the kroger co. managers can use porter five forces to understand how the five competitive forces influence profitability and develop a strategy for enhancing the kroger co. competitive advantage and long term profitability in grocery stores industry. the kroger co. is one of the leading firms in the grocery stores. the kroger co. is listed at new york stock exchange (nyse) and have a market cap 22.41b usd. the porter five (5) forces are – porter five forces is a holistic strategy framework that took strategic decision away from just analyzing the present competition. porter five forces focuses on – how the kroger co. can build a sustainable competitive advantage in grocery stores industry. new entrants in grocery stores brings innovation, new ways of doing things and put pressure on the kroger co. through lower pricing strategy, reducing costs, and providing new value propositions to the customers. suppliers in dominant position can decrease the margins the kroger co. can earn in the market.
powerful suppliers in services sector use their negotiating power to extract higher prices from the firms in grocery stores field. they want to buy the best offerings available by paying the minimum price as possible. this put pressure on the kroger co. profitability in the long run. when a new product or service meets a similar customer needs in different ways, industry profitability suffers. if the rivalry among the existing players in an industry is intense then it will drive down prices and decrease the overall profitability of the industry. the kroger co. operates in a very competitive grocery stores industry. by analyzing all the five competitive forces the kroger co. strategists can gain a complete picture of what impacts the profitability of the organization in grocery stores industry.
this is a detailed porter’s five forces analysis of the uk supermarket industry. competitive rivalry, supplier power, buyer power, threat of substitutes, and threat of new entrants can impact on the industry and can erode the profitability of the existing market players. powerful customers drive prices down and can demand more products and services at the existing pries. considering these criteria, many analysts argue that bargaining power of buyers in the uk supermarket industry is relatively weak making the industry attractive and profitable for the existing companies. the supplier power is not particularly strong in the uk supermarket industry as there are thousands of suppliers both local and international that cater to the needs of the supermarkets. the threat of new entrants in an industry is determined by barriers to entry. certainly, it is very difficult for a new company to enter into the uk supermarket industry, making the industry very attractive for existing companies. it took many years for both aldi and lidl to come to a considerable stage.
the threat of substitutes in the uk supermarket industry is considerably low for food items. likewise, the substitutes of major supermarkets are small convenience stores, off licences, corner shops, and shops selling organic products which are not able to meet all the needs of the customers. thus, the threat of substitutes is low making the supermarket industry attractive for the existing companies. therefore, it is a less profitable industry for existing companies. we hope the article ‘porter’s five forces analysis of the uk supermarket industry’ has been helpful. you may also like reading top 10 supermarket chains in the uk and competitors of tesco. also enter your email address at the bottom of the site to ‘join us’ free for our newly published articles and newsletters. he is a lecturer in management and marketing.
porter’s five forces model degree of rivalry within the industry the threat of substitutes the threat of new entrants bargaining the threat of new entrants is weak because grocery stores have high economies of scale, they have created long standing relations with suppliers, and there are the kroger co. porter five forces analysis threats of new entrants. new entrants in grocery stores brings innovation, new ways of doing things and put pressure, five forces analysis of supermarket industry uk, threat of substitutes in grocery industry, bargaining power of suppliers in grocery industry, threat of new entrants grocery industry.
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