Question

What is Kroger's "Industry Attrractiveness" using Porter's Five Forces

Answer 1

Porter's Five forces model is a strategic management tool.It helps in determining competitive landscape of an industry.This model helps startegic planners to gain more profit potential in industries.Strenght of these forces vary from inustry to industry because different industries have different policies and attractiveness.

Porter's five forces are :

1.Threat of new entrants.

2.Bargaining power of suppliers.

3.Bargaining power of buyers.

4.Threat of substitute products or services.

5.Rivalry among existing firms.

Kroger's Industry attractiveness using five forces of porter's model :

1. Threats to new entrants-Kroger can tackle the threat due to new entrants by fighting off its new entrants through cost advantage.Also,Kroger can spend more money on developing new products which can suit with the current trend,he can build a brand identification by putting some extra effort in marketing area,these will help in retaining customers than losing them.

2.Bargaining power of suppliers-Kroger has more number of suppliers than buyers which reduces the power of bargaining among suppliers.Switching costs are low because the product that these suppliers provide are fairly standardised and has less variations.Kroger can purchase products at low cost from suppliers and can also switch from one supplier to another whenever needed.For an efficient supply chain kroger should have multiple suppliers to different geographic locations.Kroger can also develop a close relationship with suppliers for more benefits.

3.Bargaining power of buyers-Number of buyers in the industry in which kroger operates is much more than the companies producing the product.Therefore buyers have less control over prices ,which makes thier bargaining power weaker.Quality of product and variations of product attracts more buyers.Kroger can focus on these areas to attract customers.Producing innovative products will also help in attracting buyers.Brand identification will help in gaining more bargaining power among buyers.

4.Threat of substitute products or services-Kroger can provide products with greater quality and lower price which will help in making a strong customer base even when other substitutes products are growing.Kroger should be able to create a unique product with unique advantages ,so that customers will always stick onto these products than going for other substitutes.

5.Rivalry among existing firms-Kroger can focus on new customers than on existing customer once the company has grown.Kroger can prevent overproduction and inventory control by conducting studies on supply demand situation of the company.Product differentiation is another area to focus on inorder to fight the competitors.