Analysis of Tesco's Competitive Environment: Porter's Five Forces

This report presents a Porter's Five Forces analysis of Tesco, a leading global grocery and food retailer. The analysis evaluates the bargaining power of buyers (customers), the bargaining power of suppliers, the threat of new entrants, the threat of substitute products or services, and the rivalry among existing competitors. The report finds that Tesco faces high bargaining power from customers due to easy switching costs, low bargaining power from suppliers due to its size, a low threat from new entrants and substitutes, and high rivalry from competitors within the United Kingdom. The conclusion emphasizes the effectiveness of Porter's Five Forces in determining the competitive intensity of an industry and its strategic implications for Tesco. The report also includes references to relevant academic sources.

PORTER’S FIVE FORCE ANALYSIS
TESCO

TABLE OF CONTENT
 Introduction
 Porter’s five force analysis
 Conclusion

INTRODUCTION
 Porter five force frameworks are defined as a method which is used to
evaluate competition of a business in a respective industrial segment.
There are number of factors involved in this method through which
business organisation can evaluate the competitive intensity in an
industrial segment and can underline or determine terms of its
profitability. Present report is conducted on critical evaluation of Tesco
porter five forces analysis which is performing its business operation as
one of the largest grocery and food retailers around the globe.

PORTER’S FIVE FORCE OF
TESCO

BARGAINING POWER OF THE
BUYERS/CUSTOMERS OF TESCO
 Tesco is facing high bargaining power of buyers or customers as they are
having easy switching cost due to the presence of number of organisation
in retail industrial segments those who are offering similar form of
production services in affordable price range. With the help of having easy
switching options consumers are having high bargaining power. In order to
overcome this competitiveness Tesco is required to emphasize upon,
consumer service, product range and pricing policy.

BARGAINING POWER OF THE
SUPPLIERS OF TESCO
According to the analysis it has been identified that Tesco is facing low
bargaining power of suppliers, as company is conducting their business
operation as a leading suppliers of food and non-food items. Company is
having more than thousand suppliers around the globe. Thus, TESCO is
having power to easily negotiate product pricing. Along with it has been
evaluated that Tesco is leading multinational in retail industrial sector that
makes suppliers to perform their business operation with company because
of its highest quality of product offering to customers.

THREAT OF NEW ENTRANTS AFFECTING TESCO
Tesco is facing low threat of new entrants as identified that in order to establish
them in retail industrial sector it is essential for new entrants to make heavy
investments and undertake use of many financial resources in order to
establish their presence. It has been identified that high level of market
saturation is other factor that decrease the threat of entrance for Tesco.
Company by taking advantage of this factor can maximize their product
range and can attract number of customers. This make company to enhance
the overall base of customers and profitability in respective industrial
segment.

THREAT OF SUBSTITUTE
PRODUCTS/SERVICES
AFFECTING TESCO
 Tesco is facing low threat of substitute, as major threat of substitution that
business organisation in facing in retail industrial segment are from small
convenience store as well as organic store. However these stores are not
posing any form of serious threats upon business operation or financial
sustainability of Tesco. In addition to this it has been identified that
because of the economics of sale effect, Tesco have capability to provide
good at cheaper price that enhances attractiveness of consumers towards
the product and services.

RIVALRY AMONGST TESCO’S
EXISTING COMPETITORS
 It has been evaluated that in the provinces of United Kingdom
competitive intensity is high in retail industrial sector. As there are a
number of business organisation such as Sainsbury, Aldi, Morrison’s
and more those who are providing same or similar form of products
and services in market in affordable price structure. This creates
aggressive competition among organisations in retail industrial
segment. Tesco is facing high rivalry from competitors over
promotion, products price.

CONCLUSION
 As per according to the above mentioned analysis of above mentioned
report it has been concluded that, porter's five force analysis act as an
effective method through which company can effectively determine
intensity of competition in respective industry segment. With the help of
this company can not only determine its strength and weaknesses but can
also undertake advantage of significance strategies to overcome the
challenges.

REFERENCES
 Suh, H.S., 2020. Consulting project for the optimization of the
automative providers network of Europ assistance Portugal (Doctoral
dissertation).
 Jelassi, T. and Martínez-López, F.J., 2020. External Analysis: The
Impact of the Internet on the Macro-environment and on the Industry
Structure of e-Business Companies. In Strategies for e-Business (pp.
49-95). Springer, Cham.
 Jelassi, T. and Martínez-López, F.J., 2020. Overview of the e-Business
Strategy Framework. In Strategies for e-Business (pp. 35-48). Springer,
Cham