The Kroger Company: Michael Porter's Five Forces Model

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Currently, I work for a local government; so, for the sake of the discussion, I will analyze my prior employer, The Kroger Company. In 1979, Michael Porter developed a knowledge-based system that incorporated strategy in the decision making process (Ryall, 2013). In theory, Porter’s five forces model involves analyzing and understanding the industry by: researching existing rivalry, determining the barriers to entry, estimating the threat of substitutes, identifying the bargaining power of buyers, and estimating the bargaining power of suppliers (Bethel, 2015). Porter’s five forces model has been used by many organizations as a determination of when, if at all, to enter the market relevant to their book of business (Prasad, 2011). Ultimately, …show more content…

Notably, the three aforementioned organizations do not encompass the plethora of stores nationwide. In fact, in 2014, there were 37,716 traditional and nontraditional grocery stores in the United States (Food Marketing Institute, 2016). Hence, with the number of competitors in the industry, there are sure to be price wars, advertising battles, new product introductions, modifications to their business plan, and increased customer services (Parnell, 2014). Thus, rivalry factors include: high fixed or storage cost structure and the extent to which capacity is added in large increments (Bethel, …show more content…

Why is POS data a problem for suppliers? Ultimately, POS provides organizations with the data they need to more aptly negotiate pricing with suppliers. For example, organizations that know customer demand and inventory levels can accurately match supply to projected sales and manage the level product to retail shelves and displays (Margold, 2015). “According to a study, up to 40% organizations share shopper data with their suppliers” (Margold, 2015, para. 2). Why would they do that, you ask? Uniquely, automated data management is the most productive and efficient way to support real-time decision making and reduce the lag time for setting

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