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Porter Five Force

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Porter’s Five Forces Analyses
Threat of New Entrants - Low
According to Porter (1985), potential competitors in any market are faced with challenges that new entrants often have including sales channels, costs of conversion and funding needs. (Dr. Antony Michail, 2011) Throughout the recession Tesco has continued to invest into expanding the company and developing efficiencies, making it as competitive as ever to defend against the threat of new entrants (Datamonitor, 2010).The threat of a new competitor entering this sector is relatively low, due to the huge capital investment required to be competitive and establish a brand identity that stands out. Tesco and other large supermarket are able to purchase large volumes of goods in lower price. In contrast, smaller new entry companies are more likely to buy smaller volumes at higher prices. New firms also have to be aware that Tesco already have loyalty customers. All of which helps to protect them from the threat of new competitors. Therefore, the successful entry of new threats is minimal.
Threat of New Substitutes products or services - High
According to Porter (1985), the threat of substitute products and services offered by an organization depends on propensity of the buyer to substitute, switching cost that the buyer will incur, perceived product or service differentiation level, the number of substitute products or services in the market ease of substitution and quality depreciation among other factors. (Dr. Antony Michail, 2011) This, Tesco threat of substitutes is high because product that Tesco sell same with to the other retailing shop. Therefore, Tesco should analyse to what extent it is possible for the customers to switch to the substitute. In such case, Tesco should ensure that customers satisfaction on theirs products and services. On the other hand, other companies in the same industry may

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