• Join over 1.2 million students every month
  • Accelerate your learning by 29%
  • Unlimited access from just £6.99 per month

Competitive Environment of Hypermarket Industry

Extracts from this document...


INTRODUCTION The case study below will be accessing the competitive environment of hypermarket industry using Porter's Five Forces, as well as its competitive advantage strategies. 1.1 What is Hypermarket Hypermarket is basically a combination of supermarket and department store. It is a huge retail facility which provides a wide range of products under one roof. It attract customers by allowing them to satisfy their routine shopping needs, from food and other household items, to clothing and appliances in one single trip. The concept of hypermarket is to focus on high quantity but low margin sales (Dibb & Simkin, 2001). In Malaysia, some of the biggest players in hypermarket industry are like Carrefour, Giant, Jusco and Tesco. Other hypermarkets that are famous around the world are like Wal-Mart, ASDA, and Sainsbury's. They are usually selling various products at a very low price, but in high volume. 1.2 What is Porter's Five Forces Porter's Five Forces is developed by Michael E. Porter of Harvard Business School in 1979. It is a framework for industry analysis and business strategy. It studies how the five forces impact on an industry, and explains how the internal and external factors of an industry are effecting the competition within it. The five competitive forces that determine industry profitability are bargain power of buyers, bargain power of suppliers, threat of new entrants, threat of substitutes, as well as rivalry among existing firms. A successful business is to find out everything you can about your competition and industry dynamics, which refers to the commercial exchange among Porter's Five Forces (Trump & Gordon, 2007). ...read more.


Jusco Hypermarket's core strategy is to accelerate the shopping center development. They channel their resource towards attractive, integrated commercial facilities which attract the customers (http://www.jusco.com.my). By applying this strategy, Jusco will be able to minimize the risk of losing potential customers when there are new entrants. 2.4 Threat of Substitutes A substitute product is one that performs the same function as the industry's product. Substitute's product may appear to be different but they serve the same function as the industry's product. Substitutes in effect place a ceiling on the prices that companies in the industry can charge. If the price of an industry's product rises steeply, consumers will likely to switch to the substitutes. Since hypermarkets provide a wide range of products, there are no particular substitute products in this industry. The threat of substitutes appears when there are a lot of substitute shops or specialized shops where customers can purchase a particular product. For example, hypermarkets sell clothing but customer may purchase clothes from boutiques; hypermarkets sell food but customer may buy foods from other food stores. Other than that, there are also some convenient stores that sell the same range of products with hypermarkets but in a smaller scale, like the 7-Eleven. These specialized stores and convenient stores are considered as substitutes for hypermarket industry, and thus the threat of substitutes is very high in this industry. In hypermarket industry, the threat of substitutes is very hard to avoid as there are too much substitutes. ...read more.


4.0 Conclusion According to the research above, it is seen that Porter's Five Forces does apply in all types of businesses and industries including the hypermarket industry. Porter's Five Forces allows a firm to understand which of the forces are affecting their business. In order to gain the competitive advantage status and protect itself from the competitive threats such as the substitutes and new entrants, a firm should quantify which of the forces are affecting them and then choose the appropriate strategy, improve their weakness and strengthen their opportunity. Firms facing vigorous competition should continuously strive to reduce costs, boost product quality, raise productivity and develop innovative products. Reference ANON. (n.d.). Industry Attractiveness. Retrieved April 24, 2009, from www.brs-inc.com: http://www.brs-inc.com/models/model116.asp Dess, G., Lumpkin, G. T., & Eisner, A. B. (2003). Strategic Management. McGraw-Hill. Dibb, S., & Simkin, L. (2001). The Marketing Casebook: cases and concepts Edition 2. Cengage Learning EMEA. GIANT. (2009). About us. Retrieved May 2, 2009, from www.giant.com.my: http://www.giant.com.my/about_us.html Hamermesh, G. R. (1983). Strategic Management. Harvard Business Review. JUSCO. (2009). Corporate Philisophy. Retrieved May 3, 2009, from www.jusco.com.my: http://www.jusco.com.my/juscohome/html/aeon_v2/oa/oa_corp_philosophy.php Lynch, R. (2003). Corporate Strategy 3rd edition. Prentice Hall. Material, M. Peng, M. (2006). Global Strategy. Thompson. Porter, M. E. (1998). Competitive Advantage:Creating and Sustaining Superior Performance. The Free Press. Porter, M. E. (1998). Competitive Strategy: Techniques for Analyzing Industries and Competitors. Free Press. Rapley, P. (2005). Business Review. Five Forces Analysis . Trump, J. D., & Gordon, E. M. (2007). Trump University Entrepreneurs 101: How to turn your idea into a money machine. John Wiley and Sons. ?? ?? ?? ?? ...read more.

The above preview is unformatted text

This student written piece of work is one of many that can be found in our University Degree Marketing section.

Found what you're looking for?

  • Start learning 29% faster today
  • 150,000+ documents available
  • Just £6.99 a month

Not the one? Search for your essay title...
  • Join over 1.2 million students every month
  • Accelerate your learning by 29%
  • Unlimited access from just £6.99 per month

See related essaysSee related essays

Related University Degree Marketing essays

  1. Market Structures & Tesco

    The large may not exploit the small In doing business with smaller firms, Tesco cannot use their bargaining power to impose conditions which would make it difficult for their supplier or customer to do business with its competitors. The Commission can, does and has fined companies for all these practices.

  2. Attractiveness of the Tire Industry.

    As Michelin and Bridgestone are introducing new products in 1992 with a higher warranty and heavy advertising, Goodyear must advertise in a big stage to attract the customers. If they can achieve a favorable image in the minds of the customers then they would be able get the market of imported car drivers after some months.

  1. Five forces analysis applied to the online auction industry.

    This location was decisive for its success, too: only in a place near to the most innovative IT-Cluster of the world, Silicon Valley, this business could be established that early. People were open for this kind of technologies earlier than in other locations, and professionals working in IT could be found easily.

  2. In assessing the competitive position of a home improvement retailer, we would use the ...

    Professional Business Customers: Professional business customers can be segmented according to nature of business i.e. builder and general contractors, heavy industrial, property maintenance, repair & remodeling, and tradesmen. Each group usually requires different type of home improvement products. Thus the companies that want to sell to these markets have to

  1. How Does ASDA Maintain a Competitive Advantage?

    any other supermarket to determine to best place to build a new store, so getting highly trained analysts is vital, although they cost a great deal of money a good team will ultimately lead to greater profits so companies will often pay dearly for this commodity.

  2. Analyse and evaluate the industry environment in which Marks and Spencer operates

    its September launch that the retailer had to delay rolling out the brand in all of its stores. The new collections have helped stem a decline in clothing sales. These rose 0.8% in the quarter ending Sept. 30--an improvement from a year ago, when they were down 9.1%.

  1. Chapter Notes on Marketing Management by Philip Kotler 10th Edition

    distinctive way so as not to confuse it with competitors' Delivers and emotional power beyond mental image. The image must be communicated for it to work. The communication can be through: Symbols: Logos Media: to convey a story, a mood, and a claim-something distinctive.

  2. PESTEL analysis on the external business environment of Malaysia based whisky industry.

    When the economy is in a good condition, the standard of living of Malaysians will also increase and they tend to spend and consume more on luxury goods. In this case, the consumption of whisky will become more as the spending of Malaysians on luxury goods is getting higher as the indication of the growth in the value of GDP.

  • Over 160,000 pieces
    of student written work
  • Annotated by
    experienced teachers
  • Ideas and feedback to
    improve your own work