SWOT, PESTEL and five forces analysis

SWOT, PESTEL and five forces digest2. IntroductionThe super marketplace industry is fierce in terms of its competitors. on that point be four primary(prenominal) stiffs that pay off dominant market shargon but still live the aim to become the market leader and want to be monolithic and improve for their guests and potential customers.3. MethodologyIn order to conduct my query I used a variety of sources which implyd sparingal and modern-day books, additional journals were also used to gain more(prenominal) specific and with-it information. The internet was also a valuable source due to its temperament and variety of widely available information.4. PEST ModelThe Pest sit around allows us to see what changes m other happened in the industry and how this can run into competition. It allows us to distinguish the not so important comp ard to what is vital in the industry. For any firm in this industry it is important to shape respect for its customers, so theref ore an instinct of the customer is vital.To create treasure, a firm would retain to create a form of understanding and a affinity with its suppliers. Also for a firm in this organisation an in skill understanding and monitor of its competitors is essential in order to be a profitable company and have first- grade mover profit. This supermarket industry includes the customers, the suppliers and the competition.An understanding of the pest model allows us to discover comprehensive potential opportunities and threats in the future. I.e. global warming may not be an issue come forthright but can be in the next hundred old age this could reflect raw materials for aliment.4.2 Political there is a low take aim of unemployment this due to the recession this affects the demand of good being bought as consumers have less disposable income. However, nutrition is a commodity and depart always be demanded sue to its nature.E.g. the price of old-hat in supermarkets has dropped i n choke few years with the intention of boosting demand. Its level of custom has also fallen.There atomic minute 18 now restrictions on purchasing land or tainting by another supermarket chain making it more difficult for supermarkets to expand.4.3 frugalBarriers to entryE.g. Over 5 years it has been reported that 700 hundred supermarket repositings have opening ranging from sizes to 3,000 to 25,000 square feet. In comparison to this it is going to be life-threatening for littler supermarket bonds to break into this industry due to it competitors. Only 5 sore supermarket monetary funds have opened in last 5 years.As a result of the recession, supermarket shackles have to concentrate on the demands of the customer. This could include customers looking atCostPricesProfitsOverall price is real competitive in this industry.There is also a change in the way consumers shop supermarket chains such as Tesco have communicate this by giving incentives such as a club billhook in order to gain shuffle loyalty and repeat custom.bigger supermarket chains are quick to eliminate competitors. E.g. Sainsburys had bought out star trade and past opened stick ins across Egypt.4.4 SocialSupermarkets are continually monitoring changing consumer trends and obtain patterns such asWho is buying the product?When they buy the product?How they buy their products?Which products are they buying?Monitoring these trends and understanding then can create competition in order to be the first to develop products and serve that meet changing patterns.E.g. in the UK,75% of customers shop in two ways a week and seven still shop at diverse chains. This pattern by UK shoppers is known as Bulk Shopping or One Stop Shopping.Even though the recession has cut cover the function of jobs available, supermarkets still employ a large number of people. This could be due to their flexibility in working times such as part time. E.g. Sainsburys employs around 150,000 people in the UK al one. Also there will always be demand for commodities meaning that supermarkets have some level of safety. Some supermarkets use this as a marketing technique, for example Asda aims to create over 7,500 jobs in 2011 (Tue, 16 Nov 2010 (www.supermarketnew.co.uk))There is also change in demand regarding taste native foods are now much more common in supermarkets due to greater awareness of global warming, fairtrade and galore(postnominal) other issues. E.g. there could be health concerns surrounding British skreak with BSE.4.5 TechnologicalTechnology has become beneficial to customers in supermarkets. With self tab tills, shop has become much easier and more convenient for consumers for shoppers. They are also easy to use meaning that all consumers can take advantage of this new technology. Personalized shopping is also being introduced which again makes shopping easier and more convenient. E.g. Waitrose allows you shop with your own trolley gun.With the technology available and th e number of companies supplying it, explosion is the word for it, said Tim M. Hammonds, senior vice chair of the Food Marketing Institute in Washington. Almost every store is doing at least one experiment.Tesco are reported to have exhausted 25 billion in 2005 setting up their on- transmission line shopping website this also attend tos chains looking at consumer buying habits. Tesco.com is the worlds biggest online supermarket and this year the convention had sales of over 577 one million million million, an increase of 29% on last year4.6 EnvironmentCutting waste fruit and vegetables have less packaging.tonic and seasonal produce of a high qualityIntroduction to organic foods, governments have supported farmers to convert and grow only organic foods.4.7 profoundLaw legislationsHealth and Safety5. Swot AnalysisThe SWOT analysis shows the strengths, Weakness, opportunities and threats in the supermarket industry.5.1 StrengthsCorporate cultureThe supermarket industry is one of t he biggest and profitableSupermarkets are a necessity people will always need food therefore the demand is always high in relation to other industries.Customers have different tastes supermarkets have a wide variety of goods and operate making it likely that a consumer can purchase all of their necessities in one place.Having different stores allowing access to the mass market.Customer Experiences e.g. in store cafes and facilities.Giving Incentives Loyalty cards and point reductions on foods.Image this encourages brand loyalty and can keep an environmentalist reputation.5.2 WeaknessRecession has squeeze on supermarkets giving better price reductions and deals undercutting competitors to retain market share. low-cost supermarkets such as Aldi, Netto and Lidl have taken consumers due their much get off prices.Smaller supermarkets may have to fold due to recession and a very highly competitive market.Low employee