Five Forces analysis
Competitive Rivalry: Low
The SPF eggs industry is a relatively narrow segment. There are few competitors existing and the CRL holds a leading position of market shares. Two other competitors are mentioned in the case, however, as the demand of SPF eggs is 5% to 10% beyond the supply and the competitors are failed to add their capacity to meet the demand, therefore they will not threat the CRL a lot.
Threat of New Entrants: Low-Moderate
The production of SPF eggs doesn’t need a huge amount of initial investment. However, it requires continuously capital investment for research and development to increase ...view middle of the document...
It’s necessary for vaccine research because the target various will not be killed by antibodies. Therefore, SPF eggs are not easily substituted by common eggs even though they are more expensive.
Bargaining Power of Suppliers: High
SPF eggs’ production needs biotech to improve quality and productivity. Now that the intelligence property are hold in only several suppliers, they have more ability to rise up the price. Moreover, with the application of NAFTA, the demand of SPF eggs is increasing rapidly, which forces producers to increase their capacity. That also strengthen the bargaining power of suppliers.
Bargaining power of Buyers: Low
As the case indicates, the demand of SPF eggs exceeds the supply of them, and the gap is about 5-10%. Under this circumstances, SPF eggs suppliers can drive up prices. As NAFTA has been applied, the demand of SPF eggs will keep increasing while the supply could not meet it in a short period of time. Therefore, buyers will not have strong power of bargaining.
SPF eggs industry is highly specialized. There are few rivals existing in the market, and also few chances for new players entering the industry. Because of the unique bacteria and various control, SPF eggs are not replaceable in vaccine developing and testing. The demand of SPF eggs are more than the supply, which gives more power of bargaining for suppliers and less power for buyers.