• Though profitable, slower growth in sales • Strong brand awareness • Share market with recognized competitors Value chain analysis is one of the fundamental elements of chain analysis. In order to analyze the environmental aspects of Costco, PEST analysis will be used. The PEST analysis covers the analysis of Political, Economic, Social, Technological environments of a country with reference to a specific object. The Costco Warehouse Corporation’s PEST analysis as follows: Political Costco Wholesale Corporation’s business practices get influenced by the political environments of the host and the home countries where it carry outs its business. The company is providing high wage rate to its workers as a result of its agreement with the union bars and it has set different standards for its workers in its stores in spite of the political policies of a country.
Quality product is critical to just-in-time (JIT) purchasing system. Poor product quality from a supplier can disrupt the entire supply chain and result in expensive production. If Bose corporation receives a poor-quality that they need to send back to the supplier, entire Bose’s production processes disrupted. Such occurrences can shut down production line in some cases. Since Bose uses JIT system which minimizes inventory.
Companies take a very basic, low-cost approach to marketing--nothing fancy. It is just the bare minimum to keep prices low and attract a specific segment of the market that is very price sensitive Aldi, a food store, is another example of economy pricing strategy. They keep their prices low and attract huge customers . Penetration pricing is based on a particular principle which is that a product or any commodity has enough buyers to make up for the lower price point. This can be used as a strategy where in the competitors will have lower their prices in response or risk being forced out of the industry.
To find the main sources of competitive advantage that Tesco has over its competitors an analysis of the structure of the industry should be under-taken (Porter, 1980). In order to analyse what extent Tesco U.K’s performance is attributa-ble towards industry characteristics, Porter’s five forces are broken up into competition, potential of new entrants, power of suppliers, power of customers and the threat of sub-stitute products. Below is an image of Porters 5-forces in relation to the U.K supermarket industry. 1. Rivalry amongst competitors The intensive rivalry in the U.K’s grocery sector is remarkably high.
Describe the competitive situation in which the company has been able to succeed (e.g. the number and key characteristics of the closest competitors alongside your other central observations from the "Porter's five forces", for example). 1. Risk of entry by new competitors Risk of entry by potential competitors into the grocery retail industry is not significant. Economies of scale are considered as one of the critical factors of success in grocery retail industry and economies of scale are therefore a substantial barrier to new entrants.
Customers are always attracted to low prices, when the products available are low pricing comparatively customers would easily choose them. To keep the consumers involved Tesco should come up with diverse promotional activities. Bargaining power of suppliers: The low measure of bargaining power shows in the market of Tesco Malaysia. Suppliers are mostly attracted to the big grocery food retailers. Since the position of Tesco in the market has always been inclined, the negotiations would be positive as they would receive the lowest prices from the suppliers.
The Porter five force model looks at the following aspects: 1. The level of rivalry in the market 2. The availability of substitute products 3. The threat of new entrants that may join the market 4. The power of buyers The level of rivalry in the market This force looks at how intense the current competition is in the market place.
Amazon would struggle with quantity control from purchasing Whole foods because Amazon will be holding too much stock given by the company which may produce sales or losses towards the capital. They will also experience losses from defective products within Whole Foods that will affect the company. Aside from losses in quantity, this would result in finding a supplier that satisfies quality standards which will cause prevention of expanding their operations for long-term growth. Also, since Whole foods priced their products relatively high, Amazon must adjust to these changes by adding more price value towards the product which will be less attractive towards customers who prefer paying cheaper alternatives. Furthermore, Amazon may face a lot of supplies being damaged when being shipped out to consumers as each product is very fragile.
Capital requirement usually build up a firm which is the high capability to compete in the industry. However, telecommunication is a high competitive industry in order to gain large market share. Therefore, new entrants have to ensure that they have ample financial resource to sustain in this industry. 3.2.2 Bargaining power of suppliers (high bargaining power of suppliers) Telecommunications industry in Malaysia is dependent on imports for the majority of its network components as
The strategies of the company are strong and their strength lies in the sense that helps the management to build up strong relationships with both buyers and suppliers (Rudolph, 1995). The only weakness so far is lack of adequate investment, but this can be reduced by attracting some potential investors. Suppliers can pose high price threat, but this risk can be mitigated with the help of building strong management ties. Opportunities Opportunities can be defined as trends that can influence business in a positive way. Continuous increase in the saturation and competition in the UK food industry seems to be an opportunity for Campbell.
This option allows the grocery chain to focus on important determinants of store choice: Grocery and Produce. This option will increase Hi-Value’s competitiveness in the market, especially against chains that are less convenient and more expensive. Customer price perception is category specific so it will be a high impact. Management believes a price war with competitors is unwise and that it is not a viable option to engage in deep discounting across the board like Harrison’s, Grand American, and Missouri Mart. I think it is crucial to reassess pricing strategy on a quarterly basis per store to determine effectiveness.