5-Forces analysis :

1. 5-Forces analysis: In this study Porter’s 5 forces analysis (Michael E. Porter, 1980) has been conducted to explain the industry attractiveness and long-run industry profitability. The researcher measured the five forces by implementing the following method: www.AssignmentPoint.com

2. 1. Buyer Power: It has been measured how easy it is for buyers to drive prices down of the business. Again, this is driven by the number of buyers, the importance of each individual buyer to the business, the cost to them of switching from the products and services to those of someone else, and so on. Therefore, the power of buyers is a threat for the company that defeats them to enjoy monopoly and hence to gain adequate profit. If company deal with few, powerful buyers, they are often able to dictate terms to the company. www.AssignmentPoint.com

3. Continued.. According to Porter, buyer’s bargaining power is highest when- • The supply industry is composed of many small companies and the buyers are few in number as well as they are large. • Buyers purchase in large quantity. • The supply industry depends on the buyers to purchase the input of its total orders. • Buyers can switch orders between supply companies at a low cost. • It is economically feasible for the buyers to purchase the input from several companies at once. • Byers can use the threat to supply their own needs through vertical integration (backward linkage) as a device for forcing down prices. www.AssignmentPoint.com

4. 2. Threat of New Entry: Power is also affected by the ability of people to enter the grocer market. The business may have strong and durable barriers to entry, can preserve a favourable position and take fair advantage of it. The researcher considered Economies of scale, capital / investment requirements, customer switching costs, access to industry distribution channels to measure the threat of new entry. www.AssignmentPoint.com

5. Continued.. Economies of scale is the reduction of the average cost of a unit of production as the total volume produced increases-drove managers to strive for further growth. The types of economies of scale are • Financial • Technical and • Marketing www.AssignmentPoint.com

6. Continued.. In the marketplace some competitors are already operating in their business. They are called existing competitors. Some other competitors are not now competing in the industry but have the capacity and desire to enter into the business. They are called the potential competitors. Existing competitors discourage potential competitors from entering into the industry by creating barriers to entry. They are created by undertaking some measures that are very costly for competitors to adopt. Such barriers may brand loyalty, absolute cost advantage, economies of scale, and government regulations. www.AssignmentPoint.com

7. 3. Supplier Power: Here it is assessed that how easy it is for suppliers to drive up prices. This is driven by the number of suppliers of each key input, the uniqueness of their product or service, their strength and control over the business, the cost of switching from one to another, and so on. The fewer the supplier choices we have, and the more you need suppliers' help, the more powerful your suppliers are. www.AssignmentPoint.com

8. Continued.. A company has to procure various types of supplies suppliers from suppliers such as raw materials, components, parts and other materials necessary for producing a product. If the suppliers are powerful they can raises prices of materials. Powerful suppliers are a threat to companies who have to buy at the price offered by the suppliers. If suppliers are weak, company may be in an advantageous position and can demand high quality at a lower price from the suppliers. In Bangladesh, in the paper industry the number of suppliers are is very few and they are very strong in bargaining prices. www.AssignmentPoint.com

9. 4. Threat of Substitution: This has been measured by analysing the ability of business’s customers to find a different way of doing what Sainsbury’s do. It has been conducted by analysing Buyers' willingness to substitute, the relative price and performance of substitutes, the costs of switching to substitutes. The major factors that determine the strength of the competition from substitutes are i) attractiveness of the prices of substitutes; ii) buyer’s satisfaction with the substitutes in terms of quality and others features; iii) the easiness to switch to substitutes. www.AssignmentPoint.com

10. 5. Competitive Rivalry: The degree of rivalry between existing competitors has been measured here. Sainsbury’s main competitors are thus found as Tesco and Asda. The competitors are offering equally attractive products and services hence Sainsbury’s most likely have little power in the situation. www.AssignmentPoint.com

11. Continued.. • Competition increases as the number of competitors increases. • Competition is usually stronger when demand for the product is growing slowly. • Competition is more intense when industry conditions encourage competitors to cut prices. • Competition is stronger when customers’ cost to switch brands are low. • Competition is stronger when one or more competitors are dissatisfied with their market position and undertake other measures to win the battle for market share. • Competition is intense when it costs more to get out of a business and than to stay in the industry. www.AssignmentPoint.com