Porter's Five Forces Analysis Tesco

Due to the fact that they are in an oligopoly market, Tesco 's decisions would be mainly

Suppliers are interested in supplying Tesco with goods because of the business they get from them and the profit that they receive. They influence Tesco because if the suppliers go out of business then Tesco will have to find new suppliers that may not offer the same high standards as the previous supplier.

The suppliers of Tesco PLC are interested in the level of customers. As the suppliers will be able to sell more stock such as food to cover the number of customers at Tesco PLC. Therefore, there will be more awareness for the supplier so more work can come to the suppliers. Meaning that the supplier will earn more revenue from being more well-known due to supplying stock to a business as big as Tesco PLC. The suppliers would also be interested in maintaining relationships with Tesco PLC and to have the best interest deal. And finally, to be paid on time so then the suppliers will trust Tesco PLC on future orders.

Tesco has increased their market share by increasing their product and service line. Moreover, the main target market of Tesco is the grocery market that covers the majority business of the company.

Bargaining Power of Suppliers: The bargaining power of suppliers in the industry is low. There are numerous suppliers in this industry, and the large department stores have the ability to negotiate for the lowest prices. In addition, the switching costs are low, as the products are not highly differentiated. There are a large volume of purchases in the industry, allowing the department stores to exert even more power over the suppliers.

Larger stores also offer people the convenience of additional services along with their shopping, for example post office, pharmacy and opticians. By addressing consumer’s expectations and using their buyer power they can offer a choice of products to reflect consumer’s diverse budgetary, dietary, ethical and environmental requirements. Furthermore their global buyer power enables consumers to benefit from choosing exotic produce all year round. With 30,000,000 customers (Bevan cited in Allen, 2009) choosing to use the big four supermarkets on a weekly basis it would suggest that they provide a format that consumers want.

Bargaining Power of Customers: Tesco frequently consults their suppliers and discuss pricing arrangements. Tesco also ensures that all aspects of their supply chain benefit from their relations with Tesco.

Tesco also have a contract with logistics company Eddie Stobart so that they can transport goods from the manufacturers to the warehouses quickly and from the

Potential entry of new competitors is rendered low for the grocery retailing industry. Puregold, SM Hypermarkets, Rustans, and Robinsons Supermarkets are amongst the top key players in the game. The entry of new competitors could be very low because of the huge capitalization funds that this industry requires. In addition, the industry has been long time dominated by the giant players that had already well established and positioned their brands throughout the country and that they had already spread out with branches in Metro Manila and other regions.

The competition to a chain retail grocery store, such as Kroger, is not limited to other

Tesco PLC is a British multinational grocery founded by Jack Cohen in year 1919. As one of the world’s largest retailers with 476,000 colleagues worldwide, serve millions of customers a week in Tesco stores and online (Our businesses, n.d.). In addition, Tesco has stores in 11 countries across Asia and Europe. For example, Malaysia, UK, Hungary, Ireland, Poland, China, India, etc. Since its launch in 2002, Tesco have opened over 50 stores across Peninsular Malaysia.

Tesco is one of Britain’s leading food retailers and has 586 stores. From 1992, Tesco has grown greatly and has increased its market share from 10.4% to 15.2%. This increase in customers has also given Tesco a large amount of profit.

Porter 's five forces framework assesses the competitive pressures a company faces within the industry. The five forces of competitive pressure include: competition from rival sellers, competition from potential new entrants to the industry, competition from producers of substitute products, supplier bargaining power and customer bargaining power. The model helps us determine the strength of competitive pressures and profitability of an industry. [3]

Tesco was founded in 1919 by Jack Cohen, when he purchased the shipment of tea from T.E Stockwell and later in 1924 combined the initial of the names (TES) with the first two letters of his surname (CO). The first TESCO store was opened in Burnt Oak, Middlesex in 1929. Tesco is now operating in 14 different countries around the globe with almost 5000 stores worldwide and it is one of the largest retailers around the world. According to Kantar worldpanel, 2012 Tesco covers almost 30% of the market share in the UK.

The Porter`s five forces are threats of new entrants, the bargaining power of buyers ,product substitution and intensity of rival of rival among competitors .These forces measure the competitiveness of the market and also helps the company to identify strategies to use to penetrate such and gain market share.