Porters Five Forces Model on ASDA Marketing Essay

Porters Five Forces Model on ASDA Marketing Essay The task that all business managers have to complete effectively is analysis of competitive forces in the industry environment for identification of potential opportunities and threats. To accomplish this objective in a systematic, organized way, Michael E. Porter created his globally known framework now termed the Five Forces Model (Hill and Jones 42). The model is now widely used by managers worldwide to analyze forces shaping the industry, such as the risk of potential rivals’ entry to the market, overall intensity of rivalry in the current market, the bargaining power of buyers and suppliers, and the closeness of substitutes to the company’s products (Ahlstrom and Bruton 131). Once these forces are clearly evaluated and understood, the firm can develop a strategy for development and empowerment in its business sector. Hence, this essay is dedicated to analysis of a well-known UK-based company Asda with the help of Porter’s Five Forces Model. In terms of current competitors, Asda faces fierce competition from the side of other retail giants such as Tesco, Sainsbury’s, Co-op, Morrisons, etc. Given their impressive size and strength, the key leaders in this industry compete with price wars, superb service, and excellent product quality. Speaking about the threat of new entrants, it is high in the field, with many international giants planning and executing aggressive market entries in the UK. For instance, Asda also became a part of such an initiative when it was acquired by the US retail giant Wal-mart, which now sets the trend for cut-price shopping and other ‘category busting’ techniques (Cheveton 76). Next, the bargaining power of customers should be analyzed. In the case of Asda, it is in a beneficial position in this regard because it offers a unique combination of low pricing and high quality of products and service. This strategy allows Asda to maintain its popularity among customers who make their shopping locale selection based on the offers they get from various competitors. As it was previously mentioned, Asda is at an even greater advantage after being purchased by Wal-Mart, which helps it involve in price-cutting more effectively, attracting greater numbers of shoppers with appealing prices (Industrial Analysis). As for the bargaining power of suppliers, Asda also has a strong, stable relationship with over 500 suppliers who provide its grocery stores with highest-quality goods. Therefore, the risk from this side is also minimal for Asda in terms of risking its competitive market position. Finally, one has to analyze the threat of substitute products. At present, Asda faces tough competition in this aspect because there are many competitors among supermarkets and grocery stores in the UK, and there is nothing unique for Asda to offer to clients and achieve differentiation as a brand. Moreover, competition continues to intensify because of the growing number of convenience shops and off-license shops effectively substituting Asda’s facilities (West, Ford and Ibrahim 76). The major aspect of threat comes from competitors offering substitutes in terms of fair pricing and service offers. It can be thus concluded that though Asda enjoys a stable position in the UK grocery market and successfully competes with other market leaders, there are new market entrants offering similar products and services, which is a major source of risks for the near future.