how can you describe the threat level posed from Hickory Divine’s buyers?


Question 1.

Below is a description of a hypothetical industry. Read carefully and answer the questions below.

Hickory Divine is one of the leading manufacturers in the hardwood furniture industry. Hickory Divine has many small competitors, none of which controls a significant portion of the industry. Hickory, like most of the furniture manufacturers, sells its products to a broad variety of small furniture stores throughout the country, none of which represents a large percentage of Hickoryʹs sales. When purchasing the products it uses for manufacturing its furniture, Hickory is able to choose from many suppliers since the wood it uses is an undifferentiated commodity, and Hickory is able to easily switch to any supplier that has the best price and delivery times. While growth in the hardwood furniture industry has historically been in the double digits, the industry growth rate has slowed considerably into the single digits, to approximately 5% in recent years; consumers have been purchasing less expensive furniture made of composite wood that is considerably less expensive than hardwood furniture but that looks and functions very similarly once it is painted.

Answer all the questions below.

Question 1a. Based on the description of the hardwood furniture industry, how can you describe the threat level posed from Hickory Divine’s suppliers? Is it high? Is it low? Why? Provide an explanation by using the logic and measurements of the 5 Forces model.

Question 1b. Based on the description of the hardwood furniture industry, how can you describe the threat level posed from Hickory Divine’s competitors (rivalry)? Is it high? Is it low? Why? Provide an explanation by using the logic and measurements of the 5 Forces model.

Question 1c. Based on the description of the hardwood furniture industry, how can you describe the threat level posed from Hickory Divine’s buyers? Is it high? Is it low? Why? Provide an explanation by using the logic and measurements of the 5 Forces model.

Question 2.

Below is a hypothetical income statement, based on the income statement of Starbucks, Inc.[1] in 2019, 2018, and 2017

 

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