Today's globalizes world as made a way for countries to promote free trade and make a way for international companies to expand to their markets (Lynch, 2003). After 10 ore countries Joined the EX. countries, all the European states started to promote the trade within the whole continent (BBC, 2013). Hence, it has been a good opportunity for Tests to operate internationally across the whole European market. Economic factor As the economic factor is directly related to the social wellbeing of the customers and hence their purchasing behaviors, it is significantly important for Tests to consider t for their strategic decisions.
Though 2009 was a period of recessions in the United Kingdom, the government agreed to significantly reduce the interest rates. This lead to a higher number of unemployed population in 2010 (Remuneration, 2011). This had a direct impact on consumers' purchasing behavior. However, as UK economy started recovering, people tend to be more positive about their finance and spending. Despite the recovering economy, consumers are not ready to but expensive products which is having a direct impact on the value of sales.
For example, consumers prefer eating at home rather than eating out. It gives chances to Tests to grow their grocery outputs. (Guardian, 2013). It is also important to understand that food is of primary importance for everybody and consumers will not tend to buy fewer groceries. As it can be seen from the figure below consumers are spending significantly more on food in the recent years (Remuneration, 2010). Figure 2: UK Spending on Food as percentage of Overall Consumer Spending 2004 to 2009 The following diagram shows the GAP growth before the economic recession.
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It Pestle By rearrangement ill help Tests to better understand the economic environment to the market in which they are operating (Minute, 2013): Figure 3: UK GAP Growth 1989-2009 Social factor The recent statistics of United Kingdom population show that the number of retired exceed the number of children in the country (Herald Scotland, 2013). This factor is having an impact on Deco's sales performance as retired people are eating much less than younger consumers. They also do not like traveling to shops. However Tests should try to target the aging population by online shopping tools.
The level of internet literacy has grown among the population over 65 and many of these consumers find it easy to shop online. This should also be a good opportunity for Tests to develop its delivery services. Technological Technologies have had a significant impact in the grocery and food market. Nowadays, retailers are using internet for targeting the consumers. The number of people using Internet in I-J has grown steadily by 50% recently and 70% of I-J residents are subscribed to the Internet (Office for National Statistics, 2013).
Mobile technologies are also giving huge opportunities for Tests. It is using Wine App to target potential consumers interested in buying wine (Tomlinson ; Evans, 2014). According to Keynote (2010) Internet shopping is expanding very rapidly and has gained huge popularity. About 70% of the total population are using internet and there are 15. 5 million broadband users in I-J. Environmental factor UK government is encouraging retailers to use environmentally friendly packaging.
According to UK National Statistics (2013) the number of recycling bags has grown to 75% and the number of people preferring only reusable bags has from 65% to 68%. As today's consumers are more aware of the firm's carbon footprint (Wood, 2013), Tests included carbon footprint information on dairy goods, potatoes and orange juices, and is going to expand it to breads and other items in 2014 (Tests, 2014). Tests is also promoting its Greener Living Scheme which advices customers about reducing food waste and carbon footprint (Youths, 2013).
Legal factor The I-J government was initially planning to rise VAT to 20% in order to fill the gap in budget deficit (HEM Treasury, 2010). This would have a significant impact on the price f products at Tests, such as clothes and other non food products. According to the statistics in the Low Pay Commission Report (National Minimum Wage, 2009), in 2008 and 2009 the minimum wage in I-J increased by 15. 5%. This means that in order to stay a competitive employer, Tests will have to rise its employees wages which will result in growth of operating costs.
Porter's Five Forces Analysis The industry structure should be discussed in details with the purpose of outlining the key sources and milestones that can provide competitive advantage to the many and differentiate it from the others in the market (Porter, 1985). One of the tools that have been widely used by the researchers to analyses competitive environment is Porter's five forces analysis, which will be applied to generate Deco's analysis. Threat of substitute products and services This torte represents the threat which can emerge trot the entry to the substitutes in the market and highly affect company's positioning.
However, for the grocery retail market this threat can be considered quite low for food items and relatively medium to high for non-food items. Taking into consideration the above mentioned the main substitutes for the Deco's market will be considered off license shops, small convenience stores and other small shops, which however cannot be considered Deco's competitors as it can provide high quality products at considerably lower prices mainly due to economics of scale (Financial times, 2014).
On the other hand the threats coming from substitutes providers of non-food items (such as clothing, electronics) is fairly high due to lower specialization of Tests in this market. In addition the shadows of economic recession still exits and customers will give reference mainly to discounted prices in this market. Threat of entry of new competitors This threat identifies the risks connected with the entry of new competitors to the food industry which possibly can have an impact on company's competitive advantage.
However for the food industry this threat can be considered quite low, the current positioning of Tests requires huge financial investments and certain time period of establishing a reputable brand. Currently the I-J food market has been mainly captured by the four main market players (Tests, USDA, Kingsbury and Morrison), which own nearly 80% of the market retail (Minute, 2013).
Therefore, companies entering the market will have to provide exceptional quality with the lower price to create market value and differentiate themselves from the competitors. In addition a huge obstacle for the companies to enter the market will be the process of receiving authorization from local government authorities which will additionally require more resources and time. Intensity of competitive rivalry The competitive rivalry between the four owners of the market is quite intense and Hereford the threats with this are extremely high.
The direct competitors of the Tests in this industry are the other market leaders, such as USDA, Kingsbury, Morrison and Waitresses, which are also in a rival with each other over the prices and the spectrum of the products that they are providing to the customers. It is worth to mention the changes of market shares for the competitors, which will show the market trends and companies' positioning. For instance, Soda's market share has increased from 16. 6% to 16. 8% in the fiscal year of 2012/2013, while Kingsbury has rowan to 16. 1% from 15. 8% and finally Morrison has also recorded a growth of 0. % reaching 1 1. 6% (Remuneration, 2013). To sum up, the relatively low level of the growth is mainly reasoned by the growing trends of market shares from competitors, which obviously questions Deco's leadership in the field. Moreover, in the rural areas customers are attracted by the stores which are located nearby and retailers like Somerville and Co-pop has considerable in market share in this edge. Finally, the economic recession has urges consumers to focus on savings and discounters such s Laid and Lid have recorded record growth of 25% in 2008 (Keynote, 2010).
Bargaining power of buyers For the Deco's industry it can be assumed that the bargaining power of the buyers is quite high, as for the products which are more standardized and do not contain certain differentiation the costs of changing to the other competitors are very low. In addition the consumers are searching tort lower prices and online retail shopping gives them chance to compare the prices and products between the different stores and make a decision based on that, which again forces the leaders to provide the sweets price in the market.
Bargaining power of suppliers Finally, the bargaining power of the suppliers for Tests is low, as it represents one of the channels for them to promote their products and deliver to the consumers. The economics of scale works here as well, as for suppliers it is more preferable to provide large quantities with lower prices to the market leaders. As a result the positioning of the leaders such as Tests, Morrison and Sandburs is efficient for them and gives power to negotiate the lowest possible price from the key suppliers.
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