1. 5(+1) Porter‘s forces. | |The threat of substitutes | | |Food retail industry at first seems easy to substitute, but in truth the large markets are the ones who state the prices in the market, | | |thus for such large chains like Tesco the threat of substitutes is low as due to high demand it manages to offer high quality products at | | |low costs.
Moreover, Tesco has already started to focus on opening express stores and this creates even more barriers for the substitutes | | |to enter the market. | | |The threat of entry | | |Tesco takes part among 15 largest world’s retailer chains’.
There are a few factors which determine that the threat of a new entrant is | | |fairly low: | | |Due to economies of scale, Tesco offers goods at lower prices. For new entrants it is complicated to achieve this level of sales so that | | |selling at the same level of prices would become profitable.
This can appear on certain products which can be not admitted in one or another | | |country but usually can be changed by another good. Although, public authorities are able to control the prices of products and set a cap,| | |but this will be valid for all the competitors and for a large retailer it this will not create any barriers. |