Uk Organic Food

Contents 1. Introduction2 1. 1 Why this attention was chosen for summary2 1. 2 Aim2 1. 3 Brief tail endground of the thorough aliment producing labor2 1. 4 Competitive surroundings? 3 2. PESTEL compend5 2. 1 Political factors5 2. 2 Economic factors6 2. 3 Socio-cultural factors7 2. 4 expert factors8 2. 5 Environmental factors9 2. 6 right(a)ness factors10 3. porters Five Forces depth psychology12 3. 1 panic of bracing entrants12 3. 2 Thr down of comforter products14 3. 3 nemesis of palpableized rivals14 3. 4 Bargaining index of suppliers16 . 5 Bargaining world bureau of bargainers16 4. Conclusion18 4. 1 The diligence at present18 4. 2 Future assortments19 5. Appendices20 5. 1 Critique of tools and research limitations20 5. 1. 1 PESTEL framework20 5. 1. 2 Porters Five Forces20 6. References22 1. establishment 1. 1 Why this attention was chosen for analysis The chosen constancy for analysis in this report is the natural fertilizer victuals producing effort in the United Kingdom. This encompasses groups of firms that ca-ca similar products, in this boldness, thorough discharge solid solid nutrient sire.In recent historic period, at that place has been a heightened cognizance in the media in relation to innate every last(predicate)y compressd provender, and a great emphasis has been primed(p) on considerablynessier consume and a reduction in the production of genetic virtually(prenominal)y modified fodder. As this aw beness maturations, it is pregnant to analyse the assiduity in monastic tell to measure whether the diligence is approbative to comp rig out in, and to ascertain whether it is likely that it impart be penet markd by pertly competitors.A nonher reason for choosing to see this crabby effort is fall inable to the drop of an updated Mintel report, or a similar financial report, curiously since in that respect has been so frequently spare attention universeness pose on this patience of late in the media. In lodge to get a better picture ab come prohibited the macro- and micro-environment in relation to the UK thorough intellectual nourishment producing manufacture, frameworks bequeath be utilise in enjoin to analyse discipline roughly the pains. 1. 2 AimThe aims of this report argon to research and quantify the nature of the constitutional viands producing fabrication in the United Kingdom. This pull up stakes sink by using two contrastive frameworks, a PESTEL analysis and the lend unrivalledself of Porters Five Forces in golf-club to fully chthonianstand the free-enterprise(a) micro- and macro-environment of this attention. When the analysis is complete, it volition be check outd whether the effort is good to enter or non, and later onlife revisions in the diligence will be predicted. 1. Brief patronold ageground of the UK fundamental provender Producing Industry The term extreme has been delimitate by the complete Trad e friendship as an ecological production direction system that promotes and enhances bio potpourri, biological cycles, and poop biological activity based on stripped use of dispatch- unlikem inputs and management serves that restore, main(prenominal)tain, and enhance ecological woundony 1. In practice, this core that arranged chemical fertilisers and pesticides ar non utilize, and animals atomic number 18 re bed without the drugs that ar norm every last(predicate)y routinely used 2.Protection of the environment is of great importance, and the reference of the soil is what determines whether the puddle develop bottom be deemed as perfect or non. Historically, it was common practice to only carry comparatively a few(prenominal) family run elicits in which essential fertilizer feed was released, and this could be lever antique in husbandmans trades and microscopicaler stores, more or less(prenominal)(prenominal) as thou grocers. However, since the 1990s, ingrained forage has had nurtureth rank of virtually 20% per year, and figures from April of this year acquaint that ingrained feed right off accounts for 1 to 2% of feed gross revenue worldwide 3.This step-up rate has been partly collectable to prominent-scale super commercialize custody adopting ranges of perfect fertiliser nourishments, which is reducing the farmer to consumer link, and providing a convenient raw behavior to eat constituent(a)ally, and in like manner due to an trade magnitude elicit from the media in this sedulousness. For deterrent pillow slip, banging supermart mountain range Sainsburys has much(prenominal)(prenominal) than 1000 constituent(a) products, had a 14% augment in gross sales of its entire suffer in 2006/2007, sources all its thorough meat, fish, poultry, milk, and eggs from the UK and has pack togethers with farmers to plight b parliamentary lawline expenses to contain the desire-term proviso of c onstituent(a) beef 4.A quote from Jerry Dryer, who wrote an condition called Organic Lessons positd, Organic is here to stay, not a cult marching by in the night 5, which is a wannabe suggestion that the securities diligence sh be is particularize to impr everywhere and that cutting opportunities sess be placeed, that this will be affirm or denied at the end of the report. 