Dliveroo Edited

QUESTION 1
Analysis of Deliveroo micro business environment - online food delivery industry.
Porters five forces model helps analyze a businesses' success by evaluating the market and
providing key information concerning the business that can be used to increase its success
(Varelas and Georgopoulos, 2017). Porter's five forces model does so by analyzing factors
affecting the business concerning the industry, in this case, Deliveroo. In the online food delivery
industry in the U.K. The five forces include the threat of entry of new players, suppliers'
bargaining power, bargaining power of the buyers, the threat of substitute products and services,
and industry competition.
The threat of new entrants
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The entry of new players in the market is one of the greatest challenges that the inline food
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delivery industry faces. The demand for an increase in the number of deliveries made using
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online platforms has been on the rise in recent years. The threat of new entrance faced by
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Deliveroo as a player in the online food delivery industry in U.K has increased further due to
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In the online food delivery industry, few barriers may prevent new businesses from venturing
into it. The government has also laid favorable policies that make it easy for new businesses to
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join the industry, including setting low capital requirements on entry and few fixed costs. New
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entrants may be triggered to enter into this industry since the cost of starting a restaurant is
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relatively lower than other forms of business (Gavilan et al., 2021). In the food industry, a
business's probability of success is mainly determined by the experience rather than the food it
offers and the business's ability to establish a strong network. Businesses operating in the online
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food delivery industry face a constant threat of entry of new firms, and their survival depends on
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their experience and innovativeness.
Bargaining power of suppliers

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Suppliers' bargaining power analyzes the pressure that suppliers exert on a given industry or
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business and how the supplier's tactics, such as hoarding, affect an industry. In the online food
delivery industry, every player is always seeking to offer its customers a wide variety of products
to choose from. In the industry, no limitations are acting as a barrier to the number of businesses
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joining the network (Allen et al., 2017). Lack of limitations implies that there will be a high
number of suppliers. The prices that suppliers provide their products with to the sellers will
determine whether the online seller like Deliveroo will purchase from that point. Deliveroo has
many suppliers to choose from since many producers in the U.K, making it easier for Deliveroo
to select its preferred supplier. For example, if there are many meat suppliers for meat needed by
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Deliveroo to make its dishes, then then the bargaining force of suppliers will have a little
strength, making it a weak force.
Bargaining power of the buyers
In any industry, buyers' bargaining power is crucial since it determines important factors such as
prices and the number of suppliers who will venture into the industry. In the porter's five forces
model, buyers' bargaining power measures the pressure which customers put on businesses
making them change their processes and strategies to fit consumer demands. When the buyers
have great bargaining power, the prices and services offered by Deliveroo will be forced to
reduce, posing a threat to the company (Hussein and Muchemi. 2019). There is always a strong
buyer bargaining power in the online food delivery industry since there are many restaurants
with no standardized prices to choose from. The cost for shifting from one seller to another is
very low, making it easier for buyers to bargain.
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According to Suhartanto et al., (2019), more than 80% of buyers stick with the online purchasing
platform which they have used regularly, maintaining loyalty to a given service. For Deliveroo,
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this is a great advantage since it joined the industry among the first businesses and therefore, it is
likely to benefit from consumer loyalty. For Deliveroo, an online food delivery company, the
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force for buyers' bargaining power is a moderate force since players offering lower prices are a
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threat. Still, nevertheless, it has a large customer base.
The threat of substitute products

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According to porter, the threat of substitute products in an industry is triggered by competition in

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goods and services prices. When sellers maintain standardized product prices, they are less likely
to lose customers (Kawira, 2017). In the online food delivery industry, substitute products may
vary depending on the value a customer attaches to them. In the online food delivery industry in
which Deliveroo operates, the threat for substitute products is caused by competition in the
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prices of products offered to buyers (Roberts et al., 2020). Consumers of online foods may opt to
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consume home-cooked foods when the prices of online-delivered food are higher. They may also
choose to buy other products other than those they initially intended to purchase before. For
Deliveroo, the threat of substitute products is low since it offers favorable prices and quality
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services to its customers. Deliveroo is also ranked among the most attractive online food
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deliverers in the U.K just after Uber Eats, which surpass it closely, making it easier to retain
customers.
Industry competition
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Deliveroo, despite being among the largest firms in the UK, is faced with competition from other
firms in the online food delivery industry. Firms such as DoorDash and Uber Eats are among the
largest competitors that Deliveroo faces. According to Iqbal (2021), Deliveroo's greatest
competitor in online food delivery in the U.K is UberEats.
Iqbal, M., 2021. Deliveroo Revenue and Usage Statistics (2020).
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Since few restrictions are barring new players from joining the industry, competition is always
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high. All players offer similar products and services, making the competition even stiffer. A
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higher concentration of restaurants in urban areas means that there are high levels of completion
for Deliveroo. According to GlobalWebIndex 2019, 80% of consumers in the U.K love take
away from Just Eat, 24% from UberEats, and 23% from Deliveroo.
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Top 3 takeaway delivery providers in the UK and U.S

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Source: GlobalWebIndex, 2019.

