The five forces model is a strategic analysis tool developed by Michael Porter, a Harvard professor and the godfather

of contemporary strategic management. Porter identified five forces, external to a business, that can threaten the business: bargaining power of suppliers, bargaining power of buyers, threat of new entrants, threat of substitutes and rivalry among competitors. It is simple to apply the five forces model to a retail business simply by considering each one of these forces individually as they exist in the market of the retail business.

Meaning and defination

Michael E. Porter, this model identifies and analyzes 5 competitive forces that shape every industry, and helps determine an industry's weaknesses and strengths. In addition to and in combination with the SWOT analysis, the Five Forces model by Michael Porter provides another analysis tool to identify opportunities and risks when entering untapped territory in any industry or market. Porters Five Forces model, other than a SWOT analysis, provides clear action and thus does not rely solely on subjective judgment. If the actions that derived from the Five Forces model are synchronized with business requirements and goals it can become a substantial business driver in the competitive environment.

Retail industry can be CLASSIFIED INTO TWO BROAD categories organized retail and unorganized retail. Organized retail - Those traders/retailers who are licensed for trading activities and registered to pay taxes to the government. Unorganized retail It consists of unauthorized small shops - conventional Kirana shops, general stores, corner shops among various other small retail outlets - but remain to be the radiating force of Indian retail industry

 Emerging areas to retail business Some sectors that occupy a prominent position with the retail industry are: Apparel Retail: Everybody understands the impact of fashion and textiles on the environment. Almost $19.5 billion were spent on online apparel shopping in the year 2009 and increasing since then. Fashion & Lifestyle Retail: In India the vast middle class and its almost untapped retail industry are the key attractive forces for global retail giants wanting to enter into newer markets, which in turn will help the retail to grow faster. Food & Beverage Retail: Backed by huge potential and changing lifestyles, the food and beverage retail market is growing at a robust 30-35 per cent per year.

 Pharmaceutical Retail: Driven by therapies like anti-diabetic, vitamin, anti-infectives and dermatology, it accounted for a robust 15% growth in 2011. E-commerce or E-tailing the next big revolution: With the advent of e-commerce in the retail industry, retail stores are facing stiff competition from e-stores. The rising demand for e-shopping has lead to a new debate cropping up in the world

 Factors affecting Retail Sector are: 1. Competition in the industry 2. Potential of new entrants into industry 3. Power of suppliers 4. Power of customers 5. Threat of substitute products

Companies working in retail Industry under Porters five force model are as follows
EFFECT OF PORTERS FIVE FORCE MODEL ON RETAILING INDUSTR Y THREAT OF NEW ENTRANTS Independent retailers decreased Chain stores Centralized buying competitive advantage THREAT OF SUBSTITUTES Deal with various products. Chances of shifting is high. POWER OF SUPPLIERS Less power Exploitation as happens

 POWERS OF BUYERS Lower Bargaining power. High quality products retailers Honesty RIVALRY AMONG EXISTING FIRMS WITHIN AN INDUSTRY Cut throat competition Reduce frequent fliers , memberships , loyalty cards etc..

COMPANY WITH APPLICATION OF 5 FORCE MODULE BIG BAZAAR ANALYSIS

5 Forces Analysis

Rivalry among the competitor

Reliance Retail , Aditya Birla Group , vishal retails , Bharti..etc

Threat of entrants

FDI policy not favorable for international Domestic conglomerates looking to start retail chains. International players looking to foray India.

Bargaining power of supplier

The bargaining power of suppliers varies depending upon the target segment. The unorganized sector has a dominant position. There are few players who have a slight edge over others on account of being established players & enjoying brand distinction.

Bargaining power of Buyers

Consumers are price sensitive . Availability of more choice.

Threat of substitutes

Unorganized retail

Life cycle of Big Bazaar