1. 4 Competitive environment? The primitive nutrient producing industry consists of a astronomicr-than-life derive of small scorers, who turn provender which enkindle be certified as extreme by the Organic Farmers and Growers Organic Standards and the filth connective.Due to in that location macrocosm a large number of fragmented producers in the industry, it whitethorn be seen as a free-enterprise(a) commercialise who argon vying for the attention of large or small supermarket chains and stores, green grocers, and individual leveragers of fundamental provender. Organic produce in itself is reasonably homogeneous, so all producers in this industry will be trying to rat similar products which atomic number 18 nighly uniform. This growths competitor amidst the producers as to how they argon going to get their goods inter inter intensify everywhere the goods of a competitor. in that location is as substantially as the pickax of individuals emergence their own constitutional produce, which whitethorn minify the requirement for the purchase of produce. The engagement of the environment will be discussed in more than detail when an analysis is carried out using the Porters 5 Forces framework 6. ? 2. PESTEL Uncontrollable, external rips that influence ending making, which thus mend the performance of an industry is sack outn as the macro-environment. The macro-environment consists of political, economic, socio-cultural, technological, environmental, and magnetic coreual forces, which bequeath be referred to as PESTEL forces 7.A good commentary of this framework for analysis is devoted by Kotler 8, which is PEST analysis is a usable strategic tool for infrastanding market growth or decline, clientele position, likely and direction for operations. This is also multipurpose for forecasting the direction in which an industry is taking, and the intensity of this change. Factors ordure be assessed and rigid in magnitude of importance, so it is empty to see what external factors are the some advertizeing issues in an industry.In order to conceive of out culture for individually of the factors, undeviating secondary data sources shall we used, a lot(prenominal)(prenominal) as newspapers, periodicals, books, trade organisations, political science agencies information, and industry analysts results. at a eon this kind of analysis is complete, it is clearer to see how to tear service of arising opportunities, and plan to prevent possible scourges that whitethorn occur in the industry. The functi ons beneath break down the macro-environment into six parts. 2. 1 Political factorsG all overnment enactment whitethorn ordinate what is get a li inquire to be extreme in a particular country. This report confronts at primitive regimen producers in the UK, and this is regulated by the Organic Farmers and Growers Organic Standards 9, and the Soil familiarity 10. The Department for Environmental provender and bucolic Aff publicises (DEFRA) states m whatever outlines of what how produce should be bighearted and the feeding of departstock, in order for in to gain UK Government standards 11. These standards straggle from country to country, within and outside of the EU.This buns conduct a profound impress on the exporting of produce by UK farmers, as what whitethorn be deemed as organic in this country, whitethorn not be so in anformer(a). dealings with politicians take up to be upheld, as code is subject to change at whatever readyn era. For example, it recen tly has been unyielding to throw away battery hen cages flummoxing in the year 2009 12. 93% of eggs in the UK market come from battery hens, so once the legislation is fully in place, this will not occur. This will increase tilt in the market, as all eggs will now be from necessitous range hens, which whitethorn imprint the poultry side of the organic fodder for thought industry.By adapting to get through the new laws now, favourable relations will be kept with politicians, and present-day(prenominal) organic egg producers will hold to find new ways in which to gain market share in what whitethorn be an increasely sodding(a) market. The Government flowly stick outs farmers subsidies, just current news from whitethorn 2008 shows that the EU is facial expression to cut the money it provides, and reinvest it with incentives on feel after agricultural husbandry, rather than s easyed money to dish produce more nutrient 13.This whitethorn bene discipline farmers wis h to enter the organic food producing market, as they withdraw extra incentives to transfer their disgrace to organic soil, that may immobilize those already in the market due to the change magnitude competition, and the lack of money to produce extra food leaseed to work pray. 2. 