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For Deliveroo, competition is a very strong force since it determines the number of revenues the
company will make. Competition is even increased further by the ease of entry into the industry
and the similarity of products offered.
QUESTION 2
Business strategy of Deliveroo
Deliveroo uses a distinctive business strategy to be a successful player in the online food
delivery industry. In its operations, Deliveroo engages in partnerships with other restaurants such
as Pizzaeast, Nando’s, Wagamama, among others, in delivering products to customers.
Deliveroo’s incredible selection of restaurants
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NOAH15 London, 2015.
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Deliveries to customers are made by drivers who work for Deliveroo on a contractual basis,
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depending on the products' demand. The business also uses a differentiation strategy that enables
it to prevail in the highly competitive industry. One of its main strategies involves integrating its
products from its competitors, focusing on foods being mainly on quality (Ovetz, 2020). The
company delivers food to all customers regardless of whether they want to eat from their favorite
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restaurants or their home's comfort.

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In its operations, Deliveroo has a deep sense of technology across all sectors. The business has
digitalized its marketing and delivery systems, making it easy for customers to order foods while
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also increasing the expected delivery time (Drahokoupil and Piasna, 2019). Using the online
platform, Deliveroo plus, customers are given a one-month free delivery trial which enables
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more customers to subscribe and make online purchases using the platform.
How Deliveroo become a leading Food delivery platform in many countries

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Piraya, 2019.
The payment systems used by Deliveroo have been digitalized, enabling customers to make
payments by use of credit and debit cards which leads to a significant decline in the
complications. Customers of food products can access the company’s products from an online
platform that integrates website and mobile users, which has been simplified, making the
ordering process very easy. Customers will be able to track their ordering journey, making it even
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more reliable and safe for them. In 2019, Deliveroo reported a 650% revenue increase from the
previous year's revenue (Ivanova et al., 2019). The company also recorded a 30% increase in the
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level of sales in the same year.
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The competitive advantage of Deliveroo
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Resource-based model theory of competitive advantage.
The resource-based model theory of competitive advantage analyses the resources essential in a
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company's performance and positioning, which place it in a position of enjoying the competitive
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advantage. According to this theory, a company’s long-term success is based on its internal
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resources and capabilities (Barney, 2018). Competitive advantage is enjoyed when a company
can create more value than its industry rivals' inability to replicate the advantage. Deliveroo
utilizes its resources, both tangible and intangible, and its capabilities to achieve a competitive
advantage in the industry.
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Deliveroo's tangible resources include resources physical resources, which include software
platforms like Deliveroo Toolkit. The platform enables riders, buyers, and restaurants to enjoy
the best experiences. The online platform is a competitive advantage since it is unique and is not
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available for competitors. Deliveroo's intangible resources include its know-how and experience
gained from its long stay in the industry (Drahokoupil and Piasna, 2019). Deliveroo's capabilities
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that give it a competitive advantage include its ability to expand due to its huge financial base
enabling it to operate in international markets.
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Competitive advantage.
Being in a highly competitive industry, Deliveroo has a certain competitive advantage that
enables it to survive and outdo its competitors. Some of its competitive advantages include its
high degree of innovativeness and agility (Akgün and Latham, 2020). Deliveroo utilizes
innovative technologies like machine learning to facilitate speedy food delivery to its customers.
The company also uses online platforms like Deliveroo plus, restaurant home, and Deliveroo
Toolkit.
Deliveroo plus
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Deliveroo, 2021.
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Since the online food delivery industry is highly competitive, Deliveroo offers high-quality
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products that customers can order and receive speedy deliveries to track the delivery progress.
The company also has a high level of expertise and experience as it is among the forerunners in
the online food delivery industry.
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Deliveroo's ability to remain innovative is a competitive advantage because it can take advantage
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of arising opportunities that its competitors cannot. The company also has great experience from
its long existence in the industry, enabling it to mitigate all challenges and produce high-quality
products. Its online platforms are also a competitive advantage since they can make more sales
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with convenience and speed.

