Value Line Publishing - Case Analysis

3345 WordsJan 6, 201514 Pages
VALUE LINE PUBLISHING, OCTOBER 2002 Case Analysis Report Introduction The Retail Building – Supply Industry remains to be going strong despite the slow economic growth in 2002; this is due to low interest rates and strong housing market. This industry with the size of $175 billion is expected to reach $194 billion after five years. In this consolidating industry, two key players are dominating: Home Depot, which is holding 29% of the market, and Lowe’s that has 10.8% market share. Both wanting to improve their financial reports, the two retailers go head-to-head in finding means to boost their top and bottom lines. Home Depot and Lowe’s have both expanded to the professional market by catering to the needs of the targeted professional…show more content…
All of these factors can support the assumption that threat from possible emergence of new competitors in the industry is low. Threat of Substitutes | LOW THREAT The industry is engaged in retailing, which means that businesses in it are not mostly engaged in manufacturing. An inference can be made that threat from introduction of substitutes will have a low effect because no matter what products are being newly introduced in the market by the manufacturers; the retailers can sell each and every one of them. Bargaining Power of Buyers | HIGH THREAT Due to the cutthroat competition in the industry, there is an intense price competition between businesses engaged in it like what happened to Home Depot and Lowe’s. Due to the latter having expanded into the metropolitan markets from the rural areas where it was previously concentrated, it captured a portion of Home Depot’s market shares. Being retailing as the nature of the industry and products being sold may be the same across different stores, consumers would want to buy on a retailing store with better prices. It can be safely inferred that bargaining power of buyers is high. Bargaining Power of Suppliers | LOW THREAT It can be assumed that bargaining power of suppliers is low because a business engaged in retailing can have many suppliers. They can choose to which supplier they should buy with the cheapest price

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