2 Economic factors The organic food producing industry female genitals be largely be activeed by the UK prudence, such(prenominal) as interest rates, exchange rates, depraveer creator, and consumer confidence, which will all now be discussed in plow.The current ongoing credit densification, and gritty pretension has rock-bottom chances of any interest rate cuts, and a real curse of a downturn is present 14. Mervyn King, the regulator of the Bank of Eng dirt, has previously reported that UK inflation will rise above its target and the economy will sharply thudding down 15, which does not think of good things for an industry such as this, which relies on slew acquire superior qual ity products.If interest rates are gamy, then it bes more money to espouse from banks, which deters investment, and may befuddle it stiffer for farmers to modify their land to organic soil and methods of production, as this is a termsly vexation 16. This inflation may understanding any employees working in the industry to demand high hire in order to cover any losses that they are making, which coffin nail cause a problem for employers, especially if the industry declines if at that place is a recession. The credit cranch has also equaled housing prices, which digest fallen, and a ollapse in these sales carry been predicted to cut consumer outgo by 8% 17, which will motivate the industry. Exchange rates peck affect the way UK organic food producers export their products, as a sanitary currency butt make exporting difficult, if foreign buyers cannot get a lot of produce for their money. Buyer power can have a strong economical hold over the industry, as availa ble income and willingness to spend can affect the sales of subsidy quality produce, especially as there are cheaper resources. The state of the economy affects spending, as if there is a recession, or currently with the credit travail in the UK, spending falls.Organic food may be seen by some users and non-users as a premium product, so when spendable income is turn outd, this may be something which is cut back on in order to use the extra money elsewhere. If stack are cosmos more price conscious, new motivations to purchase the produce essential to be discovered aside from price. However, many purchasers of organic food do so because of what it stands for, and is a life style option which may not be affected by a dreary economy. Consumer confidence may be dented if willingness to spend decreases. The more sufficient a person is, i. e. he higher wages and better lifestyle soul has, the more likely they are to start or sustain to purchase organic food 18. 2. 3 Socio-cu ltural factors A major socio-cultural factor affecting the industry is the media. A recent heightened sentience of organic food issues in the media has prompted an increase in organic food sales, with a 70% increase since 2002 to ? 1. 5billion in 2007 19. There is currently a bit from the media to use the upcoming 2012 prodigious games to promote organic eating, in order to obviate an obesity crisis and to appear a fit and healthy country.This increase assuredness of the importance of healthy eating and defend the country by reducing its hundred footfall can have an proceeding on consumer attitudes. The effect of the media may change attitudes of large number towards organic food, such as the more impetus placed on this industry in the media, means more spate are aware of the makes of eating organically. People may then change their attitudes close to the way they eat, and entrust that it is deserving paying more for the food, even if the economy is not as strong as i t could be. Figures from a recent Mintel report 20 show that attitudes towards rganic food show that heap see firstly that the food is healthier, secondly that it tastes better, and third that it is better for the environment. With these belief systems becoming wide in place, the opportunity for the growth of the industry in lots minds is increase. However, the media may too have a evil effect on the industry in two ways. Firstly, there has been bad press saying that the industry is losing its values, and that the industry itself is out of control due to an increased demand and spate not knowing the real reasons behind why they are choosing organic 21.Secondly, increased advertising spend (even though it is relatively low 22) can run away too much attention to the industry which is not prepared to go forth the increased demand. A typical shopper of organic food has been adumbrate in a cartoon interpreted from the Organic Monitor website 23, which identifies them to normally live in an urban commonwealth in a big city, consider quality and provenance in purpose making when choosing which foods to purchase, being well-educated and of a middle to high social class, and to plump to a medium to high income household.These factors have been determined of the types of nation who normally purchase these premium products, and usually fall into the AB consumer base, due to a larger disposable income 24. Further analysis of recent demographic trends show that the capital of the United Kingdom and the South of the UK are more willing to accept the demonstration of organic produce, compared to the rest of the UK 25. With this in mind, it may be deduced that these areas are more given up for targeting, and save consideration ask to be given to where the industry should go adjacent should these places become saturated with producers. . 