2010 STRATEGIC STRATEGI C MANAGEMEN MANAGEMENT T FOR GROWTH
TUTOR-ERIC.ADJEI.YEBOAH RAVINDER KAUR M.B.A-2
ND
SEM
11-08-2010
Table of Contents N
C G
N:
4
P C
N S:
ey Figu Figures res of the the
4
etail arket:
ain etail ndus ndustr tries ies in the
5
:
5
he ole ole of Port Porter ers s Five Five Forc Forces es in etail ndustry: P
S F V F S &SP &SP NC S
C S
5
L:
5
V V W:
6
arget arket: P
S F V F
6 C S
N F
S
C
F C
P
N N
S & SP SP NC S:
6
Bargaini Bargaining ng Power of Supplier Suppliers: s:
7
Bargai Bargaini ning ng Power Power of Buyers Buyers::
7
hreat hreat of ntrants ntrants (Barrier (Barrier to ntry):
7
hreats hreats of Substit Substitutes utes::
7
Competitive ivalry:
7
SC S
7
P
V V W:
S F V F
C S N L Z
N
SC :
8
ndustry Competitors: Competitors:
8
Bargaini Bargaining ng Power Power of Supplier Suppliers: s:
8
Bargai Bargaini ning ng Power Power of Buyers Buyers::
8
hrea hreats ts of New New ntrants:
9
hreats hreats of Substit Substitutes utes::
9
S
V V W:
P
S F V F
9 C S N L Z
N S
:
10
Competitive ivalry:
10
Barriers Barriers to ntry:
10
hreat hreat of Substit Substitutes utes::
10
Power Power of Buyer: Buyer:
11
Supplier Supplier Power: Power:
11
S
:
C NCL S F
11 N:
11
NC S:
12
Assignment of SMBG : M.B.A 2 nd Sem
Program
Module
Student Name
Student ID
Tutor
: Strategi Strategicc Marketing For Growth
: Ravinder Kaur
:1002053
: Eric.A.Yeboa Eric.A.Yeboah h
Date of Submissio Submission n : 11-08-2010 11-08-2010
Word Limit
: 2000
Words Count
: 2009
INTRODUCTION:
T he he retail industry retail industry is is in a general way general way is is very impulsive, very impulsive, fast fast pace pace sector In the economy of economy of UK it UK it represents represents as one of the of the main sector So as outcome in terms of dealings of dealings and overturns, it is it is extremely agonistic extremely agonistic and sophisticated and sophisticated indu industr str y For being For being ahead in ahead in race companies need to need to b e regularly supervise regularly supervise the market, to keep an eye on new and new and latest latest trends trends on the changing fashion changing fashion and above and above all they all they have have to be ready to ready to keep up with the buyers changing tastes according to the the fashion fashion and increasing and increasing expectations Nowadays, in the era of competition of competition it become it become very difficult very difficult to to satisfy the satisfy the customer needs customer needs T he he leniency in leniency in the international barriers international barriers particularly particularly increases the choice of number of number and and types of product product for the for the customer T his freedom his freedom gives consumer confidence consumer confidence to make number of choices of choices and retain and retain their brand their brand loyalty loyalty towards towards particular particular company company because because preferably preferably they have they have number of number of choices choices and substitutes and substitutes of the of the same product same product with with same quality E ventually ventually for be for be in the race, retailers need to need to supply the supply the products products to the consumers with innovative and creative and creative features features time to time Companies also need to need to ke ep an eye on demographic changes, for changes, for better better understanding understanding the consumer behavior consumer behavior
DEMOGRAPHIC DEMOGR APHIC TRENDS: TRENDS :
The follo followin wing g trends trends shows shows useful useful penetr penetration ation to consu consume mers rs buyin buying g behav behavio io r: Population getting older
number of working working women Increasing number of Increase in spendable income
besity increasing because of inactive of inactive lifestyle Obesity increasing T hese hese are the some trends companies have to keep in mind while mind while developing the new product Companies also have to keep an eye on the needs, wants and tastes and tastes of the of the customer Because the success of the of the product product is is basically depend basically depend on on the customer customer s attitude towards the the product product
ere H ere
e
ill f
M rk
tr f UK . Th
i
o pa ab F o
o
o pan and Sp n
an
er, A
e
a on b h nd h
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o p odu
a
a
and o
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t e m i le
on o h
h
i
l er i ret il
b au
h
hav
.
a
hav b
o h
v n o
d opp d do n o
n a ng o
a n d o p
n u . Fo
h
11% o 2% a o d ng d ng o annua
on o a
ha po
h
va
o h Ma
2004 n a d a a
a .
