Risk Factors of Bloomingdales Risk factors play a major role in today’s economy. Since we are stuck in the stagnation period and do not seem to be recovering for quite some time, businesses have to come up with a proper marketing plan that will help sell their products. All businesses suffer from the same risk factors. Some common risk factors include: product quality, price, brand loyalty, competition, managerial skills, etc. Many customers are shopping at lower priced stores because the economy is not allowing them to spend extra money.
Porter’s Five Forces Buyer Power In the dairy market, buyer power is estimated to be a strong force. In fact, players like Saputo can only sell to a small number of larger buyers since the main distribution channels for this industry are dominated by supermarkets which accounts for roughly 75% of the total market value. (1) Furthermore, staple foods like milk and butter are undifferentiated products, which makes it easy for buyers to switch to one of Saputo’s competitor. This is enhanced with the fact that the dairy market is highly price sensitive. Luckily, this aspect is mitigated by the fact that Saputo also offers other products such as specialty cheeses, which are more differentiated.
Rivalry in the grocery industry is a strong competitive force for several reasons. First, companies are using competitive weapons such as sales specials, coupons, company card to save additional money, and high use of advertising. Second, customers switching cost is low. Last, competitors are becoming equal in size and therefore able to achieve similar results. In this case, Winn Dixie, Publix, and Wal-Mart are the main competing firms within the industry in my area.
These products also have numerous options from which to choose. Because they offer a multitude of brands for a majority of their items, this tends to initiate competitiveness between product manufacturers. This competition results in lower prices that are passed down to consumers. In contrast, Publix’s primary focus is being a grocery store. They offer limited choice options for most of their grocery items, sometimes as few as only two brands.
Since their raw materials go so fast they quickly become what is known as the (WIP) work-in-process; which means that the product moves fast through the production process, and then quickly moves out the door as a finished product within 1½ shifts. And, then finally to the grocery shelves in less than 1.4 days. As opposed to the process- focused facility that will have a ample amount of raw materials on hand due to unexpected orders of customers. Also, these facilities will have a significant (WIP) work-in-process due to the variance in the organization. These facilities also have less (MRO) maintenance,
Essay Plan Introduction: How shopping has become a major part of our lives Introducing the concept of the zero sum game What a consumer society implies Main Body: What makes the supermarkets powerful How do the supermarket dominate the high street What does zero sum game mean Conclusion: The negative impact of the big chains on family run shops Outline the argument that supermarket power is a zero-sum game. INTRODUCTION : Shopping has become a major part of our lives, from buying our essentials to becoming one of our favourite pastimes where we are buying more than what we need. We are now part of a consumer society. In our high streets, you are more likely to see big chain shops than small independent businesses like fishmongers, fruit and veg shops and local butchers. Consumers are having their choices restricted as these chains grow and branch out to retail parks.
Unit 3 Assignment 2 Task 1a Carrying out a swot analysis for Tesco Strengths • The strengths for would be: • It is a powerful brand • It has a reputation for value for money and a wide range of products all in one store. • It is the UK’s largest supermarket with over 26% Market share • They are able to increase there market share • Cheaper then most supermarkets Weaknesses would be: • Tesco is not be able to provide a better service in books then Whsmith as they are more specialist in this region • Tesco controls its own massive empire which could lead to some weaknesses as due to the huge span of control from bureaucracy • They do not specialise and focus on one particular market like other companies, which can have a negative affect • They have competitors such as Morrison’s Opportunities would be: • They could expand more • Provide cheaper prices then Asda • Having special offers • Having lots of variety • Merging or forming a strategic alliance with another organisation would be a great way to improve their services Threats would be: • Other supermarkets would provide similar products • Some company’s would sell cheaper products then Tesco • They have competitors such as Asda • They have a growing public concern and annoyance that Tesco is threatening the smaller retailer Political • The price of petrol changing • There is growing concern that Tesco is getting too big • The organisation is driving out the competition • An increase in unemployment due to a downward turn in the world economic • Trading policies • Employment Law Economical • Impact on sales of the credit crunch • Exchange rates • Inflation • Interest Rates Social • An increase in immigration from Eastern Europe resulting in a demand for new goods • Changes in fashion • Lifestyle changes • Branding • Health and welfare
Immigration: with a lot of immigrants from Eastern Europe there is a lot of demand for new goods to be put into the stores. Rate of change: The rate of which technology changes is fast at the current time which means Tesco have to keep in with it all. Training: Without the relevant training of staff they can't use the machines properly Online Shopping: Online shopping has made Tesco extremely popular whilst also making it possible to have fewer stores around the UK and making them able to deliver to places where people may not be able to get to the stores. Health and Safety Laws: This restricts to the things that Tesco's can do within their stores. Data Protection Act: They have to keep all data they take of their customers protected.
A market is where producers (like Tesco) and consumers (the customers) trade, e.g. goods are traded fort the consumers money. The market which Tesco fits into is the food and & grocery supermarket market, this market is very competitive as there are many large firms which rival it, these include; • Sainsbury’s • Morrison’s • Asda • Iceland • And Waitrose However despite there being many companies in a market, this is not an assurance that it will be particularly competitive, this is because the degree of competition is mainly based on market share, this is the % of the total unit or revenue produced by one company in a market, so it is possible for there to be 5 companies each owning 20% of the market, with each of the companies owning very similar (and therefore competitive percentages) this would be a lot more competitive then 20 or more companies all owning small percentages. The current market shares in the supermarket industry are; 1. Tesco: 30.6% 2.
Essay 3 When businesses find ways to internalize externalities they can make more money. Discuss why shopping malls charge a low price per square meter to department stores like Galeria Kaufhof, a medium price to stores like H& M, and a high price per square meter to jewelry stores and food vendors. “Externalities are the costs or benefits that affect people who are not directly involved in the production or consumption of a good or a service.” 1Thus, externalities are not limited to the parties participating in the market i.e. to producers and consumers but also affect other people in the society. Externalities cause deadweight loss which can lead to market failure.