Tesco INSEAD case study.

SITUATION ANALYSIS UK Supermarket Industry in the 1990s The supermarket labor in UK was characterized by scratchy competition and low profitability, with giant players dominating the marketplace. Porters five forces analysis (summarized in Exhibit 1) provides insights into the industry: Rivalry: Since there was smallish crop differentiation in the midst of the multiples, price was commonly used as the competitive weapon. bandage the demographic profile of the shoppers of all(prenominal) twine was different, with Sainsbury at the legislate end, and Kwik Save at the bottom, most durance had a sub-brand (eg. Sainsbury with Savacentre; Safeway, with Presto) which convey fored their competitors market. As a result, margins were razor thin in the industry. Suppliers: out-of-pocket to limited shelf space and the abundance of ingatherings to be displayed, supermarkets had traditionally strong bargaining position vis-à-vis the suppliers. While this held true(p) for mo st suppliers, the appendage of major FMCG companies like Nestle and proctor & adventure had tilted some of the cater cover to the suppliers. Overall, the power seemed to be relatively balanced between the two parties. In general, the power varied between retailers and between suppliers, with sizing the key deciding(prenominal) of power in this relationship.

Customers: While the target guests were different for each major supermarket chain (with differentiation on income levels, age and geography), little product differentiation and extensive overlaps in target segments gave the consumers a lot of flexibil ity to shop at different chains. As a resul! t of this low work shift cost, supermarket chains were unable to raise their prices even though their margins were so slim. Therefore, customer power was judged to be from moderate to high. Substitutes: There were a summate of traditional substitutes for the supermarkets, ranging from butcher shops, convenience stores (Eg. 7-Eleven), corner food product stores, to department stores (Marks and Spencer had been in the... If you want to get a exactly essay, order it on our website: OrderCustomPaper.com

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