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

Using Porters' Five Forces theory, analyse the competitive environment of a business of your choice - Sainsbury's Plc

Extracts from this document...


Using Porters' Five Forces theory, analyse the competitive environment of a business of your choice. Sainsbury's Plc Sainsbury's was founded in 1889. The owners of Sainsbury's opened their first dairy shop in London. The dairy farm was a success as a business because of its low prices, the popularity of this shop lead to several other shops being opened in different locations around London. Between the period 1890 to 1900 the number of Sainsbury branches increased from 16 to 48. Sainsbury is one of the lead trading stores in Britain. The corporation employs 153,000 people 68% of these are part time and 32% are full time. 30,000 products are sold, 50% of these are Sainsbury's own brand. Sainsbury's serves over 14 million customers a week and at the end of the Financial year 26 March 2005 had 727 stores throughout the UK. Nearly 60% of their stores are in centre or edge-of-centre locations, many of these built on previously redundant sites. The food retail market is very competitve. The firms which dominate the market are the large firms which trade nationally. There are few firms which trade nationally the ones that do trade nationally are Tesco, Sainsbury, Asda and Safeway. These companies have tremondus purchase power and due to this they reign sumpreme on the market. The UK grocery market was valued at an estimated £103.4bn in 2001. ...read more.


(in operating an efficient distribution system) which might act as a barrier to any potential new entrants. www.bized.ac.uk/economics) At company level factors to consider would include: * Buying in large quantities and improved supply chain efficiently. * Using more efficient distribution and Spreading fixed costs over a large sales volume. (Anderton . (2002). Economies of scale for supermarkets . Available: www.bized.ac.uk/economics. Last accessed 21 Nov 2005. ) The cost of providing retail services will differ across regions and countries due to differences in property costs, staffing and transport costs, variations in the degree to which economies of scale are achievable, and differences in pricing strategies. (Anderton (2000). Economics . 3rd ed. Lancs: Legoprint. 112-113.) Huge amounts of capital are needed to enter the supermarket industry. The industry in which supermarkets compete is hugely competitive. However the abnormal profits associated with the industry has encourage firms from abroad to merge with UK firms. Wal mart was the first American food chain to merge with Asda having vast experience of the food industry. Following the deal Asda/Wal-Mart had approximately 16.1% market share compared to Sainsbury's 16..9%. In all, this means that four companies will control 80% of the UK grocery market. GOVERNMENT INTERVENTION AND LEGISLATION The supermarket and superstore sector has been subject to many pieces of legislation, regarding the safety of food and distribution. ...read more.


Taken these factors into account suggest that labour has a low power in the industry. Buyers, or Consumers The power of the buyer is likely to be greater when: * There are few buyers and many sellers * There are close substitutes * Switching costs are low . There are two different types of buyers in this industry. The first one would be the individual consumer. The second group would be consumer on masse. Growing awareness of obesity and Genetically modified food have cause changes in the supermarket world. Sainsbury's have introduced the taste the difference range and other health food products so that they don't lose buyers. Buyers in a group have a powerful bargaining position. (Lynch 1997) Threat of Substitutes There are no direct substitutes for the industry. Food needs to be consumed by human beings so that they can survive. However takeaway foods seemed to be the closet substitutes to supermarket food. However time is a factor and over time there may be closer substitutes. In conclusion we have looked at the interface between the organisation and its immediate environment and examined the impact the supermarket industry has on the nature of competition. Porter's model identifies five competitive forces. The essay has identify the barriers that exist for new entrants and each one of Porters factor has been discussed clearly. (Curtis (1998). Buisness functions an active learning approach . Massachusetts : Blackwell . 173-181. ...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. Michael Porter's Five Forces Model Analysis

    PTP's state-of-the-art IT solution encompasses virtually every aspect of port operations including container management, marine safety Freezone Information Processing System and the Vessel Clearance System. The system guarantees easy access to all port users via leased lines, dial-up or web-based access for submission of data, declaration and general enquiries.

  2. Using Porter's model identify and analyse the generic strategy pursued by Ryanair throughout the ...

    This causes some concern, as Ryanair has emphasised that one of the main reasons for removing all the "frills" from its services was so that it could continue to provide cheap flights to customers. Porter (1998) highlighted potential risks that companies adopting any of the three generic strategies might face.

  1. Next PLC - Clothing Retail

    Recent years have also seen several larger format stores open across the UK in particular in edge-of-town or out-of-town areas as the company concentrates on relocating stores to larger units which allow a much wider product offer. 2.0 Competition In order to analyse and compare Next it is important to establish who their main competition is.

  2. This report has examined both Billabong and the competitive environment in which it operates ...

    Rip Curl's product lines include surfwear, footwear, wetsuits, mountainwear, watches, backpacks and surfboards. They have a network of 1000 stores within Australia and New Zealand and 2000 stores throughout the rest of the world. From the Competitor Analysis (Appendix 4), critical success factors (CSF's)

  1. Report using the five forces model of Ceasars Entertainment.

    Following Porter's Five Forces Model, another major aspect of Caesar's industry attractiveness is supplier power. Evaluating the supplier power in a large casino/resort does not present any straightforward answers. Supplier power is paradoxically quite low, as well as quite high.

  2. Porter's Five Forces Degree of Rivalry.

    Moreover pasta consumption did not require any specific home appliance that can not be used for others. So there was no significant switching cost associated with this market. A host of new substitutes that are healthy and easily prepared with no switching cost to others is making threat of substitutes high.

  1. Fair Trade

    I might also use it as an advertising tool because it is a fast growing network. Pricing Strategies Skimming A pricing policy sometimes used by companies introducing a new product. A high price is set to ensure large profits are made before the competitors are able to produce a similar product.

  2. Use Porters five forces model to assess the attractiveness of the bottled water industry ...

    Smaller unknown companies might find it relatively difficult to compete against these brands, and look for any competitive advantage that they can. The owners of various springs that supply the water to the various companies have very strong competitive forces, they are able to control who they sell there products to and at what prices (essay24).

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