Competitive Analysis of Metro Holdings Ltd

865 WordsJun 16, 20184 Pages
1. Introduction Metro Holdings Ltd is a multi-national company that operates two major business segments, namely Property Development and Investment, and Retail. This report explores the retail arm of Metro, which manages three department stores and four specialty “accessorize” stores in Singapore, and another five department stores in Jakarta and Bandung, Indonesia. 2. Competitive Environment of Metro Ltd The competitive environment of Metro Holdings Ltd would be evaluated based on Michael Porter’s 5 forces Model. The factors affecting each force would be critically analysed to determine the competition faced by the business. As the nature of department stores and specialty “accessorize” stores is vastly different, the report would…show more content…
To a large extent, these factors contribute to a high barrier to entry, deterring new entrants into the department store industry. 2.2 Bargaining Power of Buyers Individual buyers have low bargaining power against department stores like Metro. As mentioned in Section 2.1, products sold in Metro are standard and undifferentiated, and customers incur minimal switching costs of their products. Thus, they have some bargaining power against Metro. However, customers to department stores are not concentrated, and purchases merchandises in small volumes. These products earn relatively low profits for the stores (0.131% profit margin for Metro in 2008). Such merchandises give little threat of backward integration as it is almost impossible for consumers to produce their own products. On the whole, individual customers of Metro have little bargaining power. 2.3 Bargaining Power of Suppliers With a diversified portfolio of merchandise suppliers, each supplier have some bargaining power against Metro. Merchandises from suppliers are important inputs to Metro’s business. In fact, they essentially make up Metro’s business. They pose a credible threat of forward integration, and might even prefer having their own specialized stores. Besides, there exist outlets of distribution other than department stores, for instance boutiques, discount stores, or even through the online platform .

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