Investment Essay

2779 WordsSep 12, 201512 Pages
Investment Porter's five forces analysis is a framework for industry analysis. Attractiveness in this context refers to the overall industry profitability. An "unattractive" industry is one in which the combination of these five forces acts to drive down overall profitability. A very unattractive industry would be one approaching "pure competition", in which available profits for all firms are driven to normal profit. Woolworths Threat of new competition The existence of barriers to entry is significant, with the other oligopoly Coles in the Australian market, few new firms from overseas can enter and challenge them easily. Plus after rooting in Australia for many years, it has developed into a major Australian company with extensive retail interest throughout Australia and New Zealand across retail, takeaway liquor retail, hotel and poker machine sectors with economics of scales. Even though the industry profitability is driven down during the recession and impacted by the online shopping. Threat of substitute products or services The existence of products outside of the realm of the common product boundaries increases the propensity of customers to switch to alternatives. Due to its comprehensive, wide-range offering, WOW is not challenged by substitute product much. Yet from the other perspective, retailing is substantially shaped by online tools and online shopping trend. Bargaining power of customers (buyers) It is not too strong when it comes to bargaining power, as they only have few supermarkets to do grocery. There is competition among them though. Bargaining power of suppliers The bargaining power of suppliers is also described as the market of inputs. Suppliers of raw materials, components, labor, and services (such as expertise) to the firm can be a source of power over the firm, when there are few substitutes. Suppliers may

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