Michael Porter's 5 Forces for Target Research Paper - 1

Michael Porter's 5 Forces for Target - Research Paper Example New entrants are firms that have just entered into a market or will do so in the near future (Barney and Hesterly). Because Target just operates within one market, the United States, it is susceptible to new entrants trying to take away some of Target’s market share. Another reason is due to a reducttion in the barriers to entry, e.g. international trade. It is becoming easier and easier for foreign competitors to enter markets because of liberalization of trade. The UK-based company Tesco is perhaps the biggest threat to the American discount deparment store market. Supplies assist firms by contributing raw materials and labor, among other things, to the process of finishing a product (Barney and Hesterly). The bargaining power of suppliers in the discount department store industry is relatively strong because of the wide number of competitors in the market. If suppliers do not like their current relationship with a discount department store, then they can take their business somewhere else. Another reason that suppliers have greater bargaining power is through the increase in online stores. Now, consumers can choose to purchase a product directly from the supplier rather than through the retailer. Buyers are a key component of Target’s marketing schemes because they have the ability to stay with the company or leave if they feel prices are too high (Barney and Hesterly). Because of the wide range of stores in the industry, customers do not feel loyal to one particular brand and can switch their loyalties if another brand offers a product of the same quality for less. As a result, firms are always competing to lower their prices, and this can only be good for the customer because it strengthens their position. Substitute products fulfill customer needs by do so by offering something extra (Barney and Hesterly). In the discount department store industry, the threat of substitutes is