External Analysis Foot Industry Uk

External Analysis

I. PESTEL Analysis of the Macro / general Environment

1. Political trends

* The measures of Margaret Thatcher in 1979 to restrain the crisis of the 60 produced an increase in the economic activity and the retail trade.

* In addition the policies to free market (Laissez-faire) allowed the construction of the new premises in UK.

2. Economic trends

* The increase in different economic indices and the increase of the population and the introduction of the woman from the labor world contribute to a growth in the market of retailing between 1980 to 1990.

3. Sociological trends

* As the growth of the adult population is mentioned in the economic changes, consequence of post war and the introduction of the woman in the labor world produces a change in the styles of life and the appearance of new foods like the congealed ones.

4. Technological trends

* The electronic product development as the refrigerator changed of many ways the food market.

* The incorporation of technology to the logistic process as EPOS and EDI allowed to improve and to increase the operations of the market.

5. Environmental trends

* The tendency to adopt policies that protect the environmental like the recycling, the use of cleaner energies is elements key when competing in more and more competitive markets.

6. Legal trends

* The legal ties for the construction of mega supermarkets and policies that prevent the concentration of the industry are problems not even solved for the industry.

Implications:

It is a market with attractive Macro / general Environment. Nevertheless, the actors of the market must watch the environmental tendencies and changes of habits of the consumers.

II. Industry Profile. Dominant Economic Features of the UK Food Retailing Industry in 1998

1. Market size and Growth Rate:

Total Volume Sales 1997: 2278 Ј millon (CWS and CRS)

Annual Growth Rate (97/96): 2, 95% (CWS and CRS)

Industry Position in the Business Life cycle: Maturity

2. Scope of competitive rivalry: concentrate in 5 companies.

3. Number of Rivals and Relative Sizes: Tesco 23, 6%; J Sainsbury 19, 6%; Asda 13,5%; Safeway 10,8% and Kwik Save 5,8%

4. Buyer Needs and Requirements: Quality and low prices.

5. Production Capacity: Economies of scale

6. Nature and Pace of Technological Change: Innovation in logistic

7. Vertical Integration: Vertical integration backwards. Launching of own marks.

8. Degree of Product Differentiation: Little product differentiation.

9. Learning and Experience Curve Effects: Economy on scale. Better yields of the assets that companies of central Europe.

III. Competitive Forces Analysis: Porter's Five Forces Analysis

1. Threat of new entrants (Low)

a. Factors of increasing cost:

* Capital requirements and specific assents: Great required capital and assent of logistic.

* Economies of scale: Sale of great volumes in detail.

* Technology and know-how: Sophisticated systems of logistic.

* Favouvareble access to raw materials: Contracts with suppliers.

* Favourable geographic locations: Difficult to have construction permission.

* Learning courve / experience curve: Development of learning curves can take years.

b. Factors limiting market share:

* Product differentiation: Little product differentiation.

* Access to distribution:

* Expected retaliation: Threat of competition of prices

c. Others factors

* Government policy: Difficult to have construction permission

* Reputation: Present marks have the good prestige

2. Power of suppliers (low)

* Supplier Concentration: Suppliers atomized and without being able of negotiation.

* Input/Total Cost: The cost is important but it is handled.

* Switching Cost: The suppliers do not have the negotiating power to transfer margins.

* Importance of the product quality: Little product differentiation.

* Importance of the product characteristics: Little product differentiation.

* Scarcity of suppliers' products, skills and capabilities: There are many suppliers that offer similar products.

3. Power of buyers (low)

* Customer concentration: Customers atomized and without being able of negotiation.

* Switching cost (standardization): Elastic demands to the price more than to