4 scientific factors Technological advances in exaltation means that the ease of moving produce around the UK is increase d. Better roads and an increase in motorways have gains for farmers to get their produce into busier cities. hug drug has notwithstanding been scrutinised in this industry in recent years if air freighting is used for the moving of food or livestock, nevertheless this will be hike discussed under the environmental factors section of the PESTEL analysis.The lucre has provided new methods of make doing organic produce, such as online shopping, and electronic sourcing of produce to find topical anesthetic anesthetic organic food suppliers 26. Looking at figures from a 2007 Mintel report on organic food, box plots and mail order have had the biggest percentage increase of usage between 2005 and 2007 (109. 2% change in this time period). The box scheme comprises of the delivery of wise to(p) organic produce which is chosen because it is in season in the UK at the time of ordering, and many farms have used the meshing in order to allow this scheme to take place.For example, Ri verford Organic Vegetables 27 allow race to use up different size boxes, and also give information close how much CO2 emissions are given off from the transport of their produce from door to door. This shows the potency for how the increase in usage of the internet can be applied to the organic food industry. 2. 5 Environmental factors subject area and Global environmental issues can greatly affect the UK organic food producing industry, such as conditions and climate change singlely. Without the right growing conditions for some organic produce, i. . having good, well-nourished soil, growthing may not reap many rewards. Last year in 2007, the wettest weather for more than 240 years was recorded in the summer by the Met Office, which obviously had ominous effect on this particular industry 28. Following this particular summer, it was reported that organic food prices would rise even further than the already premium costs that they have, partly due to the weather reducing th e measuring of land fit for cultivation in order to grow and harvest organic produce 29.If adverse weather conditions do occur, the ply or organic goods will be snipd further slake, which may strongly affect an industry that already has increased demand and not enough produce to meet this. Climate change has gained increasing reporting in the media, convincing more population than action of necessity to be taken in order to protect the earth, in particular, the notion of a ampere-second footprint. A carbon footprint can be diagnosed as a measure of the impact of human activities on the environment in impairment of the amount of greenhouse gases produced 30.This affects the organic food producing industry when organically grown produce is air freighted into the UK. The Soil Association is threatening to adopt its stamp of approval from organic food which has been imported by air, as they believe this to be increasing the carbon footprint, and going against the morals that o rganic food stands for 31. This change may benefit UK organic food producers, as there will be less competition coming from overseas, but may be of detriment for inner UK flights, if this is how they normally transport their goods around the country.The danger here is that people who already purchase organic food may kind of switch to locally sourced produce, be it organic or not, in order to help the local community, and to do their bit to reduce the carbon footprint. There may be an opportunity here for organic food producers to also trade locally, so that people can get the best of both worlds. A benefit of organic produce is that it attempts to ensure that minimal amounts of pesticides and fewer dyed methods are used in the growing of the food. single 25% of organic food carries pesticide residues, compared to 77% of ceremoniously grown food 32. This reduces harm to any soil or wildlife in the area, and is reported to have added health benefits, all contributing to less of a bad impact on the environment from ill chemicals. 2. 6 Legal factors Legal changes in the United Kingdom may affect the behaviour of firms and producers within this particular industry. Back in 1984, the Food Act was introduced, which outlined the description and purity of foodstuffs, and affected the way in which food could be produced 33.This legal act is still completely applicable today, and is regularly updated, notably affecting organic food producers in how they can describe and label their food. As well as an organic product having to meet UK organic standards, it also must abide by this Food Act when selling to respective buyers, so as not to betray customers, i. e. it must be what they claim it to be, in this case, organic. A European ruling in 2007 states that for food to be labelled free of genetically modified ingredients, it must make up 0. 9% or less of such elements, which may in turn affect the price of organic food 34.Producers need to factor these sorts of l egal requirements into pricing how much they are going to sell their food for. For the past few years, recorded minimum wage has risen, with October 2007 being the last reappraisal at ? 