Global Business Management: Porter’s Five Force Model and VRIO Analysis for Retail Sector Expansion

Running Head: GLOBAL BUSINESS MANAGEMENT
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Global Business Management
(Students Details)

GLOBAL BUSINESS MANAGEMENT 2
Executive Summary
The report highlights what threats and competition an Australian retail company can face when it
enters into a new market segment. There are various things that have to be studied and monitored
before planning an expansion for operational activities. In this report the market based view
analysis is performed by applying the frameworks of Porter’s Five Force Model and VRIO
Analysis in details. These concepts will educate and aware the company regarding the resources
and opportunities available in the target market.

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Contents
Introduction.................................................................................................................... 4
Michael Porter’s Five Forces Framework............................................................................ 4
1. Threats of New Entrants........................................................................................ 4
2. Bargaining power of Suppliers................................................................................4
3. Bargaining power of buyers................................................................................... 5
4. Threat from substitute products...............................................................................5
5. Rivalry among the existing competitors.....................................................................6
VRIO Analysis............................................................................................................ 7
1. Value............................................................................................................... 7
2. Rareness........................................................................................................... 7
3. Imitability......................................................................................................... 7
4. Organization...................................................................................................... 7
Bibliography.................................................................................................................. 9
Appendices.................................................................................................................. 10

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Introduction
The report highlights market based views concepts and theories that the retail industries should
implement in order to expand their business operations in foreign markets. In this report
Australia is the domestic country and retail sector has been selected to analyze and identify
market views for expansion. Porter’s Five Force Model and VRIO Analysis are explained to
show the challenges faced by retail sector when they plan for expansion into a foreign market.
This framework will also assist in developing knowledge about expansion strategy.
Michael Porter’s Five Forces Framework
Porter’s Model is a holistic concept that helps retail industries to analyze their competitors and
make strategic decisions to reduce such challenges (Porter, 2017). This can be explained by
defining Woolworth’s analysis for food and staples retailing sector.
1. Threats of New Entrants
New entrants are often considered to be more innovative and have the capacity to bring new
ideas for conducting business activities; this generally puts Woolworth into a pressure. The retail
sector has to reduce the price of the product, reduce the cost and also provide the new
propositions to value the customers (Roy, 2011)
How the retail industries can tackle this problem
 By introducing new products and services at the time of launching its existence in the
new market segment, this will attract new customers and the old customers will be more
loyal to the company.
 The retail company should build economies of scale in order to reduce its fixed cost.
2. Bargaining power of Suppliers
Each and every retail company in Australia purchases their materials from different suppliers.
The suppliers of retail sector are in dominant position as they have the capacity to decrease the
profit margins the company. The suppliers are powerful and can access the bargaining power,
thereby earning a higher rate from the retail firms.