The paper "Sustainable Competitive Advantage of Trader Joe" is a great example of a management case study. This report focuses on the competitive analysis of Trader Joe where the report makes an in-depth analysis of Porter’ s Five Force Model to identify the industry trends and competitiveness of the same. The report then makes an analysis of competitive advantage offered and “ Sustainable Competitive Advantage” in terms of Trader Joe by making by relating it to Barney (2001) and Porter (2006) to provide readers with both practical and theoretical knowledge of the topic. 2.0 Porter’ s Five Force Model To analyze the intensity of competition that Trader Joe faces in the current scenario let us look upon Porter’ s Five Force model of industry competitiveness. The threat of New Entrants Trader Joe has an added advantage of Economies of scale which reduces its average long-run cost and enables it to offer superior quality goods at a lower price than its rivals.
The threat of entry of new entrants is medium as entry to the existing market of Trader Joe is either supermarkets being rebranded or health store transforming into supermarkets.
Further, there exists a possibility that competition may become more intense in the form of grocery stores like Whole Foods or Market Baskets. Further specialty stores and Target superstore could intensify competition. One of the major reasons for concluding the threat of new entrants as the medium is because Trader Joe is characterized by offering unique products which its existing rivals fail to do so thus ensuring competitive advantage to the company. Further, the customers of Trader Joe are very loyal to the company and there seems very little probability of the customers being swayed away by existing or potential entrants in terms of luring them with lower price or using discounted schemes. Bargaining Power of Buyers The bargaining power of Buyers can be characterized differently in terms of their different buyers.
The power of buyers in large volumes is high as the variety of goods and services offered by its competitors within the same industry like Whole Foods and Grocery stores are immense.
Barney, J. 2001. Firm Resources and Sustained Competitive Advantage. Journal of Management, 17, 99-120.
Porter, M. E. 2006.What is strategy? Harvard Business Review, 77(November–December), 61–78.