Analysis of Failed Company - Kwik Save Essay

3030 WordsJun 11, 201113 Pages
1. Introduction Kwik Save was the first and once the most successful serious limited-rang discounter in the United Kingdom (Drive, 2011). It was regarded as a soft discounter (with 5-10% discounts), compared to hard discounters (with 20% discounts) (Colla, 2003). In the zenith of its business, the company had more than 800 stores nationwide (Tedlow and Jones, 1993). Nonetheless, it was taken over by Somerfield in 1998 and eventually went into administration in 2007. To investigate Kwik Save’s failure, this paper exams the operations strategy of the company which includes external market analysis and internal operations analysis. It would be followed by identifying Kwik Save’s order qualifiers and winners. Finally, recommended strategies…show more content…
In the following, Porter’s five force model is applied to analyze the competitive environment of Kwik Save. (Threat of New Entry: Food retailing was a relatively easy sector to enter in the early decades. Capital requirements were not too demanding and so were the general governmental policies. However, major retailers were able to achieve economies of scale that against other imitators. For example, Kwik Save’s dominant position in 1970s and 1980s gained such cost advantages, but this situation was interrupted by the advent of foreign hard discounters. (Threat of Substitution: The threat of substitutes in the food retail market generally is high as similar foods can be found in big supermarkets, discounters, convenience stores etc. It worth noting that, to a certain extent, products with famous brand and low price acted as a barrier and helped Kwik Save achieve distinctive growth. However, this advantage disappeared when Kwik Save lost its price superiority. (Supplier Power: It worth noting that the suppliers were inclined towards major food and grocery retailers. Therefore, the bargaining power of suppliers changed along with the status of the buyers. In Kwik Save’s bright days, it was able to gain increasing buying power through bulk purchases. Whereas during its downturn, Kwik Save suffered serious supply chain difficulties, suppliers started say no to Kwik Save supply plea (The Grocer, 2007). (Buyer Power: Customers are

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