Tesco INSEAD case study.

SITUATION ANALYSIS UK Supermarket Industry in the 1990s The supermarket industriousness in UK was characterized by scratchy competition and low profitability, with sizeable players dominating the marketplace. Porters five forces analysis (summarized in Exhibit 1) provides insights into the industry: Rivalry: Since there was minuscular crop differentiation amid the multiples, price was commonly used as the competitive weapon. age the demographic profile of the shoppers of to each one twine was different, with Sainsbury at the head end, and Kwik Save at the bottom, most imprisonment had a sub-brand (eg. Sainsbury with Savacentre; Safeway, with Presto) which shell fored their competitors market. As a result, margins were razor thin in the industry. Suppliers: collectable to limited shelf space and the abundance of point of intersections to be displayed, supermarkets had traditionally strong bargaining position vis-à-vis the suppliers. While this held true(p) for most suppliers, the harvesting of major FMCG companies like Nestle and proctor & take a chance had tilted some of the violence 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 epitope of power in this relationship.

Customers: While the target clients 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 flexibility to shop at different chains. As a result o! f 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 physique 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 yet essay, order it on our website: OrderCustomPaper.com

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