1. 5(+1) Porter‘s forces.
| |The threat of substitutes | | |Food retail industry at first seems easy to substitute, but in truth the large markets are the ones who state the prices in the market, | | |thus for such large chains like Tesco the threat of substitutes is low as due to high demand it manages to offer high quality products at | | |low costs. Moreover, Tesco has already started to focus on opening express stores and this creates even more barriers for the substitutes | | |to enter the market. | | |The threat of entry | | |Tesco takes part among 15 largest world’s retailer chains’. There are a few factors which determine that the threat of a new entrant is | | |fairly low: | | |Due to economies of scale, Tesco offers goods at lower prices. For new entrants it is complicated to achieve this level of sales so that | | |selling at the same level of prices would become profitable. Therefore, a large investment is a necessity. | | |The access to supply and distribution channels is not complicated, but the demand of products is not high by new entrants and not all | | |products would be acquired at the same price as Tesco and other market’s leaders acquire. | | |Although, products are not differentiated in a food retail industry and therefore customer loyalty is not high. | | |The power of buyers...
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