M A AR RK S &SPEN C C ERS O ERS OVERVIEW:
Ma o b
and Sp n
on o h
ad ng ad ng Co pan
n a ov UK and a o a n
na ona
on pound n 2010 h p //annua po . a
v
n
a
ndu
n 29 oun
and p and p n
o UK . I ha abou 300 . M&S ha
u nov o 8.4
. o / / ..
Targe Targ et Mar ket: ket:
Ma
and Sp n
Food Fu n u
d a
n h
o o
ng
C o C o h ng and F nan F nan a S v
g
n .
P ORTERS RTERS F F IVE FO IVE FOR RC ES ES IDENTI F F THE S OUR URC C E OF E OF COMPETITI CO MPETITI ON IN M A AR RK S &SPEN C C ERS: ERS:
Bargaining Power Power of Suppliers: Main suppliers of M of M&S were from were from Britain T he he Suppliers were reliant and reliant and dependent dependent on on M &S because M&S bought all bought all their their stock stock whatever whatever they they manufacture manufacture Suppliers Bargaining power Bargaining power was low when low when it has it has turn to buyers When in late 1990 sales turn down quickly then uickly then M&S have to hire companies on global level global level to to reduce its cost same cost same as its rival c rival c ompani ompanies es which ends in a lower bargaining lower bargaining power power of of its its UK suppliers UK suppliers
Bargaining Power Power of Bu ers: Generally bargaining Generally bargaining power power of of customer customer is is quite high T he he consumers divide into two groups one is seeking classical clothes classical clothes were price were price sensitive but the but the other group want style want style and high and high image become fashion become fashion sensitive T he he rivals of M of M&S were more attentive to the customer needs because of it of it M M&S lost its lost its potential potential consumers consumers Moreover, consumers of UK of UK were were not ready to ready to pay pay premium price premium price in support of support of British British Produ Produ cts cts M&S misjudge its target market target market whereas consumer oriented consumer oriented strategy strategy is is needed rather needed rather than than product product oriented oriented strategy strategy
Threat of Entrants (Barrier to Entr ): M&S faced &S faced strained strained competition competition in the both ends ( igher and igher and Lower) Lower) of the of the market Like Asda Asda and many and many other other companies companies offer its offer its high quality clothes uality clothes with its own brand name brand name at low price price which draw attention draw attention of the of the classic customer which customer which were the loyal customers loyal customers of M&S
On
the other hand other hand the the stores like Next, Gap offered clothes offered clothes of latest of latest fashion fashion which
attract younger attract younger customers customers .In .In food sector food sector T T esco esco and Sainsbury and Sainsbury threaten threaten M&S by offering by offering their own their own range of high of high quality food food products. products.
Threats of Substitutes: T he he threat of threat of substitute substitute is very high very high.. A fter 1990 fter 1990 there are increased number increased number of of cloth cloth retailers who operating with foreign with foreign imports. imports. Consu Consumer mer s have option now whether now whether they they pay pay premium premium price for price for a a label or label or they they can can buy same buy same product product with with lower price. price .
Competitive Rivalr : M&S is working in a very competitive very competitive era. era. T he he rivals of M of M&S are more customers oriented and aware and aware of needs of needs of customer of customer . For ex For ex Next, Next, Asda and Gap and Gap in clothing sector where sector where as T esco, esco, Sainsbury and Sainsbury and M Morrisons are in food in food sector sector .
TESCOS OVERVIEW: T esco esco was founded was founded in in 1924 by Sir by Sir JJack Cohen ack Cohen in Maldon and nowadays and nowadays its one of the of the leading retailer of retailer of the the UK. For reaching For reaching the ladder of ladder of success success they continuously they continuously formed competitive formed competitive strategies in order to order to attain this. this.
P ORTERS RTERS F F IVE FO IVE FOR RC ES ES AN AN A ALYZE LYZE O ON TES CO: CO:
BAR
AI
PO
I
I
E R OF
DUSTRY
COMPETITORS
SUPP IERS
TESCO BAR
AI
PO
I
THREAT OF
ER OF
SUBSTITUTES
THREAT OF
BUYERS
E E
TRANTS
Industr y y C C om etitors:
Th
an a o
d
n a on apa
ndu
T
o h
on d
p
ng b hav o hav o and a o
p ad on a a g
on n n
o on
a
o ha a g nu b
R a Indu o p
o
n a
on
a
a g
o p a
h nu b
da o
n a on
d o va ab
and o pan g o A da M&S Mo
n UK. So
o
anag
on
a
ndu
va o pan n n o d
o
n
ha va h
h. In
a
on and an
o .
a na o h
a d. So
n ov
o
n
a
o p
o T
o
on. on.
