Often the starting point when analysing a case is to conduct an industry analysis in order to establish the attractiveness or otherwise of a given industry. For this we usually use Porters Five Forces theory, which has as one of its considerations, the barriers to entry that may hinder a competitor who is considering moving into a particular market. Examples of these barriers include high initial capital requirements, access to distribution, proprietary product issues, and expected retaliation (more on this last one later).
A few weeks ago I needed to get some milk on my way home from class, and as I had heard that a new Supervalu had opened nearby, I decided to go check it out. The store is located in a small commercial park that already has a large Dunnes Stores. Obviously no business is happy when a competitor moves in next door, but it seems that Dunnes Stores were determined to do something about it.
Perhaps the management in Dunnes are disciples of Michael Porter because they took his theory to the ultimate, and a brilliant, conclusion by erecting an actual barrier to entry. Yes, they retaliated by bricking up the wall and closing off access. If you look closely at the picture you can see the evidence of this by the newer brickwork in the wall as well as the old road markings.
However, not to be outdone, Supervalu also retaliated by erecting a large electronic sign that flashes psychological warfare messages directly into ‘enemy territory’. Perhaps it’s no wonder that the locals are calling it the Berlin Wall!
Conor Connolly ~ Executive MBA Year 2