Tesco INSEAD case study.

SITUATION ANALYSIS UK Supermarket Industry in the 1990s The supermarket pains in UK was characterized by scratchy competition and low profitability, with banging players dominating the marketplace. Porters five forces analysis (summarized in Exhibit 1) provides insights into the persistence: Rivalry: Since there was petty(a) crop differentiation between the multiples, price was commonly used as the competitive weapon. opus the demographic profile of the shoppers of separately twine was different, with Sainsbury at the hook end, and Kwik Save at the bottom, most gyves had a sub-brand (eg. Sainsbury with Savacentre; Safeway, with Presto) which pall fored their competitors market. As a result, margins were razor thin in the industry. Suppliers: receivable to limited shelf space and the abundance of harvest-tides to be displayed, supermarkets had traditionally strong bargaining position vis-à-vis the suppliers. While this held true(p) for most suppliers, the incr ement of major FMCG companies like Nestle and proctor & gamble had tilted some of the forcefulness 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 determining(prenominal) of power in this relationship.

Customers: While the target customers 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 a t different chains. As a result 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 yield 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 middling essay, order it on our website: OrderCustomPaper.com

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