BJ’s strategy focuses on providing their shoppers more groceries and packaged goods in small portions. Sam’s is concentrating more on reducing their product cost. Sam’s is using other countries, like China and Mexico, to but from to help keep their cost down. When it comes to determining who have the best strategy out of the three rivals we believe Costco is using the best strategy due to the fact they use the deny dock distribution, which allows them to be cost efficient. By Costco finding ways to insure they are cost efficient they are able to offer their customers reasonable prices.
Power of Suppliers – Low There is low supplier concentration relative to the industry they sell to and a single supplier does not account for a large part of a retailer’s business. This weakens the overall power of the supplier because there are more supply options available for discount retailers. The emergence of private labels has also reduced supplier leverage. Supplier power is further weakened by low switching costs and non-differentiated products. As the retailers incur virtually no costs by changing suppliers it is easy for them to play them against each other to get better terms.
I would personally say that, of the five forces, the substitution from other industries would be the strongest. Wholesale clubs offer similar products in a sense, although it is the same product simply in larger quantities, or obviously, wholesale instead, which drives the price down. Which then could almost tie up with the buyers competitive force, which is where the wholesale clubs buy their products from, direct, which makes that middle man non-existent, and increases profit margins. 2. Do all three warehouse club rivals have highly similar strategies?
Case: Blue Nile, Inc., in 2010 (case 9 in text) 1. How strong are the competitive forces confronting Blue Nile and other online retail jewelers? Which one of the five competitive forces is the strongest? Do a five-forces analysis to support your answer. After reviewing all the five competitive forces, my analysis showed that the weakest of the fives forces is the threat of new entry’s despite the possibilities of selling of a good with a high contribution margin, it is very challenging and expensive to develop a new competitor that could go head to head with Blue Nile and make a profit, let alone survive the competition.
This has lead to a fall in profit of the company. This decision is taken based on the constraints theory as profit is not the most important issue, as incidents of phone exploding may lead to the company shutting down. Thus it is wiser for the company to focus more on the issue and solving it in order for the company to have a higher sustainability. Revenue maximisation means that the business tends to maximise the revenue in order to increase its market share. For example, a hotel manager tries his best to satisfy the customer without considering about the high cost spent.
They need to enforce distinctive cost-saving methods in their production, operations, and selling that has allowed them to draw in the foremost affluent customers in discount selling. The central focus of their business model turned around high sales volumes and fast inventory turnover by giving fee-paying members beautifully low costs on a restricted choice merchandise that include a mix of across the country branded and illicit private-label products in an exceedingly wide selection of merchandise classes. This is an awfully appealing business model because it provides the power to control fruitfully at a lot of lower profit margin by securing marketer volume getting agreements, economical distribution, no-frill self-service warehouse facilities and supplemental membership fee revenue. Another magnet is because of the high sales volume and fast inventory turnover style of this business model, the accelerated money conversion cycle permissible Costco to gather the funds for inventory before marketer liabilities changing into due. This provided for marketer finance and also the ability to require advantage of early payment discounts that additional reduced operational prices.
Solution for Dell's Working Capital Dell’s working capital policy Pros: - Low finished goods, low carrying cost, reinforces it custom build-to-order strategy. - in case of defective products, it is much quicker time to market. - rolling out pcs with new os, technology much faster than its competitors. - helps it to pass on saving on customers, when the component cost is reducing. - generates cash from maintaining low cash conversion cycle/ - more sales can be stimulated on credit basis - low inventory with low fixed assets gives dell a higher return on capital employed.
Only offer products that can be placed at bargain prices iv. Philosophy was to keep customers coming in to shop by wowing them with low prices v. Criticized for too low price vs. focused on profit…. Reasoning, they want people for the long run Limited selection i. Only 4000 options (vs. 40K to 150K for others) ii. Intelligent loss of sales (e.g, 350 count of advil only option, those who need it will buy it).- helps with efficiency Treasure-hunt shopping environment i.
1. The strategy of DFA company was taking advantages of size effect (small companies outperform the market) and value effect (high book-to-market ratio companies outperform the market). So that they chose small-capital companies and high book value companies to create their portfolio. They primarily believed in efficient market as well as the sound academic researches and ability of skilled trader. They worked with the RIAs (registered investment advisors) to lower the cost.