1. Introduction
Metro Holdings Ltd is a multi-national company that operates two major business segments, namely Property Development and Investment, and Retail. This report explores the retail arm of Metro, which manages three department stores and four specialty “accessorize” stores in Singapore, and another five department stores in Jakarta and Bandung, Indonesia.
2. Competitive Environment of Metro Ltd
The competitive environment of Metro Holdings Ltd would be evaluated based on Michael Porter’s 5 forces Model. The factors affecting each force would be critically analysed to determine the competition faced by the business. As the nature of department stores and specialty “accessorize” stores is vastly different, the report would focus on the analysis of department stores which accounts for a bigger portion of the company’s income and presence in the industry.
2.1 Threat of New Entrants
The threat of new entrants is relatively low in the department stores industry.
Department stores do not manufacture products nor create their own brands of merchandise, their products are not differentiated. As a result, consumers have low switching costs, customer loyalty is low, as they can easily purchase similar products elsewhere. These lower the barriers to entry, allowing new entrants a chance to gain customers.
On the other hand, most factors prove otherwise. The retail industry does not have high Economies of Scale to be exploited in general . Yet, it is impossible to run department stores like Metro on a small scale . A large retail space, inventory, and warehouse are necessary to host a specialized portfolio of brands and products to better attract both customers and suppliers. Heavy capital requirements and operational expen...
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...Michael Porter’s Five-Force Model.
• Able to make valid and clear conclusions about the competition faced by the business, based on the analysis.
• Demonstrate a clear understanding of the business and the actual environment it operates in.
Works Cited
https://www.metro.com.sg/storefront/ContentDetail/AboutUs3.asp?ContentId=458
http://digilander.libero.it/fschivardi/images/schivardiviviano.pdf
Charles A. Ingene, Scale Economies in American Retailing: A Cross-Industry Comparison
Engle, J., How to Open & Operate a Financially Successful Retail Business
http://secure-online-purchasing.suite101.com/article.cfm/the_growth_of_internet_shopping
http://www.streetdirectory.com/travel_guide/singapore/expat_guide/910/singapore_aims_to_achieve_65mil_populati on.php
Eng, P., Accounting for Indonesia’s economic growth:Recent past and near future
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