In any industries, competitive advantage plays a significant role in winning a competition. The possession of specific competitive advantages is increasingly important since nowadays, customers use emotional side than rational side when deciding which products or services they want to use. Advanced technology does not have to provide competitive advantage for a product if retailers cannot employ it to their fully extent.
In ACPFG, the rivalry occurs in the production of superior quality of cereal varieties that are tolerant to stress condition caused by environment such as salt, frost, drought, and mineral toxicity (Ball, 2002).
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This stress condition, if not managed properly, will influence the plant growth and crop productivity. Under such circumstances, the competition in crop productivity is backed up by the development of gene technology in order to increase the number of crop, which in turn generates economic wealth. It is true since low crop productivity has caused Australian agricultural industry to lose millions dollar from export opportunity (Ball, 2002).
1.1 Barriers to Entry
The number of new entrants increase as the barrier to entry reduces in a market. This is because the situation encourages more companies to enter the market, thus increase the degree of competition or rivalry, and drive the profitability to fall. One of common barriers to enter a new market is political and health issue, to name a few.
Concerning the ACPFG GM foods, the barriers to entry occur in some market such as in the Europe where they prevent any genetically modified (GM) process and the GM foods by giving strict labeling and regulatory warnings on such products. The barriers also come from the situation where prohibitive of potential R&D and technology suppliers via the sales of technology and the licensor to a company operating in the industry (Ball, 2002).
1.2 Products Substitution
Impact of product substitution is possibly the most overlooked factor although its impact is damaging. Therefore, it is imperative that business must not only look at what the company’s direct competitors are doing, but what other types of products people could buy instead. The product substitution for GM food is the natural-growth products since in some market like in the Europe, the regulator still prohibit the distribution of GM foods. In other markets that are already opened for GM food such as in the U.S., the competition also occurs between natural and the GM foods (Ball, 2002).
1.3 Buyer Power
There are some aspects that influence buyer power; they composes of size of buyer (larger buyers will have more power over suppliers), number of buyers (when there are a small number of buyers, they will tend to have more power over suppliers), and purchase quantity (When a customer purchases a large quantity of a suppliers output, it will exercise more power over the supplier).
In the ACPFG case, it is find that the acceptance of Australian GM food by the U.S. market becomes significant buyer power since the increasing orders from U.S. customers will in turn demand the reduced costs. This situation occurs since GM foods cannot be exported into all countries, to date, due to the fact that some regions like Europe still prevent such GM foods (Ball, 2002).
1.4 Supplier Power
In case of GM industry, power of suppliers have also important role because the Plant Genomics Centre was financed by five stakeholders, each has different financial objectives within 5-year period. The condition suggests that the commercialization may vary due to the various pricing practices (Ball, 2002).
Moreover, the commercialization of genetically modified (GM) technology depends on the research and development (R&D) of such technology. The vast availability of talents in the GM technology become the supplier in which they would produce feasible research that benefits the commercialization of GM foods (Ball, 2002).
Ball, Donald A. et al, International Business the Challenge of Global Competition 8 ed, McGraw Hill, 2002
Porter, Michael. 1998, Competitive Strategy: Techniques for Analyzing Industries and Competitors, Free Press