DOI: 10.36347/sjebm.2018.v05i03.004

Pages: 158-166

The concept of Porter’s Five Forces have been recognize for many years for analyzing the industry where the companies decide to compete. Porter’s Five Forces are perceived as a holistic measurement of companies’ environment. The food industry in Indonesia is experiencing positive and significant growth in their performance, however in there are many challenges in the industry. This research objective was to determine the forces in food industry SMEs in Surabaya-Indonesia by using the concept of Porter’s Five Forces. This study was designed as a cross-sectional survey of the SMEs food industry in Surabaya-Indonesia. The population was 112 food industry SMEs in Surabaya from which 88 SMEs were used as a sample in this research. Primary data was collected using questionnaires which were administered to managers or owners in the firms. Data was analyzed using descriptive analysis and presented in tables. The study found that on average the respondents agree that they perceived the forces in the industry as a threat. Substitutes are perceived as the highest threat, followed new entrants, and bargaining power of buyers. Bargaining suppliers is rated relatively lower. Further research can focus on how this forces effect company performance.