Business Strategy

COMPETITIVE STRATEGY

A competitive advantage is what distinguishes a business from the competition in the minds of consumers that will make them want to use one's business over another's. There are four different categories that a business can fall into that are used to describe the advantage, they involve Industry Wide/Focus, and Low Cost Leadership/Differentiation.

There are two predominant nutrition stores that dominate the supplement market in which consumers like to buy from, they are GNC and Vitamin World. Like most highly credible name brand retail businesses, GNC has locations all across the United States and also has some international locations as well leaving an industry wide/ broad strategy. Due to the uniqueness and specialty of products that are sold, GNC falls into the differentiation/ product uniqueness strategy. That leaves the overall strategy of GNC to be an Industry Wide Differentiation strategy.

PORTER'S FIVE FORCES MODEL

Rivalry Amongst Existing Competitors:

Industry rivals are what fuels the competition in the business world. Companies try and stand out over competitors to get an edge in any way possible to obtain more sales than their opponents. GNC is in a supplement market that is only seen as having two established name brands in the locations that GNC is located. Vitamin World is the only other recognized brand in the industry of supplements, leaving the rivalry amongst existing competitors to be low. Granted there are some smaller stores that sell supplements other than these two competitors, but for the extended variety and depth of product these two companies carry, there are no real contenders. 

Threat of New Entrants/Barriers to Entry:

The threat of new entrants is how big of an impact a new company can make in the same market that one's business is in. Barriers to entry and existing competition are just a few factors that lead to deciding the relative ease or difficulty that  new entrant faces when trying to enter a market. For GNC, the threat of new entrants is low. Any business can sell supplements, however, brand recognition plays a huge part in this decision. This is because GNC is already a well established and more than credible destination for what they are selling; both them and Vitamin World are. 

Threat of Substitute Products:

The threat of substitute products refers to a different product or service that is related to a product another business is selling that can easily be replaced. Supplements in pill and powder form only come in that one form, however customers can get the nourishment these supplements give in the food they eat making the threat of substitute products medium. For example, instead of buying protein powder, one can get their daily protein needs in eating more meat. The benefit that these supplements give is that they are much more cost friendly when compared to the cost of buying food for the same protein. 

Bargaining Power of Customers:

The bargaining power of customers is, in essence, the power a customer has over a business. For GNC, this is medium due to the fact that if a customer does not like the way GNC does business, they can easily go to a rival such as Vitaman World for their needs. A way for GNC to retain customers and keep the power of consumers low, building relationships with customers is the most effective and cost friendly solution. 

Bargaining Power of Suppliers:

The bargaining power of suppliers is how easily or difficult it is for a supplier to drive up prices. The uniqueness and depth of products that GNC carries leaves the bargaining power at a medium. This is due to the fact that GNC holds special products that many suppliers cannot sell at other locations due to the fact that not every business wants to carry these products. For GNC this is both an advantage and a disadvantage. It is an advantage because these companies will want to continue to supply GNC at the decided fee because they need to sell their products through GNC. However, this is also a disadvantage because these suppliers know that the unique products they have are what drives customers to come to GNC and can teeter with prices little by little.