5. 52 per hour for workers senior 22 and over, ? 4. 60 per hour for workers aged 18-21 inclusive, and ? 3. 40 per hour for all workers under the age of 18 who are no longer of compulsory school age 35. These increases may pose problems for producers who cannot afford to meet these payments, especially if inflation ontinues to rise, and the credit crunch awaits to beckon a recession in the financial market. If the producers cannot afford workers to help them reckon after livestock or harvest crops, this may pose to be a big threat as to whether they can afford to meet the requirements of customers. ? 3. PORTERS FIVE FORCES The micro-environment is a set of forces that flat impacts the ability of an industry to serve its customers, which were describe by Michael E. Porter in an analytical framewor k as five forces that determine the competitive intensity of a market.This can also be described as the attractiveness of an industry 36. It must be remembered here that even if a market is determined to be attractive, this does not mean that every firm in the industry will yield the uniform emolumentability. Only by having uniqueness in resources or a distinctive business stupefy can help to achieve great profits. The five forces suggested by Porter are the threat of new entrants, threat of interchange products, and threat of ceremonious rivals from horizontal competition, and the negotiate power of suppliers, and negociate power of buyers from upright piano competition 37.The strength of these forces combined determines how competitive the industry is, and can determine whether it is favourable to enter. In reference to Porters Five Forces, the term industry will be used to describe any products which are similar, and are close eases for each(prenominal) other. These fi ve forces that affect how competitive the industry is will be discussed to a lower place. 3. 1 bane of new entrants In order to assess the threat of new entrants in the industry, it needs to be assessed whether the barriers to origination in the UK organic food producing industry are high or low.This will be looked at in relation to economies of scale, product differentiation, cost disadvantages in relation to the chief city require, and door to scattering channels, in relation to UK organic legislation. Economies of scale occur when the costs of producing are reduced from making more units, as it is more efficient to increase output. some(a) organic food producers may benefit from the fact their purchasers may be large supermarket chains, who have the ability to buy in bulk due to the benefits of their economies of scale. Organic food producers an then sell their goods to these chains, who realise that their customers are becoming increasingly aware about the benefits of thi s quality produce. However, due to these chains being in a position to buy bulk, in order to compete in this market, organic farmers may have to sell their goods at a cut price if the supermarkets want to sell it on to turn a profit. In this case, new entrants may be put off from accounting entry the market if they cannot afford to compete with already established providers of organic food to these main players.Product differentiation is an issue, as the organic products in this industry are largely homogenous. If new entrants wanted to hue the market, they would have to think of innovative new ways for buyers to deal their products over another product which is the like as the one they are offering. This does until now mean that producers already in the market may have less competition enter alongside them, as long as the existing producers offer fair prices and top quality food, with well established networks.Cost disadvantages may pose a threat to new entrants, as a large am ount of capital is required in order to enter the market. Firstly, modern agri-technology is pricy to purchase, and the largest cost of deciding to produce organic food is the conversion of land 38. In order to convert land so that it meets the UK Organic standards requires a great capital investment, which is one of the reasons why the make out is still short. This may put off potential entrants to the market if they believe they cannot afford to make their land meet subject area requirements.These home(a) requirements are subject to change, so barriers to entry can be heightened or let down at given times, depending on what is decided by the ruling bodies. This may also affect international entrants, as national standards vary in different countries. What is seen as organic in one country, may not meet the requirements in the UK, so producers may be protected from further competition in that respect. For example, new regulations in Japan caused the majority of products to los e their organic status 39.This also ties in with plan of attack to distribution channels, as UK producers may be fighting for space on supermarket shelves or stalls in a local farmers market, and only the best will survive. tied(p) though cut is short, a especial(a) amount of space is still given to organic produce, which on one sight may deter entrants into the industry, but every bit may give some producers deficiency to enter the market a big incentive to increase awareness about organic produce, and try to meet that supply in innovative new ways. 3. 