Tesco Malaysia Porter's Five Forces Analysis

Porter’s Five Forces Model helps business people understand the relative attractiveness of a company and the company’s competitive pressures. The Porter’s Five Forces including buyer power, supplier power, threat of substitute products or services, threat of new entrants and rivalry among existing competitors. The buyer power of Tesco Malaysia is quite high. This is because when items have small differentiations and more standardized, it will lower the switching cost and causes client to change products unpredicted and can easily be switched from one brand to another. With the current technology and availability of online retail shopping, customer will compare the products easily and will always attracted and buy the lower price items. So the competitive advantage of Tesco Malaysia is selling lower price products than other competitors with the same quantity and quality. Thus, customers will gain greater value. Besides, Tesco Malaysia also provided buyers an online shopping service. Since this is the first hypermarket that provides this service in Malaysia, so this is the first-mover advantage of Tesco Malaysia. The supplier power of Tesco Malaysia is low. To get the best price in long-term, most of the food suppliers and large supermarkets used to make contract with …show more content…
This is because Tesco Malaysia always offer high and good quality products which are under significantly lower prices compare with other company. However, the threat of substitute products and services of Tesco Malaysia for non-food products is quite high. This is because the customers still likes and support the specialty of the products shops. So this may causes customers will not buy the non-foods products from Tesco Malaysia. Thus, Tesco Malaysia uses the switching cost method to reduce this threat. For example, Tesco Malaysia provides great services and lowers the prices of the