efficiency and high churn turnover.5.3 OpportunitiesMarket leadershi p in a highly demanded segments i.e. the growth in organic and natural foods this will establish high economies of scale merge or acquisitions gaining market share E.g. Morrisons takeover of Safeways.Working with foreign countries help supermarkets break into a new market. Such as Latin America, reciprocal ohmerly East China and South Africa.5.4 ThreatsChanges in Government RegulationsRecession impacts the economic changes. I.e. Has and impact on customers outgo patterns.6. Portors five forcesPorters five forces of competition discern structural variables influencing competition and profitability in the supermarket industry.6.1 Threats of EntryThe supermarket industry is rule by some big competitor chains such as Tesco, Asda, Sainsburys and Morrisons and small chains such as Somerfiels, One Stop and so forth Bigger Chain competitors have focused more on execution and efficiency and productivity (allowing a wider variety of foods or products, better services etc). This force h as left very small and traditional shops like butchers, bakers tracking very far behind. This has made it very hard for new companies to pull in the supermarket industry. I.e. it is hard for a new business to raise capital because of the large fixed costs and its in a very much create market with chains like Tesco have self check out points and their own stock control system. Where as Asda focus on operable tactics, like product development, better promotional activities and concentrating on better distribution.6.2 bargain Power of SupplierBecause the industry is fierce and is growing to be influenced by the likes of Tesco and Asda they can bring off better promotional prices in comparison to little chains have a fear of losing business. They benefit from purchasing economies of scale. Suppliers are under threat because big food chains can carry on better deals abroad. There ask to be an effective relationship with the supplier and its seller, this makes for a better profit margin.6.3 Bargaining Power of BuyersTo meet customer needs there are many things, lowering prices, wider and better choices, eternal promotional activities, consistently bettering customer service. E.g. Tesco club card is most triple-crown to date and has added to Tescos profitability. Supermarket chains have become more aware of consumer needs and by expanding in new markets banking, pharmacies and clothing. There is also a clit on ethical products as consumers have become increasingly aware, they are now available in most big supermarkets.6.4 Threat of SubstitutesThere is a threat that consumers can switch from one supermarket to another, this can be due to consumers being influenced highly on price, better service or quality. In relation to this bigger chains are buying out smaller chains, and opening them strategically in small towns or cities. E.g. Morrisons tookover Safeway as a method of quick expansion.6.5 Bargaining Power of CompetitorsThe supermarket industry has enc einte dramatically in size mainly due to bigger chains and continuous growth. This has opened up bigger and better retail concentration, new formats and better customer service. E.g. Tesco retain and build relationship with customers with databases allowing them to see what the consumers have purchased. Companies need to be innovative to keep up with the consumer behaviour such as refocusing on pricing and its values.6.6 Competitive RivalryBecause the industry is dominated by bigger supermarket chains, there is a constant employment for better prices or better reductions. This results to high price wars to all competitors.Supermarket chains focus on quality and value for the customer in consequence they could attract new customers of different segments of the market.By bigger chains spending much more on advertising including celebrity endorsement, E.g. Jamie Oliver being the introduce of Sainsburys and Heston Blumenthal and Delia Smith for Waitrose it becomes much harder for sma ller chains to compete.By giving customer price incentives such as Buy-One-Get-One-Free (BOGOF) this again allows supermarkets to retain and maintain customer satisfaction. Loyalty cards are also good example of this.7. decision7.1 Smaller supermarket vs. bigger supermarketsThe emergence of a number of smaller grocery store stores has increase in the past 12 months.A number of smaller supermarkets have been grasped by larger competitors.Morrisons purchase of 39 Somerfields after Co-Ops electric pig programme, led Morrisons to further increase market share in the south east and in the London.Sainsburys followed Morrisons vision, breaking into new areas, opening 22 store acquisitions in the north. The stores average from 17,000 square feet.Waitrose reached beyond the South east, opening 14 new stores, averaging between 5,000 square feet under its actual store size.A recent newspaper headline stated Asda goes shopping at Netto in 778m takeover deal (27.05.10, London evening standard ) showing larger supermarkets being able to takeover much smaller chains.7.2 Strategies AvailableDuring the recession, it is apparent that value for money is most important to the customer. There is little room to negotiate prices as the market is very competitive and each supermarket wants to retain market share.Food Retailers can look into trends and new technologies to differentiate from the competitors, i.e. smarter shopping carts and better formatting of stores.Supermarkets are looking into convenience for the shopper. Smaller stores such as Tescos Express fill the gap between the bigger and smaller stores they stock ready made meals and supply the basic foods. The sales maybe smaller but they retain market share and overall the business in going to profit.Organic foods are becoming a strong system to pull in new customers. There is a distinctive line between luxurious and affordable prices. The organic Market is worth 340 million annually, this figure has doubled in the last 2 years. Supermarkets have recognised the potential and responded with their own browse of organic produce.Tescos has market lead and Sainsburys are planning a huge launch of its own organic range as is evident from the newspaper headline below.Tesco turns itself into a green jumbo(The Sunday TimesMay 31, 2009)Asda will also be victorious advantage, a spokeswoman for Asda says Organic food is definitely something that can be marketed to the masses. end-to-end our stores we have a suggestion box programme called Tuned In. More organics is the number one suggestion.A sales increase from 3.1% to 5.4% in sales. And have increased their organic range from 250 to 400 items with cutting prices.Supermarkets may not be able to persuade shoppers from its competitors directly but convenience of better food products may sway them naturally.