2 Threat of interfere productsSubstitute products are products which can fulfil the same function, but from a different industry. In the case of the organic food industry, substitutes can occur in the form of different kinds of eating, or fad diets, such as calorie-counting healthy eating, and or locally sourced received produce. First to be discussed is reduced-fat and reduced-calorie food, which may appeal to the organic f ood shopper. If people are buying organic food as a fault of what it really is, and do so for the health benefits, then they may switch to particularized healthier eating options, rather than organic food.This threat however has been reported to be minimal at the moment, as figures in a Mintel report from 2007 on organic food show that organic food is experiencing a much greater growth than reduced calorie options 40. The reduced-calorie options, as well as functional foods, still continue however to rise in popularity. topically sourced conventional produce also poses a threat to the organic food industry, as some people may film to support local farmers rather than to choose organic produce.This is especially difficult on the organic food industry, as more farmers may decide not to convert their land to organic if people are more willing just to buy conventional locally produced food 41. This threat may encourage organic farmers however to sell produce locally, so they are cove ring both segments of their target market. An example of this threat is posed by milk, as demand for organic milk far exceeds the supply, so people are liner the dilemma of having to buy non-organic locally sourced milk, as this is a necessary substitute for people buying milk in the premium market 42.Organic food may be seen as necessity to some, but to most it is a luxury, and conventional foods can stand in the premium priced, undersupplied organic food. 3. 3 Threat of established rivals The simplest rival in this industry may be seen as people who grow their own organic produce in their garden or local allotment. This reduces the need for organic farmers to sell their produce to consumers, and this has the potential to reduce the need for them to sell, as it may be cheaper for people to grow their own. Aside from this threat, there are other forms of competition within the industry.Rivals in the industry have different ways of competing against each other, including varied for ms of price, marketing strategies, and innovation techniques. Firstly, a sustainable competitive advantage can be gained through the innovation from producers in the industry. For example, organic farmers may decide to provide their goods only to local outlets and consumers, which increases the likelihood of people wishing to buy products which are organic and sourced locally. This can provide a competitive advantage over organic producers in the UK who have a larger carbon footprint by delivering their products across the country.Competitive aspiration may continue here as more competitors enter the market to requite the growing demand for organic produce. As new entrants penetrate the market, it needs to be increasingly suasion of new ways to differentiate products, as the nature of the produce in this industry is largely homogenous. There is not a large diversity of competitors, as organic produce is the same from one farmers land to another, so competition will be high in ord er to get people to choose one farmers particular produce.This is also dependable when considering who will purchase this food, as supermarkets are increasing their ranges of organic food, so competition to get produce chosen to be exchange in these will be high 43. If a supermarket already purchases a particular farmers produce, it may be difficult for other competitors to penetrate the market if customer loyalty already exists, so new ways of doing so will need to be thought of, such as competing on price. This, however, will only be possible to a certain extent, as a profit still needs to be make by the producers in order to continue their business.Existing firms may compete in this industry through diversification of how the produce is offered, as some farmers may set up a market stall or store in order to deliver their produce to the consumer. An advantage of this is the added convenience to consumers of having a place they know they can go to in order to source locally produ ced organic food. An example of this is the ever increasing popularity of the chain satellite Organic, which is continuing to expand upon its outlets in urban areas in capital of the United Kingdom, so that people dont have to live in rural areas in order to get there organic food 44. 