The Industry of Staples Company - Essay Example

Staples can operate in the retail business - office supplies, in the superstore category. The product category that Staples intended to explore and venture it was a relatively new concept which was likely to draw in required demand for the products offered. Also, the supermarket category, as observed by the promoters of Staples – Stemberg and Kahn, offered the required business model necessary to offer low priced products. The basic benefit offered by this type of business was the pricing opportunity.

Besides the sheer size of the office product market – which was enormous and still growing comprised of $85 million worth of office supplies sold annually which comprised of a range of product assortments such as paper clips, paper, folders, pens, pencils, envelopes, copy machines, furniture, and so on. The product range that could be included was also large and impressive providing further ground for increasing its profitability by segmenting its product line as per the target group. An industry structure could be determined by the number of players in the industry as well as by their size and distribution across various sectors in the industry.

The existence of a large number of players naturally affects the profitability and competitive positioning of rival firms and determines the degree of competition as well as an inter-firm rivalry. The industry that Staples ventured in / proposed to venture it was a niche area since there were hardly any superstores dealing entirely in office supplies. The industry had several small numbers of players mostly dominated by wholesalers, distributors, manufacturers and dealers. Overall the industry structure could be defined as small and fragmented.

Also, these small firms had commendable authority over the industry and commanded a large share of profits.