Tesco INSEAD case study.

SITUATION ANALYSIS UK Supermarket Industry in the 1990s The supermarket application in UK was characterized by scratchy competition and low profitability, with spoiled players dominating the marketplace. Porters five forces analysis (summarized in Exhibit 1) provides insights into the industry: Rivalry: Since there was bittie crop differentiation betwixt the multiples, price was commonly used as the competitive weapon. season the demographic profile of the shoppers of apiece twine was different, with Sainsbury at the moderate end, and Kwik Save at the bottom, most chain had a sub-brand (eg. Sainsbury with Savacentre; Safeway, with Presto) which spread out fored their competitors market. As a result, margins were razor thin in the industry. Suppliers: collect to limited shelf space and the abundance of crossroads to be displayed, supermarkets had traditionally strong bargaining position vis-à-vis the suppliers. While this held true(p) for most suppliers, the growing of major FMCG companies like Nestle and proctor & jeopardize had tilted some of the exponent cover to the suppliers. Overall, the power seemed to be relatively balanced between the two parties. In general, the power varied between retailers and between suppliers, with sizing the key determining(prenominal) of power in this relationship. Customers: While the target customers were different for each major supermarket chain (with differentiation on income levels, age and geography), little product differentiation and extensive overlaps in target segments gave the consumers a lot of flexibility to shop at different chains. As a result of this low work shift cost, supermarket chains were unable to raise their prices even though their margins were so slim. Therefore, customer power was judged to be from moderate to high. Substitutes: There were a soma of traditional substitutes for the supermarkets, ranging from butcher shops, convenience stores (Eg. 7-Eleven), corn er food product stores, to department store! s (Marks and Spencer had been in the... If you want to get a but essay, order it on our website: OrderCustomPaper.com

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