Competitive Analysis of the Grocery Industry

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Assignment 1 – Competitive Analysis of the Grocery Industry Rebecca Lenz Alice Richmond BUS 490 – Business Policy October 27, 2011 Competitive Analysis of the Grocery Industry Porters Five-Forces Model of competitive analysis is a widely used approach for developing strategies in many industries (David, 2009). Everyday millions of Americans and citizens of other countries nourish their bodies with food that is purchased at one store or another. By using Porters Five-Forces Model, a clear and concise competitive analysis can be done for an industry that is sure to be around forever. The grocery industry consists of many different competitors like Publix, Winn Dixie, Wal-Mart, Costco, and BJ’s just to name a few. When a consumer sets out to fill their cabinets with their everyday necessities the owner and operator of these grocery stores needs to take into consideration the wants, needs and desires of their shoppers, how to pull them in and how to keep them. Michael Porter provided a framework that models an industry as being influenced by five forces. The strategic business manager seeking to develop an edge over rival firms can use this model to get a better understanding of the industrial context for which these firms operates. Porters first of five is Rivalry among competing firms is where firms strive for a competitive advantage over their rivals. 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. Wal-Mart is

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