The Production Concept – Companies focusing on this concept will primarily focus on achieving high production efficiency at low costs and mass distribution as they believe the consumers are primarily interested in widely available products at low prices. This concept makes sense when the consumers are more interested in obtaining the product than features. The Product Concept – Companies will study a product concept before they market the product to their customers are a lot of time and money is spent on research to ensure they reach their target market, in order to do this they must fully understand and know the product to ensure they can present the products best qualities and features. 2. Britvic’s micro and macro environment.
Discount Customers- Discount customers are also frequent visitors but they are only a part of business when offered with discounts on regular products and brands or they buy only low cost products. More is the discount the more they tend towards buying. These customers are mostly related to small industries or the industries that focus on low or marginal investments on products. Focus on these types of customers is also important as they also promote distinguished part of profit into business. Wandering Customers- These are the least profitable customers as sometimes they themselves are not sure what to buy.
Planning it strategically, Tyco seems to have chosen to enter businesses that are unglamorous but provide an opportunity for profitability and growth. Further, Tyco choice of products which compete in stable, low-tech and standardized products requiring limited R&D spending is also a part of its strategy. This has helped the company to control costs and reap the benefits of standardizations and consolidation of processes and systems adding to the corporate advantage. To further elaborate this, with acquisition as its major strategy early on, in the days of Mr. Gaziano, Tyco earned a reputation as a „corporate raider‟. Later on, however, under Fort and Koslowski, things operated under more diligent control.
The most attractive strategy of Primark is about cost cutting strategy is by cutting cost of the volume of the turnover meaning the company can negotiate cheap price from its manufactures in China and East Europe then they take a smaller profit margin per item than some other high street stores (Ergo 2011) see Appendix 1. This manufacturing strategy is the main selling point of the company. Primark does not believe in advertising there company rely on “big bags and big savings” to convey their message they also display they
By minimizing handling of goods through the use of direct shipments form the manufacturer to the store, as well as the use of cross-docking techniques where items are shipped to a cross-dock and then distributed to stores, Costco is able to minimize handling time. This minimized handling enables Costco to cut costs due to less labor involved. Costco also buys items from retailers on the grey market at deeply discounted prices that it can pass onto its customers. Often times, because Costco has such a rapid inventory turnover, Costco is able to buy products and sell them before the invoice is due, often taking advantage of early payment discounts, and in essence, the vendor finances purchase, and Costco is able to pass those savings onto its customers. I think that Cosco’s biggest weakness is that they are not overly forward-looking.
Define the elements of the Internal Analysis utilizing SWOT as per the chapter 3 and the charts on pages 42 & 43. Be as detailed as possible. STRENGTHS * Higher Income Shoppers * Low employee turnover * High salary * Strong management * Private Brand label (Kirkland Signature) * Return Policy- hassle free * Attracts business customers | WEAKNESSES * Modify aging stores * Vendor satisfaction * Ambitious expansion plan * Lax quality control * Strong dependency on providers * Word of Mouth Advertising * Low margin * Leader-James Senegal 79 | OPPORTUNITIES * Expansion overseas and market presence * Increase online sales * Ancillary services * Private Brand label (Kirkland Signature) * Attracts business customers * Expand wholesaling-Internet Sales * Consumer-travel, optical, auto * Financial, * Insurance * Pharmacy * Recycle | THREATS * Increasing competition * Subprime crisis * Low consumer confidence * Low promotional activity * Diversification * Expand wholesaling * Customers have high mobility | Internal Factors STRENGTHS The strengths of Costco’s strategic plan include strong management, low employee turnover, high compensation, strong customer business base, strong private brand (Kirkland) and generous return policy. The company policy is committed to promoting from within their own ranks, filling as many as 86% of higher-level openings in their stores. This allows them to be competitive by staffing their stores with knowledgeable employees which increases customer satisfaction as well as decreasing staff turnover.
The primary cost advantage is Wal-Mart’s superior distribution capability (location of stores, inside-out growth patterns, cross-docking, superior information management). Wal-Mart’s prices are low by the industry standard, which, combined with its lower costs, indicates a strategy that aims at growth in volume through grabbing increased market share. Low prices, advanced data management and extremely motivated employees (“10 ft rule”, “sundown rule”) means a better customer experience than at other discount retailers, even though Wal-Mart remains a self-service retailer. In addition, the large size of the traditional Wal-Mart stores adds convenience by offering a one-stop solution by offering a wide range of products. It’s worth mentioning that Wal-Mart acquired volume through a careful consideration of locations, away from competition.
Costco launched its first store in Seattle in 1983. In August 1999, its name changed to Costco Wholesale Corporation. Costco’s mission in the membership warehouse business was “To continually provide our members with quality goods and service at the lowest possible price” The business model of Costco was created to generate high sales volumes and rapid inventory turnover by offering members very low prices on a limited selection of nationally branded and select private label products in a wide range of merchandise categories. Costco believed rapid inventory plus the operating efficiencies achieved by volume purchasing, efficient distribution and reduced handing of merchandise would ensure Costco to operate profitably at much lower gross margins. The strategy of Costco was low prices, a limited product line and limited selection, and a “treasure hunt” shopping environment.
Yes, the company’s business model is appealing because the company’s increased inventory turnover and low operating costs allowed it to maintain a profit, despite their significantly lower gross margins compared to the industry (traditional wholesalers, mass merchandisers, supermarkets and supercenters). What are the chief elements of Costco’s strategy? How good is the strategy? The chief elements are pricing, product selection, maintaining low operating costs and expansion. Pricing/Product Selection-The company philosophy was to provide high end quality product and/or services to club members but maintain low prices.
Privatisation is the selling of public sector assets to the private sector in order to introduce competition and improve market efficiency. One argument for privatisation is that private companies are incentivised by profit by cutting costs and producing more efficiently. If you work for a government run industry, managers do not usually share in any profits. However, in private firms managers will usually receive a share of the profits motivating them to work harder, and as they are interested in making profit they are more likely to cut business costs and aim to be more efficient. Since privatisation, companies such as BT, and British Airways have shown degrees of improved efficiency and higher profitability due to the competitiveness within their respective industries.