Analysis of Failed Company - Kwik Save Essay

The following analysis of Porter’s 5 Forces Model will help in determining the threats that my be present now or in the future and help determine opportunities and decisions regarding the marketing plan.

The internal analysis of the company paints a picture of a firm that is well endowed with resources, both human and capital. The company boasts of an asset base of $11.4 billion according to the financial reports for the year 2012. This is huge, and it shows that the company is well grounded and has the capacity to gain a competitive edge in the highly competitive retail market in which it operates (Britton & Jorissen, 2007).

Operating on very thin profit margins, players in the supermarket industry traditionally either focus on a premium segment or follow a discounter strategy at the low end. Premium players address educated and more price elastic consumers who value healthy, natural and organic food; the share of perishable items for these players is normally distinctly higher. Players that focus on a discounter strategy offer a higher share of simple necessity items and value price competitiveness over premium features like healthiness or organic origin. Independently of the focused customer group it is imperative for players in the supermarket industry to be cost efficient and optimize operations

For restaurant retailers, the power of suppliers is high. This can be indicated by lack of substitute produces and low importance of restaurants as buyers.

The industry we have chosen is the department store-retail industry. Within this industry, we have chosen the department stores of JCPenney and Macy’s. We find this industry, as well as these two companies, interesting from a strategic perspective. JCPenney has recently undergone a massive strategic restructuring in regards to its pricing, brand offerings, and store layout, pushing it away from the typical department store strategy of discounts and coupons. Its new strategy has become much closer to Wal-Mart’s strategy of every day low prices. Macy’s, on the other hand, has restructured with a push from the economic

The retail industry is extremely competitive particularly during the current economic conditions when customers have limited spending power (Bloomberg, 2009). Therefore, it is crucial that the business owner assess all of the factors which determine the profitability of a store. Since the financial figures are unavailable for all of the different outlets, the success of the store will be assessed using the same physical factors which can be observed; location, client flow, employee cost, pricing, inventory levels, marketing strategy and customer service. To evaluate what makes a store’s performance good, two successful and two unsuccessful stores will be looked at and the same

     A “New Employee Checklist” will be created with all pre-employed tasks listed on it.

We have used Porter’s five forces on the discount retail industry to understand external environment(Porter, Michael E., Competitive Strategy(1988).

Even if foreign retailers do not need the approval from one central authority anymore, they have to run after much necessary permission to open new stores. Besides, under this strong competition context, the government is hardly to bring in new laws to calm the situation. Obstacles are quite numerous. Let’s summarize this analysis into a graphic to have a better representation of the procedure how to penetrate this market.

5. Power of suppliers: supplier power is likely to be high when few suppliers are available, suppliers have unique products or strongly differentiated brands, switching costs are high, suppliers can threaten to integrate forward, large number of small customers with weak negotiation power.

The company’s positioning of its consumer products in discount stores could be a threat as these stores provides heavy discounts which can have effect on sales through other channels. This also gives higher bargaining power to these stores as they are responsible for almost 40% of sales.

The retail industry India is so pivotal that it accounts up to 14% of the country’s national gross domestic product and provides jobs for nearly 10% of the entire country and is expected to rise at prompt rates. Before the rapid rate in India’s population there were plenty of competition within the Indian retail sector, but not between major licensed retail corporations but amongst small mom and pop stores, mobile carts and pavement vendors which are known as the unorganized retail sector, which in earlier yeas accounted for nearly 98% of the country’s retail market. With India’s population 1billion plan and the GDP growth estimate at 7.5% in upcoming years all sorts of different opportunity for all mass merchants and food retailers to expand their businesses locally and nationally were up for grasp. It was apparent the Indian retail sector was on its way to becoming worth billions of dollars, so the country saw many different companies beginning to funnel into the retail sector with hopes of taking advantage of all the positive changes in the region. As more and more business began entering the market the more competition presented itself.

3. Define Porter’s competitive forces model and explain how it works. Michael Porter’s competitive forces model provides a general view of a firm, its competitors and environment. Five competitive forces shape the fate of a firm – traditional competitors, new market entrants, substitute products and services, customers and suppliers. In traditional competition, all firms share market space with competitors who are continuously devising new products, services, efficiencies and switching costs.

In future maintain 5% of stores as mini-supermarkets in her development target. 759 STORE did its best to conduct “lower margin with high turnover” policy. Through this 3 years effort on active developing direct import model, it was grateful that 759 STORE had not only built up supplies with food distributors and manufacturers of Japan and other countries, but also a smooth import operation with substantial procurement scale. To avoid any conflict on product price setting with traditional market players, the Group would take further step to increase the proportion of direct import and much fully exclude the supply of local suppliers who were difficult to have price negotiation with and did not allow 759 STORE to set product prices independently. Exploring new products in all angles and without limitation, our procurement team continued to source wide varieties of import product for Hong Kong residents’ enjoyment, where around 80% of them was food products and 20% of them was household and other products, hoping that our

In the last five years the retailing industry has undergone several changes, the effect of globalisation had turned retailing in to a global enterprise. Foreign organisations expanding often with a local joint venture partner. Manufacturers are trying to have