Porters 5 Force model is used to access the nature of competition in an industry and how it can affect business within it. Porter clarifies that there are five forces. Tesco will use these 5 forces to help them determine the industries attractiveness and long run portability which they are The 5 competitive forces are the threat of entry of new entrants, the threat of substitutes, the bargaining power of suppliers, the bargaining power of buyers and the degree of rivalry between existing competitors. It is Tesco’s job to identify all these to analyse the competitive environment.
The threat of new entrants to Tesco’s is very unlikely due to Tesco’s large percentage of market which Tesco have revealed is at 29.9% as shown in the appendix z below from the BBC (2012)
As you can see there is other big companies within the industry such as Sainsbury’s and ASDA also hold a large market which will make it even harder for new entries to win other competitors customers and attract new ones. The only way new entrants will be able to compete is if they can use an innovative strategy to offer a new niche product range which has not been introduced before at a high quality at a low price to try and compete with Tesco’s. It will require high amounts of capital investment for new entries to compete with Tesco, who have a strong financial status which will only make it
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