Page 33 - DMGT550_RETAIL_MANAGEMENT

Retail Management

Notes
Figure 2.1: Michael Porter’s Five Forces Model

Porter explains that there are five forces that determine industry attractiveness and long-run
industry profitability. These five “competitive forces” are:
1. The threat of entry of new competitors (new entrants)

2. The threat of substitutes
3. The bargaining power of buyers
4. The bargaining power of suppliers
5. The degree of rivalry between existing competitors

Self Assessment

Fill in the blanks:

13. New entrants to an industry can raise the level of competition, thereby reducing its
........................ .
14. ........................ are the businesses that supply materials and other products into the industry.
15. Industries where products are commodities, like steel, coal, have ........................ rivalry.



Case Study FoodWorld

ousehold groceries, at walking distance, at economical prices is FoodWorld’s
USP. Where from do you get your vegetables and groceries? Pop this question to
Hany housewife and the most likely response is from the neighbourhood vendor
selling on a pushcart, or a nearby market, which houses groceries. But both these options
make no allowance for hygiene and comfort. This germ of a thought is what set the
process for the conception of FoodWorld in Chennai in 1996. From there on, FoodWorld,
a joint venture between Dairy Farm International and RPG Gardinier, has gone to add
four cities – Bangalore, Pune, Coimbatore, and Hyderabad – at 41 locations.
Raghu Pillai, managing director, FoodWorld says, “We started in Chennai because of the
developed retail market, good real estate prospects and cosmopolitan atmosphere. We
have the most comprehensive range of products at the most competitive prices.” Lower
Contd....

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