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Deliveroo’s main future opportunities and challenges that Deliveroo is going to face in the
next five years
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When identifying a company's strengths, weaknesses, opportunities, and challenges, the SWOC
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analysis tool is used. SWOC analysis is a strategic management tool used by a business to assess
the environment it operates in. when analyzing Deliveroo's opportunities and challenges for the
next five years, SWOC analysis will be used.
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Opportunities
Opportunities are the positive and external factors that a company live Deliveroo can take
advantage of but has no control. Deliveroo can take advantage of opportunities such as
technology and social trends to increase its performance.
With the increasing technological innovations and revolutions across the world, Deliveroo can
take this as an opportunity and utilize it in its operations. By taking advantage of technological
revolutions, Deliveroo can process more data and create applications and platforms that are more
beneficial and accurate for its customers. With the rapid technological revolutions and
innovations in the next five years, more customers will access and use online platforms
(Frederick and Parappagoudar, 2021). If it wants to retain its competitive advantage, Deliveroo
must maintain its current position as an innovative and agile company, thus maintaining its
current customers and gaining even more.
The other opportunity Deliveroo can utilize is the evolution of social trends. Today, the demand
for instant deliveries and payments increases among consumers (Dablanc et al., 2017). More
customers will prefer to order products using their smartphones or computers in the next five
years since they are convenient and equally fast. If Deliveroo can utilize this opportunity, it can
remain competitive and retain its current customers. This is because consumer’s demand for
speed in payments and delivery is not declining but increasing by the day. Analysis of
opportunities and challenges is relevant since Deliveroo can identify existing market niches and
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take advantage of them.
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Challenges/Threats
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Threats or challenges are occurrences that pose a challenge to a company, product, or venture. In
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the online food delivery industry, there are several challenges that companies like Deliveroo
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face, which are a threat to its sustainability and competitiveness in the next five years.
According to Galati et al. (2020), Deliveroo faces the challenge of increasing competition in the
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industry. The challenge is mainly caused by the ease of entry into the market by new businesses.
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The government has also laid policies that make it easier for a new business to join the industry.
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With the increase in competition, Deliveroo's position as a leader in the market is threatened.
Analyzing the threat of competition is relevant since it enables a company to understand what it
needs to do to remain competitive, including applying strategies such as product differentiation.
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Another challenge that Deliveroo faces is the challenge of legal issues. One of the main
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challenges it faces is employment contracts with drivers and riders. Due to transformations in
labor laws, Deliveroo will face the challenge of employment and contracts in the future (Zekić,
2019). This challenge is significant since it is likely to affect its position in the market over the
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next five years. With increasing employment laws changes, Deliveroo will likely have to revise
its employment contracts if it will remain competitive and sustainable.
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Recommendations
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If Deliveroo is to attain future growth in the highly competitive industry, it must take advantage
of existing opportunities while also being able to mitigate the expected future challenges.
According to a digitalization report of online food delivery produced by The Guardian Magazine
in 2020, most companies are yet to digitalize their operations despite the need for digitalization
fully. Since there is a rapid increase in technological innovations today and even more expected
in the future, Deliveroo should ensure that it adopts cutting-edge technology. This will enable it
to overcome competition and remain competitive even as time passes by. One of the ways that
Deliveroo can utilize technological revolution is by ensuring that it fully digitalizes its supply
chain, from consumers to restaurants. By doing so, more customers will be able to make
purchases and receive faster deliveries. The company can also develop more online platforms
and increase its application of machine learning and add artificial intelligence to its operations,
making it easier to track orders and identify consumer trends.
Due to the constantly changing social trends among consumers, Deliveroo should consider
investing more in its online delivery and payment systems. Today, consumers' demand for instant
payments and deliveries has significantly increased and is more likely to increase in the future.
Value of online retail sales in the UK from 2012 to 2020
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Statista 2020.
deliveroo should consider creating more platforms that enable online purchase and payments and
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invest more in ensuring that the platforms are highly reliable, accessible, and secure.
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In the recent past, many new companies have joined the online food delivery industry due to
entry ease. Deliveroo now faces a challenge of competition sa a result. To overcome the
competition, Deliveroo can consider highly differentiating its products and using pricing
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strategies to generate more sales. If Deliveroo can offer products at a lower price margin than its
competitors, it can generate more sales and generate more revenue in the long-run, (Xia et al.
2020). Differentiating its products by offering high-quality products can also help Deliveroo
overcome the current competition and sustain its future growth.
Deliveroo is currently facing the challenge of employment and contracts, which affects its future
sustainability. As a way of trying to solve the problem of legal issues related to labor, the
company can consider employing drivers and riders permanently or hire them on a commission
basis. The company can also try and ensure that it complies with the legal guidelines for it to
avoid conflicts with employees that may ruin its brand image, making the company can become
more sustainable.
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QUESTION 1

Analysis of Deliveroo micro business environment - online food delivery industry.

The threat of new entrants

their experience and innovativeness.

Bargaining power of suppliers

Bargaining power of the buyers

The threat of substitute products

According to porter, the threat of substitute products in an industry is triggered by competition in

Top 3 takeaway delivery providers in the UK and U.S

Source: GlobalWebIndex, 2019.

Deliveroo’s incredible selection of restaurants

restaurants or their home's comfort.

How Deliveroo become a leading Food delivery platform in many countries

with convenience and speed.

Value of online retail sales in the UK from 2012 to 2020

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