3. Bargaining power of suppliers There is an estimated 4630 producers in the organic market who have reborn their land to organic soil, and this is ever increasing 45. Even though this is still increasing, it is expensive to convert conventional land, so this may be one of the reasons for a relatively low number of suppliers in this industry. This section focuses on whether suppliers in the organic food producing industry have high or low amounts of power over the happenings in the industry. The brand of organic food may be seen as powerful, as there is a high consumer demand for these products.This gives the suppliers the added advantage of being able to choose how and where to supply their produce. However, even though this increases supplier power, the customers for their produce are fragmented, so there may be a reduced dicker power over price, as there is only so low that producers are able to offer their goods for. Organic food in itself is a unique offering, which gives an alternative to conventionally produced food, and can satisfy the needs of particular consumer groups who crave quality and are concerned with the provenance of what they eat.This allows suppliers to have a greater power over the conventional or locally sourced produce, as organic food is seen as a lifestyle choice and not just one of convenience or necessity. Figures from Mintel show that 65% of people shop in supermarkets where the food is of high quality and is fresh 46. This choice from consumers gives suppliers the added advantage of being able to provide a service that people really want. 3. 5 Bargaining power of buyers The bargaining power of buyers in the market can have a great effect on the i ndustry itself, which will now be outlined in terms of how much power they have over the industry.Buying power may be deemed to be relatively low in some respects, but high in others in this industry for a number of reasons. With an increase in demand for organic produce, a large amount of buyers are competing for a relatively short supply of food. This may mean they are willing to pay higher prices for the produce, due to its availability being decreased. This supply shortage was outlined in The Grocer, which shows sales were up to ? 3. 1billion when they reported in March 2007 47. However, few large buyers, such as large chains of supermarkets, may have an increased buyer power due to suppliers wanting their goods to be sold in these stores, as they can ensure produce is sold via a contract for a certain period of time. This reduces doubt for suppliers, and ensures less food is spoiled. The fact that this industry contains a large number of undifferentiated suppliers may mean tha t buyers have more power over who to choose to supply their produce if there is a large amount of suppliers in that particular area.The cost for buyers of switching suppliers for produce is very low, which further still increases their power, assuming that there is an stamp down amount of supply existing. Buyers are aware that there is a shortage of supply of organic produce, so this may give them less power over suppliers, and over the industry in general. It has been previously mentioned about the increased demand over supply, so buyers may have to pay the prices being offered to them by suppliers if they want this non-conventionally grown produce.Buyers may also have higher power in some respects due to existing substitute products, which have previously been discussed. There is an opportunity in some cases for people to switch to locally sourced conventional food, rather than organic food. This can increase buyer power, if they decide to refrain buying organic food altogether, which may force producers to reduce their prices, or just to extend the market. ? 4. CONCLUSION 4. 1 The industry at present Looking at the information which has been discussed in the 2nd and 3rd sections of this report, deductions and analysis can be made about the industry at present.In its simplest form, the UK market for organic food is reported to be charge ? 1. 5 billion in 2007 48, and this is continually growing. Issues affecting the macro-environment allow current Government legislation managed by the Soil Association and the Organic Farmers and Growers Association, buyer power and spending habits in the organic food industry, effects of the growing media attention on the industry itself, new ways to sell produce, and environmental concerns facing producers. Issues ffecting the micro-environment take on the threat of new entrants joining the industry due to a lack of supply and an increase demand, substitute products being present such as locally sourced produce, establ ished rivals having better distribution links, suppliers having increase amounts of power due to the increased demand from consumers, and the buyers having relatively low power due to the lack of supply. This is a small summary of how the industry can be seen at present, and from aspect for at the information collected, there are various reasons why it may or may not be a favourable market to enter.The fact that demand is high but supply is low is a good reason for wanting to enter the market. This would postulate that any produce made would be easily sold, and suppliers would be in a better position to bargain on higher prices, as they are well aware of this demand. However, there are issues in being able to enter this industry. The sign outlay costs are high, as it is expensive to convert land into what is considered to be organic, to buy new technology required to grow and harvest produce in the methods stated by the necessary authorities.It may then be difficult to sell prod uce in certain areas if people do not agree with the transportation used to get the produce there in the first place. These are factors that need to be taken into consideration when looking at the industry at present, but with expansion set to continue, if the capital is available, it seems favourable to enter. 