Comparison Of Lowe's And Lumber Liquidators
Comparison of Lowe’s and Lumber Liquidators
1. Michael Porter’s Five Forces Model of Competition. In order for Lowe’s and Lumber Liquidators to be successful in the home improvement industry they need to be able to understand what is going on in their industry. Using Porter’s five forces model can help them understand their industry better. The Five Forces Models shows the following: (lowesanalysis)
• Threat of Entry – (LOW) Home Depot and Lowe's already have a huge chunk of the market share. With a large network of products and brands, these industry leaders have made it difficult for a new businesses to enter this market as competition. Requiring significant capital investment, it is highly unlikely that a entrant could emerge on a national
level.
• Threat of Rivalry – (Medium) There are several other home improvement competitors out there: Home Depot, Ace, Menards, as well as local small businesses. Home Depot, however, is clearly biggest rival. This chain has completely saturated the market. They are looking to maintain their sales while Lowe's is in the growth stage. This could prove to be advantageous for Lowe's. They do have a large enough presence, and with global expansion they could eat away at Home Depot's market share over time.
• Threat of Substitutes – (Medium) Even though there are other competitors out there, there is a limited number of true substitutes for home improvement products. Lowe's main concern should be people purchasing the same product from Home Depot. Because there is no real substitute for these products and services.
• Threat of Power Suppliers – (LOW) Because of their centralized logistic system, which allows them to look at all vendors available, this threat of powerful suppliers is low.
1. Michael Porter’s Five Forces Model of Competition. In order for Lowe’s and Lumber Liquidators to be successful in the home improvement industry they need to be able to understand what is going on in their industry. Using Porter’s five forces model can help them understand their industry better. The Five Forces Models shows the following: (lowesanalysis)
• Threat of Entry – (LOW) Home Depot and Lowe's already have a huge chunk of the market share. With a large network of products and brands, these industry leaders have made it difficult for a new businesses to enter this market as competition. Requiring significant capital investment, it is highly unlikely that a entrant could emerge on a national
level.
• Threat of Rivalry – (Medium) There are several other home improvement competitors out there: Home Depot, Ace, Menards, as well as local small businesses. Home Depot, however, is clearly biggest rival. This chain has completely saturated the market. They are looking to maintain their sales while Lowe's is in the growth stage. This could prove to be advantageous for Lowe's. They do have a large enough presence, and with global expansion they could eat away at Home Depot's market share over time.
• Threat of Substitutes – (Medium) Even though there are other competitors out there, there is a limited number of true substitutes for home improvement products. Lowe's main concern should be people purchasing the same product from Home Depot. Because there is no real substitute for these products and services.
• Threat of Power Suppliers – (LOW) Because of their centralized logistic system, which allows them to look at all vendors available, this threat of powerful suppliers is low.