Managing Organisations
Introduction The chosen industry is the supermarket sector. The assignment is going to be focusing on Tesco’s due to it being the market share holder in the sector. Tesco have branched out into a wide range of markets ranging from banking, food, petrol, and clothing. However this assignment will focus on food and services. The first part of the assignment will look at Porters five forces, followed by porter’s generic strategies. The last part of the assignment focuses on three aspects being methods of growth due to Tesco growing so much over the years not just nationwide but worldwide and still growing.
Porters 5 Force model is used to access the nature of competition in an industry and how it can affect business within it. Porter clarifies that there are five forces. Tesco will use these 5 forces to help them determine the industries attractiveness and long run portability which they are The 5 competitive forces are the threat of entry of new entrants, the threat of substitutes, the bargaining power of suppliers, the bargaining power of buyers and the degree of rivalry between existing competitors. It is Tesco’s job to identify all these to analyse the competitive environment.
The threat of new entrants to Tesco’s is very unlikely due to Tesco’s large percentage of market which Tesco have revealed is at 29.9% as shown in the appendix z below from the BBC (2012)
As you can see there is other big companies within the industry such as Sainsbury’s and ASDA also hold a large market which will make it even harder for new entries to win other competitors customers and attract new ones. The only way new entrants will be able to compete is if they can use an innovative strategy to offer a new niche product range which has not been introduced before at a high quality at a low price to try and compete with Tesco’s. It will require high amounts of capital investment for new entries to compete with Tesco, who have a strong financial status which will only make it
Porters 5 Force model is used to access the nature of competition in an industry and how it can affect business within it. Porter clarifies that there are five forces. Tesco will use these 5 forces to help them determine the industries attractiveness and long run portability which they are The 5 competitive forces are the threat of entry of new entrants, the threat of substitutes, the bargaining power of suppliers, the bargaining power of buyers and the degree of rivalry between existing competitors. It is Tesco’s job to identify all these to analyse the competitive environment.
The threat of new entrants to Tesco’s is very unlikely due to Tesco’s large percentage of market which Tesco have revealed is at 29.9% as shown in the appendix z below from the BBC (2012)
As you can see there is other big companies within the industry such as Sainsbury’s and ASDA also hold a large market which will make it even harder for new entries to win other competitors customers and attract new ones. The only way new entrants will be able to compete is if they can use an innovative strategy to offer a new niche product range which has not been introduced before at a high quality at a low price to try and compete with Tesco’s. It will require high amounts of capital investment for new entries to compete with Tesco, who have a strong financial status which will only make it
Bibliography: R. Edward Freeman, Jeffrey S. Harrison, Andrew C. Wicks (2007) [Managing for stakeholder Survival, Reputation, and Risk] 1st Ed London R Porter (1980) [Generic Strategies, Performance and Risk] Thompson library, Stoke Griffin, Moorhead (2010) [Organisational Behaviour: managing people and organisations] Tenth edition, south western, cengage learning J. Kotter (2007) [Leadership and management in organisations] Oxford, Elearn Limited Guardian (2008) Tesco mergers and acquisitions (online) available from http://www.guardian.co.uk/business/2008/may/15/tesco.mergersandacquisition Guardian (2009) Tesco Record Profits (online) available from http://www.guardian.co.uk/business/2009/apr/21/tesco-record-profits-supermarket Issue (2006) Strategic Plan (online) available from http://issuu.com/aureliam/docs/tesco_strategic_plan Tesco (2012) Community Local Support (online) available from http://www.tesco-careers.com/home/community/local-support China Retail News (2011) strategic alliance (online) available from http://www.chinaretailnews.com/2011/07/19/5066-gome-tesco-form-strategic-alliance/ BBC News (2010) Joint Venture (online) available from http://news.bbc.co.uk/1/hi/8478414.stm http://www.tescoplc.com/index.asp?pageid=137&newsid=348 Tesco (2012) Our-culture (online) available from