong to them. At one point, Maseca tried to compete in the bread sector by
launching Brady bread, which finally had to disappear as it failed to compete with
Bimbo.

The sales distribution strategy that the company has generated makes them present
in almost all points of the country, from large self-service stores to neighborhood
stores.

The Federal Competition Law would be a significant challenge for Grupo Bimbo with
respect to remaining a leader in the bread market, as the law would force it to
eliminate investments in certain items so that competitors can access this economic
sector.

4.-Threat of new entry

In the bread industry there are no major barriers to entry, but Bimbo is already
established as the largest at the national level. It is a weak force, as standards are
easy to meet. Grupo Bimbo has a strong influence on the legislation, in such a way
that it manages to modify the laws that would not be favorable to it in order to keep
the leadership.
An example of this is the legal mobilization carried out by the company to prevent its
products from being taxed for their high kilocaloric content. In this way, the company
Bimbo was able to make the box bread considered similar to the bolillo or telera,
products that are not considered to have a high kilocaloric content.

Quality is essential to the Group and one of its fundamental values. In recent years,
Grupo Bimbo has strengthened the effectiveness of its quality systems to ensure the
safety and consistency of its products, in the different geographies in which it is
present.

5.- Threat of substitution

Mexico as a country is a great tortilla consumer and this is a bread substitute product.
It is a strong force for the large consumption of tortilla in Mexico.

Innovation Being one of the largest food companies in the world, the Group has
always focused on offering delicious and nutritious products to consumers. The
Group's success is based on constantly adapting to consumers' needs and
preferences and on offering innovative products in conjunction with industry trends,
such as increasing nutritional value and introducing new and nutritious options. All
over the country there are small bakeries that are almost impossible to replace
Bimbo because Bimbo studies customers, evaluates the quality of its products as
well as those of its competitors and innovates constantly.
Conclusion

The Porter Analysis of the Five Forces is a strategic that is capable of capturing how
competitive advantages are generated and maintained, examining as a whole the
company and its competitive environment. Porter's greatest value has been to
propose a systematic methodology of competitive analysis. In order to study the
crucial elements of the industry structure, Porter proposes the model of the five
competitive forces: The competitive situation of a company in a certain industry
would then depend on five groups of variables: The threat of new competitors. The
entry of new entrants into the industry poses a threat to existing firms, who will
protect their position by creating or exploiting entry barriers.