Uk Supermarket
1.0 INTRODUCTION “Today’s strange, new business world needs an augmented model of industry and market analysis that reflects recent developments in industry dynamics, such as globalization, entrepreneurship, technological advances and the internet” (Slater & Olson, 2002).
2.0 PORTERS FIVE FORCES MODEL FOR UK SUPERMARKET INDUSTRY Supermarkets’ performance is reliant on consumer’s income and their willingness to spend. The growing consumer pressure to drive value, quality and taste requires companies with strong management teams to understand the market trends in the industry of which this had led to constant competition among firms in the industry. This rivalry is based on firms in the industry battling to win the highest market share in the industry (IBISWorld). However, the UK supermarket industry has witnessed rapid growth since the establishment of its first service shop in 1950. The UK supermarket industry is an oligopolistic market with an annual growth rate of 1.5% in 2011. The industry has employed a total of 923,196 people and has generated a sum of £127 billion in revenue (IBISWorld). Furthermore, more than 50% of the market share in the industry is controlled by TESCO, ASDA, Sainsbury’s and Morrisons (BBC). Porter (1980) illustrates in this analytical tool 5 variables that determine the attractiveness of an industry for organisations in terms of profitability in their immediate environment. Using the forces in this model we can analyse how attractive the UK Supermarket industry is to enter, the 5 forces are as follows.
2.1 BARRIERS TO ENTRY The UK supermarket industry has continued to provide a very tough and highly competitive environment. New entrants to the Supermarkets industry face significant hurdles (IBISWorld). Barriers to entry in the UK supermarket industry relies on the entrants capability of matching capital requirements of existing firms,
the UK supermarket industry is dominated by firms known as Tesco, ASDA, Sainsbury’s and
2.0 PORTERS FIVE FORCES MODEL FOR UK SUPERMARKET INDUSTRY Supermarkets’ performance is reliant on consumer’s income and their willingness to spend. The growing consumer pressure to drive value, quality and taste requires companies with strong management teams to understand the market trends in the industry of which this had led to constant competition among firms in the industry. This rivalry is based on firms in the industry battling to win the highest market share in the industry (IBISWorld). However, the UK supermarket industry has witnessed rapid growth since the establishment of its first service shop in 1950. The UK supermarket industry is an oligopolistic market with an annual growth rate of 1.5% in 2011. The industry has employed a total of 923,196 people and has generated a sum of £127 billion in revenue (IBISWorld). Furthermore, more than 50% of the market share in the industry is controlled by TESCO, ASDA, Sainsbury’s and Morrisons (BBC). Porter (1980) illustrates in this analytical tool 5 variables that determine the attractiveness of an industry for organisations in terms of profitability in their immediate environment. Using the forces in this model we can analyse how attractive the UK Supermarket industry is to enter, the 5 forces are as follows.
2.1 BARRIERS TO ENTRY The UK supermarket industry has continued to provide a very tough and highly competitive environment. New entrants to the Supermarkets industry face significant hurdles (IBISWorld). Barriers to entry in the UK supermarket industry relies on the entrants capability of matching capital requirements of existing firms,
the UK supermarket industry is dominated by firms known as Tesco, ASDA, Sainsbury’s and