Aldi: Concuring the Us Market

In: Business and Management

Submitted By rocket88
Words 1429
Pages 6
Answer to the question no. 1
An industry is a group of firms producing products and services that are essentially the same. The U.S. supermarket industry is consists of both supermarket such as Kroger, Walgreens, Home Depot and large discount retailers such as Wal-Mart, Aldi. According to IBIS’s research, the U.S. supermarket industry’s revenue over $574 billion with 1.5% growth rate since 2009 to 2013. As the U.S. economy is recovering and the household disposable income further expand, it would be reasonable to assume, this trend should slightly increase over the next few years generating a steady stream of revenue. This essay would critically discuss and analyze the attractiveness of U.S. supermarket industry based on Porter’s five competitive forces namely the threat of entry, the threat of substitutes, the power of buyers, the power of suppliers and the competitive rivalry.

The threat of entry: like any other attractive industry, the U.S. supermarket industry has a high barriers to entry that is the factors that need to overcome by new entrants if they are to compete in the industry. These barriers includes differentiation of products and services, legislation, expected retaliation, scale and experience and so forth. According to Porter, high barriers to entry is an advantage for incumbents relative to new entrants. Example of the actor would be Tesco (U.K.), Carrefour (France).

The threat of substitutes: substitutes are products or services that offer similar benefit to the industry’s products or services but by a different process. Managers often focus on their competitors in their industry and ignore the potential threat posed by substitutes. Porter emphasis two important points to bear in mind about substitutes that are the price/performance ratio and the extra-industry effects. Aldi’s U.S. marketing research shows that its unique operating style…...

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