Tesco Porter 5 (+1) Forces

1. 5(+1) Porter‘s forces.

| |The threat of substitutes |
| |Food retail industry at first seems easy to substitute, but in truth the large markets are the ones who state the prices in the market, |
| |thus for such large chains like Tesco the threat of substitutes is low as due to high demand it manages to offer high quality products at |
| |low costs. Moreover, Tesco has already started to focus on opening express stores and this creates even more barriers for the substitutes |
| |to enter the market. |
| |The threat of entry |
| |Tesco takes part among 15 largest world’s retailer chains’. There are a few factors which determine that the threat of a new entrant is |
| |fairly low: |
| |Due to economies of scale, Tesco offers goods at lower prices. For new entrants it is complicated to achieve this level of sales so that |
| |selling at the same level of prices would become profitable. Therefore, a large investment is a necessity. |
| |The access to supply and distribution channels is not complicated, but the demand of products is not high by new entrants and not all |
| |products would be acquired at the same price as Tesco and other market’s leaders acquire. |
| |Although, products are not differentiated in a food retail industry and therefore customer loyalty is not high. |
| |The power