Brazil's Retail Industry Porter's Five Forces Analysis

Latin American Retail Industry

Porter’s Five Forces Analysis
Introduction to Latin America for International Management

i. Index
i. Index ii. Executive Summary 1. Review of Porter’s Model of Five Forces 2. Retail Industry Overview 2.1 Brazil’s Food Retail Industry 2.2 Brazil’s Apparel Retail Industry 2.3 Brazil’s Footwear Industry 3. Leading Enterprises in the Food Retail Industry(Brazil) 3.1 Multinational Companies 3.1.1 Walmart 3.1.2 Walmart Presence in Brazil 3.1.3 Carrefour 3.1.4 Carrefour Presence in Brazil 3.2 Local Companies 3.2.1 Grupo Pão de Açúcar - Companhia Brasileira de Distribuição (CDB) 4. Porter’s Five Forces Analysis 4.1 Buyer Power 4.2 Supplier Power 4.3 New Entrants 4.4 Substitutes 4.5 Rivalry 5. Conclusion 6. Sources 2 3 4 6 6 7 7 8 8 8 8 9 9 9 9 10 10 1010 11 11 12 13

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ii. Executive Summary
Retailing is a business model well represented in Latin America. Our report is trying to define the model and its features and characteristics related to the Porter Model. We first recall the Porter model with the principle of the five forces. In a further analysis we highlight the retailing activities within the Latin American frameworkfocusing on the leading country: Brazil. We finally resume our statements in a short and clear conclusion.

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1. Review of Porter’s model of Five Forces
Before reviewing Porter’s model of Five Forces, it would be convenient to briefly sum up each element of this model:
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Direct competitors: When there are numerous direct competitors in an industry,

companies will have to adjusttheir prices and margins and it will be harder to have a high profitability.
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Threat of new entrants: Depending on the profits of the market, companies will be

eager to enter it. The more competition there is in an industry, the easier it is for new companies to enter it. Thus, many elements of that same industry will be influenced by it such as the prices or the customer loyalty.
-Threat of substitution products: This element stands for the threat of products

substitutable to your own product might appeal customers to buy their product instead of yours.
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Suppliers’ power: In numerous cases, such as when there are few suppliers for the

industry or no substitutes for the product our company needs, suppliers will be able to pressure companies by increasing theirprices or putting a high pressure on margins.
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Bargaining power of customers: Depending on various factors -such as the volume

bought or the high fixed costs of the supplying industry-, customers might pressure the company on prices, margins and volumes. Porter’s Five Forces Model is useful in many ways and presents numerous advantages which determine the attractiveness of a market byexamining both external and internal threats. However, that model can be criticized due to several disadvantages:
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Even if a market seems profitable after the study of the model, it doesn’t necessarily

mean that every company will have the same gains. Indeed, the profitability of a company doesn’t only rely on Porter’s Five Forces but also on the business model and its core competencies.
-Moreover, the influence of each force will be different in every industry. For instance,

a web designer might not necessarily face the power of suppliers.
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Another criticism strategists arose is that threats like buyers, competitors and suppliers
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do not interact. Consequently, each threat has to be observed specifically.

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Porter’s Model might be seen as a bitrestrictive since other elements are not taken into

account such as the government and the laws implemented and might need additional studies such as the SWOT or the PESTLE Analysis to be more accurate.
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Finally, Porter’s Model was created in 1979, which is 32 years ago. Consequently, all

the information has to be updated to today’s situation, taking into account additional variables such as...