Week 5

The threat of substitute products and services: As Littlewoods does not make any products, the product side of this force does not directly affect Littlewoods, although it will affect them all the same. The bigger concern would be on the services that Littlewoods provides. Tesco, Argos and Amazon all provide online shopping and are Littlewoods biggest competitors. Littlewoods needs to have a better website than its competitors, whether its the design, ease of use and/or better features. Cheaper prices and product insurance are also factors. Littlewoods also may have to change suppliers if more, better or cheaper products or companies come on the market.

The threat of the entry of new competitors: The online shopping market is ever growing and it is inevitable that new companies will want to expand into this market. At the moment over 130,000 UK business sell online and over £18 billion is spent online every year. These statistics would seem tempting to any company wishing to sell online. This however does not help Littlewoods at all as this will increase competitiveness amongst companies and lower profits. The market will eventually become saturated. Product prices will fall and quality of products will have to increase to remain competitive which will benefit customers.

The intensity of competitive rivalry: As there are so many comapnies in the online shopping market, competition is fierce. After taking a look at Littlewoods and its competitors websites, I found that pricing was the main method of competing. On the homepages of these websites sales, price reductions and special offers banners and advertisements were dominant. To me it looks like a full on price war between these companies.

The bargaining power of customers/buyers: As it stands, customers have got alot more power than they used to. Nowadays, online customers can choose from a wide variety of products on the Internet, through many different websites. They can look for bargins through search engines of comparison websites also. Companies like Littlewoods, Argos etc, will have to bring their prices down to remain competitive.

The bargaining power of suppliers: Suppliers may also have power over Littlewoods. The suppliers could increase the prices of their products or services or terminate their contract with Littlewoods. They may also not co-operate with Littlewoods or charge excessively high prices. This would leave Littlewoods in a tough position, as they would have to decide whether to stay with the same supplier or change. Littlewoods have many different suppliers providing them with products, so this factor is essential to them.

 

As you can see all of these factors affect Littlewoods in a big way.  They have to take these seriously to stay competitive and to remain as profitable as they already are.

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