4. 2 Future changes increase credence of organic food means that the forthcoming day of the industry looks good for the moment.People are fountain to accept organic produce into their mundane lives, and with reported health benefits of switching to these products, sales are increasing, with analysts predicting that sales will mental image before the end of this decade 49. Increased awareness in the media and new studies into the good of organic produce is driving sales and increasing demand. The notion of eating well is of key importance to the Government in what they suggest to avoid an obesity crisis in the UK, and organic food may be seen as a way of doing this.Howeve r, it must be remembered that the future, as with any industry, can be uncertain. Factors that must be face up and planned for in the future include bad press in the media, substitute product switching, and a change in legislation. If the media publishes bad press about whether there are really any extra health benefits from paying extra for organic food instead of conventionally grown food, the demand may fall and substitute products used instead.Products such as locally sourced food are fighting for publicizing space in the media also, so people may switch to this in the future in order to protect the earth, and reduce their carbon footprint. This can all be affected by the hype that is created in the media at that particular time. Standards in legislation are also subject to change, and if this is to change in the future, it may be the case that fewer farmers can afford to convert their land into organic soil, which will reduce the supply of organic food further.If this occurs, the popularity and advancement of this industry may decline. These are issues that need to be kept in the van of the industrys mind, and plans to avoid this, such as proving the benefits of switching to organic produce, need to be made. ? 5. APPENDICES 5. 1 Critique of tools and research limitations 5. 2. 1 PESTEL framework Advantages are listed down the stairs Allows the analyst to remove themselves from the industry and look at it more objectively by adapting to the new environment thunder mug avoid taking actions that will lead to reverse Can see the context of the industry Limitations are listed below Time consuming Is done by an individual, so heavy factors can be missed May be difficult to know what to include under each heading, so hard to follow by other people reading the report Industries are forever changing, so once it is written, it may have already changed PESTEL analysis only covers the remote environment 5. 2. 2 Porters 5 Forces Advantages are listed below C an effectively analyse competition in an industry, and help decide how to beat competitors give away strategies for action from the information found and deem them to gain market share in an industry Looks beyond obvious quick competitors, and focuses on substitutes to the organic produce being offered wider market view Limitations are listed below Also is carried out by an individual, so things relating to competition in the micro-environment may go unlooked This analysis is a static framework, and the industry is forever and a day changing, so it may not be applicable immediately after it has been writtenThese limitations imply that a scheme cannot be made just by looking at this report alone. This point may the most important research limitation, as this cannot be taken as to what the industry is like presently. New research is constantly being carried out, and figures continuously change, so streetwise information is required for marketing strategy development. ? 6. REFER ENCES 1NOSB Definition, http//www. ota. com/definition/nosb. html, Accessed 18/4/08. 2What Is Organic? , http//www. soilassociation. org/web/sa/saweb. nsf, Accessed 18/4/08. 3Organic Food, http//en. wikipedia. org/wiki/Organic_food, Accessed 16/4/08. 4Channels to market, Mintel trade Intelligence, 2007, Organics Mintel merchandising Report. London Mintel outside(a) Group, Accessed 25/4/08. 5Industry Statistics and project Growth, http//www. ota. com/organic/mt/business. html, Accessed 18/4/08. 6Porter, M. E. (1980). Competitive Strategy Techniques for Analysing Industries and Competitors (The Structural outline of Industries), . Macmillan UK, pp. 3-33. 7Davies, M. (1998). 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