Costco : A Supply Of Rivalry

1587 Words Oct 2nd, 2014 7 Pages
Q1: Describe each of the five forces as they pertain to your company.

The five forces strongest force in the food retail industry is the degree of rivalry. I will discuss the strongest one first. The degree of rivalry for Costco is strongest because the products that warehouses sale are not differentiated from one another. The buyers can switch stores easily because it is not costly for them to shop around. However, Costco tries to counter switching of buyers by having customers become members and pay monthly fees for their membership as well as offering low prices on products. Another factor that makes the degree of rivalry strong is the number of supermarkets and warehouses are increasing, and they are becoming more equal in size and strength causing rivalry to be very competitive. Among the rivalry in the industry Costco is considered to have the best quality which helps to attract more customers. Next, the threat of new entrants which I believe is weak. Since Costco is a large warehouse store they have aggressive pricing that is difficult for smaller retailers to duplicate. Costco has their private Kirkland brand that makes entering this market more difficult and hard to duplicate unless new entrants have sufficient capital that is needed. As well marketing and advertising is very costly to gain new customers and keep current customers. Another factor making the threat of entry weak is the unappealing market growth in the industry which is small and as well as the…

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