Essay on Porters 5 Forces on Tesco

Decent Essays
Porters 5 forces on Tesco:

Porter's five forces look's into the external factors impacting on a company.

Competitive Rivalry:

Tesco's has a very high competitive rivalry in many aspects of the market from some major competitors in the food retail Industry like Asda, Sainsbury, Morrison and Waitrose. They compete with one another through price, product and promotions periodically. Tesco's express' main rivals are the Sainsbury local and the Co-op one way in which they compete with Tesco's is through distribution. These businesses have stores where Tesco's has making it competitive to sustain its customers.
Tesco's also compete with petroleum suppliers these include Shell, Esso, Bp and Texaco. They compete by using the same
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Tesco is very fortunate as there are few other large supermarket companies. This means that the food retail market is quite disciplined as the supermarkets have a set approach to price setting. Discipline stops them destroying each other in a profit war.

Threats of Substitutes:

Businesses are not only faced with competition within the industry they operate in. They also face competition from businesses in other industries.

One Reason for this is:
Technology-Tesco's is into mails although this method of communication has been in existence for ages and is still used. But the internet enables messages to be sent faster than postal mails. So Tesco's might face competition from cyber cafes and such businesses operate within the Information Technology (IT) Industry.

Threats of New Entrants:

Barriers will be placed on all new supermarkets entering the sector; this will be from the existing supermarkets. For example Tesco may have cornered the market for certain goods therefore has established a relationship with its supplier so that it will pay a lot less for large volumes of goods whereas the new supermarket will not be able to find cheap, reliable suppliers this gives Tesco's the advantage of economics of scale. A new, small supermarket chain can only buy a relatively small volume of goods, at a higher
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