– 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 inter - firm rivalry. The industry that Staples ventured in / proposed to venture in was a niche area since there were hardly any superstores dealing entirely in office supplies. The industry had several small number 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. Thus it could also be regarded as a consolidated industry and the market type could be categorized as oligopolistic, wherein a small number of players accounting for a large part of market share although, this type of industry structure was dominant in most of the industry sectors in the U.S. The office supplies superstore industry, although relatively a new concept has the potential of slowly catching up on the trend mostly due to the high profit margins made available due to the business model offered by the large supermarket industry structure.
The entry barriers in a highly fragmented industry are relatively low as compared to highly concentrated industries with large number of players. High profit margins and the presence