Bargaining Pow er of Suppli ers rs::
Th
h a
o
upp
go ng o pa
o h
on h p
ha T
a
T
qu
upp o d
o
. In h
b
au
a
o
n up
a T
d h n h
a
o do. I h
hav no h
d
d h p
upp
o go. So n a
u
h og
a upp
a
ag o T
o
o d p d p nd n .
Bargaining Pow er of Bu ye Bu yers: rs:
Bu p u o
o
on o
do n. Fo p
h I T
a o a
o go o o h
. Th po o
o bu
h ng on h gh p up
a
ah
o
o han o h
o pan up
a
han do hopp ng a T
o u h han
o.Th
power of power of buyers buyers become high when customers have less number than number than the sellers. sellers. So the T esco esco have to concentrate on the needs and interests and interests of the of the customers if they if they want want to to in race of top of top retailers in the retail industry retail industry of of U. U.K K .
Threats of New Entrants: All All the the supermarkets like T esco, esco, Asda and Sain and Sainsbu sburr y create y create a considerable barrier to new entry . In In UK retail UK retail industry industry is is mature therefore there is no chance for chance for new new entrants entrants.. In In past it was easy to easy to take entry when entry when the market was market was in an introductory stage introductory stage.. But now But now potential potential entrants have to face to face the barriers imposed on imposed on them by the by the existing companies. companies. So its harder for them for them to compete with the already existing already existing and established and established chains chains..
Threats of Substitutes: T he he threat of threat of substitute substitute is acceptable in retail industry retail industry because because nowadays retail industries retail industries or all supermarkets all supermarkets deal with deal with alike products alike products.. So the only option only option they have they have to switch the cost of cost of the product the product as as compare to other supermarket other supermarket . A s a result in result in all supermarkets all supermarkets like T esco, esco, Asda, Asda, Sainsbury and Sainsbury and M Morrisons have relatively same relatively same price price.. T he he option of substitute of substitute is beneficial for the for the buyer because buyer because in the race of competition of competition companies have to improve the quality of uality of the the product product or or cut cut down down the the price price in both scenario consumers will be will be in gain. gain . So T esco esco has only option only option to improve the quality of uality of the the product product and and cut cut down down the the price price of the of the product at product at the the same time. time.
ASDA OVERVIEW: Associated Associated D Dairies and Farm and Farm Store Limited is Limited is the the first first name name of A of Asda. sda. It was t was established in established in 1949 by Leeds by Leeds.. Asda Asda is the short form form of A of Asquith. uith. It occurred t occurred because because of the of the uniting of As Asquith chains and A and Associated dairies ssociated dairies in 1965. 1965. Asda is one of the of the top retailers in retail market of market of U United K nited K ingdom. ingdom . It It mainly mainly deals deals with food, with food, cl othin othing, g, toys and general and general merchandise. merchandise. It It has has its own mobile network as network as well known well known as Asda Mobile. obile .
P ORTERS RTERS F F IVE FO IVE FOR RC ES ES AN AN A ALYZE LYZE O ON A A SD A A::
ASDA COMPETITIVE
BARRIER TO
RIVALRY
ENTRY
POWER OF
POWER OF
SUPPLIER
BUYER THREAT OF SUBSTITUTES
C om p pe etitiv e Rivalr y :
hou an doub a
ng o
a
g
a
v
h a ho h
h
an
a on o pan
po
on
p odu
A da ha
o do a
n h
a
v . Mo ov n
h ha
a ng
d o u on b
a h
o p
na
p odu
a
o
and
n n
a g o
ha no o h
d o p a
o pan
ng o pan on. Th
. Ea h
an ub
ha
o
u
a
.
n
d ohav
.
Barri ers to Entr y :
Th
n an
a
h av nv ndu
n and
no
a
. F
a
o h UK. o a no
gh b o h h
o p ob
o
dg o h
ong p dg on
a a
o a
n
ndu
od o g b p ob
hav ng h gh a
a
n
n an
ab h h
v
a
a bu n
hno og
o
h
od a
n h
a . A da and
h h p ob
abou
.
Thr eat of Sub Su b stitut e s:
Th a o a p
a qua
ub
u
v
on
n a
v
o
n h
on h
o u o
a
od n a
ao h
on n
h h anno b
a
ndu
d and an op b
h
o h o p
. B au u o
no ada . Ada A da a o
o . In a
h
major threat major threat is is that more that more than one supermarkets in the same area. area. So A sda should have should have to consider about consider about the the factor factor and and will will consider consider all all the the possibilities possibilities to avoid the avoid the situation. situation .
