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Porter s five forces of bed bath and beyond

Threat from Substitute Products Rivalry among the existing players.

Contributors

Porter Five Forces is a holistic strategy framework that took strategic decision away from just analyzing the present competition. By building economies of scale so that it can lower the fixed cost per unit.

Bed Bath & Beyond Inc. Porter Five Forces Analysis

Building capacities and spending money on research and development. It significantly reduces the window of extraordinary profits for the new firms thus discourage new players in the industry.

  1. Porter, this model identifies and analyzes 5 competitive forces that shape every industry, and helps determine an industry's weaknesses and strengths. Suppliers increase competition within an industry by threatening to raise prices or reduce the quality of goods and services.
  2. Customers don't really have much of a say with the prices since the prices are negotiated with vendors.
  3. For example services like Dropbox and Google Drive are substitute to storage hardware drives.
  4. Value Chain A value chain of a company is a sequence of activities in which are created to construct a value for the customer.
  5. They are placed by different categories and items so that the customer can find what they are looking for easier.

Bargaining Power of Suppliers All most all the companies in the Home Furnishing Stores industry buy their raw material from numerous suppliers. Powerful suppliers in Services sector use their negotiating power to extract higher prices from the firms in Home Furnishing Stores field.

Porter s five forces of bed bath and beyond

The overall impact of higher supplier bargaining power is that it lowers the overall profitability of Home Furnishing Stores.

By experimenting with product designs using different materials so that if the prices go up of one raw material then company can shift to another.

Developing dedicated suppliers whose business depends upon the firm. Bargaining Power of Buyers Buyers are often a demanding lot. They want to buy the best offerings available by paying the minimum price as possible.

  1. Customers don't really have much of a say with the prices since the prices are negotiated with vendors.
  2. Powerful suppliers in Services sector use their negotiating power to extract higher prices from the firms in Home Furnishing Stores field.
  3. They can identify game changing trends early on and can swiftly respond to exploit the emerging opportunity.
  4. The five force model was named after michael e porter, this model identifies and analyzes 5 competitive forces that shape every industry, and helps determine an industry's weaknesses and strengths. By understanding the core need of the customer rather than what the customer is buying.
  5. In such ways, the process of a value chain activity decides the expenses and the profit outcome.

This will be helpful in two ways. It will reduce the bargaining power of the buyers plus it will provide an opportunity to the firm to streamline its sales and production process. By rapidly innovating new products. Threats of Substitute Products or Services When a new product or service meets a similar customer needs in different ways, industry profitability suffers. For example services like Dropbox and Google Drive are substitute to storage hardware drives.

The threat of a substitute product or service is high if it offers a value proposition that is uniquely different from present offerings of the industry. By understanding the core need of the customer rather than what the customer is buying. By increasing the switching cost for the customers.

Brief overview of Bed Bath & Beyond Inc.

Rivalry among the Existing Competitors If the rivalry among the existing players in an industry is intense then it will drive down prices and decrease the overall profitability of the industry.

This competition does take toll on the overall long term profitability of the organization. They can identify game changing trends early on and can swiftly respond to exploit the emerging opportunity.