Porter’s Forces in Tesco Analysis

Introduction

Porter’s five forces analysis is helpful to analyse the market condition as well as understand the competitive rivalry among the competitive firms operating in the same industry. In addition to this, through porter’s five forces is effective to acknowledge the competitive position of the brand in the market (Haleem and Jehangir, 2017). The study aims to analyse the porter’s five forces model in case of Tesco to understand the competitive position of Tesco in the supermarket industry in the UK. Through this study, it is easy to analyse the five forces that helps to acknowledge the activities and strategic planning for the brand Tesco to gain highly competitive advantage. For those who may need further assistance with their analyses, seeking marketing dissertation help can provide valuable insights and support.

Organisational background

Tesco is a British multinational groceries and general merchandise retailer which is operating since 1919, 100 years ego. The company is successful in providing the customers across the international borders and it retain high market share in the UK supermarkets with quality grocery products and other services. The products of the organisation include supermarkets, clothing, groceries, health and beauty, entertainment, and home appliance which meet the daily needs of the individuals. In this regard the company is also efficient to deliver quality products and efficient services at competitive price, so that the customer can afford their products. The tag lie of the company is ‘Every little helps’, where low price and high quality are effective to caret values for the customers (Tesco, 2019a).

Total numbers of employee employed in the organisation are more than 460000 and the company is successful in enhancing their profitability and sales volume per year, where in the last run, the profit volume of the firm was £57,491 million which is the major strengths of the company to develop their infrastructure and conduct more research for meeting the customer’s expectations (Tesco, 2019b).

Porter’s five forces analysis

Porter’s five forces are effective to analyse the market competitive position of the fir where there are five forces such as threats of new entrants, threats of substitute products competitive rivalry, bargaining power of the suppliers and the bargaining power of the customers.

Threats of new entrants:

The threats of new entrants in the supermarkets of the UK is medium as Tesco has string supply and distribution chain across the UK which is operating effectively to meet the needs and p0rferneces of the customers. Proper financial investment, more research and development and product variety further reduce the threats of new entrants in the market. The brand reputation of Tesco and high market share as well as strong supermarket chain are the barriers for the new entrant to enter into the market.

Threats of substitute products:

The threats of substitute products are also low as Tesco is efficient to enhance innovation and creativity which raises the product line of the company and apart from that the company provide the quality products at lower price as compared to other competitive firms which reduces the threats of substitute products in the markets.

Competitive rivalry:

Competitive rivalry is high where there are other competitive for in the market such as Asda, Lidl, Waitrose, Morrison, Iceland, Ocado, Sainsbury’s and Co-Op which are also operating int he supermarket chain of the UK. All the companies are providing grocery products to the customers and it raises the competitive threats for the company Tesco.

Bargaining power of the suppliers:

The bargaining power of the suppliers is low as the company Tesco is efficient to satisfy all the suppliers and distributors with proper return on investment. There are little threats of large supermarket chain as the company provides high price to the suppliers and satisfy them with other non-monetary rewards such as managing health and safety, flexibility of work, freedom and managing transparency and accountability (Grundy, 2017). The share of profitability is distributed among the suppliers as well as the managers are efficient to build strong relationship with the suppliers which increases trust and loyalty among the distributors and it further reduces of bargaining.

Bargaining power of the customers:

The bargaining power of the customers is also medium as the company already provides the products at competitive price and this is why the customers do not want to bargain. Tesco provides best offerings to the customers which further helps to retain more audience at the market and it further helps to strengthen their customers base. Continuous improvement, product line and effective price level of the products and services of the company further deteriorate the intensity of bargaining power among the customers.

As per the above discussion, it can be stated that, Tesco is efficient to generate profit volume and enhancing sales of the firm by retaining more customers towards the brand and delivering them quality products and efficient services at affordable price.

As per the figure above, Tesco is efficient to gain highly competitive advantage in the markets where, as per the recent report, the organisation has 27.8%, where the Sainsbury’s has 15.8% and Asda has 15.3%. Tesco is efficient to promote growth and enhance their performance he supermarket chain in the UK where the efficient suppliers and distributors are successful to provide quality products and efficient services to the customers at affordable price which in turn helps to create values for all the customers and strengthen their customer’s base in future. Low threats of new entrants and medium threats of substitute products further enhance the market share of the company where the customers prefer to make effective purchase decision for the products and services, delivered by Tesco (Tesco, 2019b).

Conclusion

It can be concluded that, the company Tesco is efficient to improve their market share by satisfying all the suppliers where efficient supermarket chain satisfy the customers by delivering quality products at affordable price. The market share of the brand is high, and it is successful to strengthen their customer’s base and secure future sustainable development by gaining highly competitive advantage.

Reference List

Grundy, T.D., 2017. Dynamic Competitive Strategy: Turning Strategy Upside Down. Routledge.

Haleem, F. and Jehangir, M., 2017. Strategic Management Practices by Morrison PLC, UK. Analysis, Lessons and Implications. Middle East Journal of Business, 12(3).

Jenkins, W. and Williamson, D., 2015. Strategic management and business analysis. Routledge.

Sellers-Rubio, R. and Más-Ruiz, F.J., 2009. Efficiency vs. market power in retailing: Analysis of supermarket chains. Journal of Retailing and Consumer Services, 16(1), pp.61-67.