Porters 5 Forces On Tesco

Porters 5 forces on Tesco:

Porter's five forces look's into the external factors impacting on a company.

Competitive Rivalry:

Tesco's has a very high competitive rivalry in many aspects of the market from some major competitors in the food retail Industry like Asda, Sainsbury, Morrison and Waitrose. They compete with one another through price, product and promotions periodically. Tesco's express' main rivals are the Sainsbury local and the Co-op one way in which they compete with Tesco's is through distribution. These businesses have stores where Tesco's has making it competitive to sustain its customers.

Tesco's also compete with petroleum suppliers these include Shell, Esso, Bp and Texaco. They compete by using the same principles by having price wars and the introduction of special branded (high octane) fuels.

Power of Suppliers:

The power of suppliers is the suppliers demanding that retailers pay a certain price for their goods. This basically means that is the retailer does not pay the demanded price by the suppliers for the goods then the retailer will not have the goods to sell. Therefore the retailer will not be fully stocked and create bad customer service and a bad relationship with the suppliers. Tesco's has an advantage over the smaller shopkeepers as most of the general public tend to do their big shops at the larger supermarkets such as Tesco's therefore the larger store have the ability to dictate the price they want to pay to the suppliers and if the suppliers do not agree then they will be left with no retailers to do business with (sell to).

Power of Buyers:

The power of buyers can force the product prices down. This is due to the fact that buyers will exercise their power of buying and move to other supermarket retailers if prices are too high. For example if a can of baked beans is price too high in the Tesco superstore, customers will use their buying power and move to another food retailer such as Sainsbury, Morrison or Asda. If there are a lot of competitors within the food retail industry it will give customers opportunities to have multiple choices of where to purchase products and services this will force the company to