Porter's Five Forces

Decent Essays
Porter's Five Forces
Porter's Five Forces allowed us to analyse the influences on the industry in which Tesco operates. It highlights where Tesco has developed a competitive edge over its rivals.
Potential entrants:
Throughout the recession Tesco has continued to invest into expanding the company and developing efficiencies, making it as competitive as ever to defend against the threat of new entrants (Datamonitor, 2010, p. 19).
The threat of a new competitor entering this sector is relatively low, due to the huge capital investment required to be competitive and establish a brand identity that stands out.
One of Tesco's main advantages is their ability to buy in vast quantities, making them highly price competitive.
Along with being
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Tesco then use this customer data to shape product offerings, create ranges, gain a better understanding of consumer segments and shopping profiles, help marketing to build loyalty and develop promotion offerings that suit target groups.
Datamonitor (2010, p.19) reports "18% more UK households are redeeming (Tesco) vouchers than a year ago". Money off vouchers are a very successful promotion tool during a recession, and thanks to information retained through the "Clubcard", they can be personalised to suit the needs of individual customers, therefore increasing customer satisfaction.
Large organizations, like Tesco, are in the position of control when it comes to negotiating with suppliers.
In 2009, Tesco switched to sourcing many products directly from the UK, in an effort to lower prices in the Republic of Ireland to prevent shoppers heading North due to the devaluation of sterling against the euro. This allowed them to cut its prices by up to 22% in the border regions, helping them retain their competitive edge (
Closer relationships with the suppliers and significant changes to merchandising strategy are
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