Question

Porter Five (5) Forces Analysis of Walgreen Boots Alliance, Inc

Answer 1

Products of the company are generic medicines, skincare products, cosmetics, etc.

The 5-forces are as below:

1. Challenge from new entrants

2. Substitute goods or services

3. Suppliers’ perspective

4. Buyers’ perspective

5. Industry competition

Analyses of 5-forces are as below:

Challenge from new entrants: This is a free market. Therefore, the entry is open here. New products (like cosmetics) could be opened nearby if profit margin is high. The existing products might face challenges, since the market share would be divided. The company has brand image in the market, which makes some loyal customers; it reduces challenges.

Substitute goods or services: There are so many skincare products in the market. Therefore, substitutes are always there; but, since the company has brand value goodwill it enjoys some monopoly power amongst the others.

Suppliers’ perspective: They can bargain for increasing price. Sometimes their bargain might not be ruled out, which can damage the business. In order to maintain goodwill the company can’t compromise with quality; sometimes it reduces profit margin, since suppliers’ prices are high.

Buyers’ perspective: They bargains for decreasing price. But price cut is not always possible for small quantity. This is why the company offers discounts for bulk purchase – suppose there is 5% discount on total price for purchasing 10 packs of skincare products.

Industry competition: The industry as a whole is a great challenge. New products are innovated and introduced in the market continuously. The company usually keep track with such changes, so that they can get to know their course of action, current market demand, and market sentiment.