Costco’s Expansion outside US – a very positive tactic. You can see a significant increase in the operating income 2010 – 47% and 2011 – 92%! Capital expenditures rose considerably to achieve those results. Costco’s competitive advantage is sustainable and company has proved it: annual growth, low operating cost, low prices, high customer loyalty plan, continuing profitability, and satisfied employees. Five years from now Costco will be standing as the industry leader if they will continue with the same philosophy, goals, strategy and mission.
In today’s furniture industry there are many companies to buy from, no matter what piece of furniture one is looking to purchase. But, there are two furniture companies in particular that approach their business models differently and subsequently yield very contrasting results. Ikea chooses to focus on offering affordable furniture for the average person, while still providing pieces with modern design. In contrast, the La-Z-Boy furniture company values the quality construction and innovation of its items as a long-term investment. La-Z-Boy strives for products that are synonymous with quality and comfort, while Ikea chooses to offer many products for the home at a cheap price.
Walmart sells many items at ridiculously low prices. They are able to offer low prices on their items due to an incredible mark-up on imported products. Especially in today's economy, the buck is the big winner. Everyone wants to save money, and they can do that by shopping at Walmart, where many items are the lowest price in town, even if it's only by a few pennies. But consumers aren't helping their fellow countryman earn his own living by buying these imported items.
Sweatshops may exist in any country but are more commonly found in LEDC’s. Many of the clothes sold in retail outlets in MEDC’s are manufactured in factories in LEDC’s. In many industries, including the fashion industry, jobs have been lost in MEDC’s because goods and clothes can be produced (manufactured) cheaply and more efficiently in the poorer parts of the world. This is because manufacturing overseas is cheaper; the wages there are lower, due to lots of workers being available and there being no minimum wage. Therefore manufacturers make bigger profit.
However, when decentralisation occurs, urban centres suffer many negative impacts. Urbanisation is the process of inner city functions and powers dispersing and redistributing away out of city to more sparse areas, usually on rural-urban fringe. Manchester is a particular city that has both suffered from decentralisation, but has also been somewhat successful in its attempt to tackle this issue. During the 1950’s, shops located in the city centre tended to only sell high order goods such as furniture and jewelry, attracting customers from all around and from out of the city, whereas shops selling low order goods like food were found local to individual neighbor hoods. At the start of the 1970’s, shops began to move and spread away from the CBD to areas on the outskirts of the city.
Question 1: Despite its growth and size, why is Inventec not very profitable? Inventec is not very profitable due to: 1. Extensive industry competition: a. ODMs are fragmented. There are many existing large ODM competitors such as Asustek, Compal and Quanta who all have larger economy scales than Inventec in terms of their sales revenue. Meanwhile, as OEMs tend to primarily outsource ‘commodity technology’, EMSs and ODMs are increasingly competing for the same client base.
Having such “space-friendly” package allows the warehouses to contain sizeable amounts of furniture and trucks to transport significantly much bigger quantity. All of this process reduces the overall cost of storage and transport, therefore, creating a core competency for Ikea. Furthermore, considering the fact that customers have to mount their furniture themselves automatically induces that Ikea won’t need any employees for the assembly like most shops do. This allows Ikea to concentrate their employees in different tasks, saving them a lot of money. The only counter-part of this aspect would be the fact that customers have to take time mounting the furniture, which Ikea considers being a source of fun and a social activity.
Redbox pursues a low-cost provider strategy by striving to achieve lower overall costs than rivals on products that attract a broad spectrum of customers. It was able to achieve low cost by installing kiosks the cost of which is $15,000 with five years of useful life. The price competition among rivals is vigorous. There are many rivals who are selling similar products, but hardly anybody can offer the same price per DVD with no late fees. Moreover, the convenience of locations saves customers’ time, energy and money, taking into consideration that the rental fee of Redbox is “dirt cheap.” Through its successful strategy execution, in 2010 Redbox had 22,400 vending kiosks in the United States, Puerto Rico and United Kingdom.
Amazon.com Amazon, ranked 5th for its supply chain in the most recent Gartner Supply Chain Top 25 list, is a successful company that is looking to continuously improve. When analyzing Amazon’s supply chain, there are three of the seven principles of supply chain and two of the four pillars of excellence that strongly coincide with its strategy. This company should evaluate itself based on trends of three areas to help improve its supply chain; inventory turnover ratio, days payables outstanding, and net cash flows from operating activities. Amazon has a direct-to-consumer online and drop-shipment model which comes with many advantages (Amazon.com). This model allows Amazon to have millions of different inventories listed for sale without actually having it in inventory since a different manufacturer (who Amazon is partnered with) has it and ships it directly to the consumer.
These allow IKEA to reduce space requirements in logistic operations such as trucks and warehouses and they also lowered costs, creating a core competency for IKEA. - Furniture showroom/open warehouse. This unique store concept allows customers to come see the IKEA products so they can see for themselves the quality of the products before they decide to buy them. IKEA’s end products are low-priced and high-quality furniture and in-house products. These products have low prices as a result of IKEA’s core competencies.