When applying Porter’s Five Forces Model in the analysis of the business environment for the grocery shop, all possible sources of competition must be identified and evaluated. The evaluation process must embrace the following;
Analysis of rivalry
This initiative entails identification of the competitors in the market and their capacity to outmatch the performance of the businesses. In the market there two main competitors that offer Whole Foods and Down to Earth shop offers a variety of products. The competitive strategy to beat the rivals in this case is to offer products with unique features and qualities that are not offered by the competitors (Werner, 2009).
To ensure entry barriers, the business can adopt a proper operational strategy that enables the customers to buy the grocery products at low prices than the competitors’ prices. Economy of scale is one method of achieving entry barriers.
Threats of substitute products
To combat the threats of substitute products, the business must offer a wide product range that embraces the element of diversified needs among the consumers. The business can offer products with many features that cannot be substituted easily by the customers (Coyne, & Sujit, 2008).
To combat the issue of supplier power, the business must work with many suppliers and have many choices for the suppliers available in the market, for instance, the business can work with at least 5 different companies to supply grocery products (Coyne, & Sujit, 2008).
The buyer power may affect the pricing in the market and thus force the business to offer low prices at a loss. To combat this problem, the business must deal with many buyers and ensure buyer rivalry through value pricing where each product or service attracts a certain price with anticipated values (Werner, 2009).
Werner, F, B. (2009), A resource-based view of the firm, Strategic Management Journal, Vol. 5,: pp. 171-180
Coyne, K.P. and Sujit, B. (2008), Bringing discipline to strategy, The McKinsey Quarterly, No.4.