Power of Bu er: T he he Power of Power of the the consumer is consumer is high, particularly high, particularly at at the the time when competition of product is product is very high very high.. At At that that time time its the choice of the of the buyers what they what they will will prefer prefer . Basic Basica a lly preference preference of the of the buyers is depend upon depend upon the economical condition, economical condition, choices and more and more importantly quality service provided service provided by by the the supermarkets. supermarkets. So Asda have to consider this consider this factor factor in in the marketing strategy of strategy of the the company .
Supplier Power: Suppliers are in the average state. state. T hese hese days competition is very tough very tough so its great chance great chance for the for the suppliers to establish links with different companies different companies for for the the same product same product . Asda Asda has nearly 500 nearly 500 suppliers at a at a time. time. For make For make sure that they that they do do not sale not sale same products same products to other companies A sda have to maintain relationship with suppliers and definitely and definitely have have to earn their loyalty their loyalty towards towards Asda. sda.
SUMMARY: A fter examining fter examining the the five five forces forces how affect how affect the the performance performance of the of the different companies different companies like Marks and Spencer, and Spencer, T esco esco and A and Asda it is it is clear that clear that strategies strategies of the companies must be must be intensified and intensified and function function well . Marketing Marketing Strategies need to need to prefer prefer q quality for three for three main reasons. reasons . First of First of all, all, differentiate the the product product especially at especially at the the luxury end luxury end . Second is Second is to response to the crises of the of the marketing or as or as remedial marketing remedial marketing.. T hird and hird and more more important is that competition that competition on the quality of uality of the the product product is is less financially less financially risky risky than than to compete on the price the price factor factor .
CONCLUSION: Any Any company company in in retail market retail market has has to understand the understand the needs and nature and nature of competitive of competitive environment of environment of the the market for being for being succeeded . For understanding For understanding the competitive environment of environment of the the retail market retail market industry industry Porters Porters five five forces forces plays plays an important role important role.. During During the implementation of the of the five five forces forces some issues are particularly are particularly important important for the for the organi ations to be successful . T he he effective analy e of these of these forces forces helps companies to identify the identify the rivals competition sources, chances of new of new entrants, entrants, the strength and likeliness and likeliness of the of the competitors and recommendations and recommendations and ideas and ideas about the about the creating barriers against the against the unwanted competition unwanted competition..
REFERENCES:
(Online). 1. Charles W.L.Hill / Gareth R.Jones (2008 ). Strategic Management (Online). 9th ed. U.S.A: Cengage Learning. p42-43 http: books books..google google..co co..uk books?id=C IK 9E Lsy Lsy wC&pg=P A A42&d 42&d q=porter's+five+forc es+model&hl=en&ei=_cVh T LT vNtWX4 vNtWX4 A Ab bO8- fCQ&sa=X&oi=book_result&ct=bookthumbnail&resnum=2&ved=0C DE thumbnail&resnum=2&ved=0C DE Q6w Q6w E E w w A AQ#v=onepage& Q#v=onepage&q q=porter's 20five 20forc es 20model&f=false (06-08-2010) 2. Boone, Kurtz, MacKenzie, Snow (2007). Contemporary Marketing (Online) .
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10. 10. http: // // issuu. issuu.com / aureliam / aureliam / docs / docs / tesco_strategic_plan tesco_strategic_plan ( Accessed Accessed 03-08-2010) 03-08-2010) 11. 11. http: // // www www . ciao ciao..co co..uk /A /Asda_Group__21557 sda_Group__21557 ( Accessed Accessed 05-08-2010) 05-08-2010) 12. 12. http: // // university-essays. university-essays.tripod .com / porters_5_forces_analysis porters_5_forces_analysis..html ( Accesses Accesses 06-08-2010) 13. 13. http: // // www www .oxbridgewriters oxbridgewriters.. com / essays essays / marketing marketing / marks-spencers-corporatemarks-spencers-corporateobjectives ( Accessed Accessed 07-08-2010) 07-08-2010) 14. 14. http: // // www www .swot-pest-porter . com / modules modules / info info / index index . php?content_id=69 php?content_id=69 ( Accessed Accessed 08-08-2010) 08-08-2010) 15. 15. http: // // annualreport annualreport . marksandspencer .com / ) ( Accessed Accessed 08-08-2010) 08-08-2010)