In Red Oceans Strategy, competitions are the core value and core strategy. Thus, one effective way to earn more market share is to increase sales costs or reduce profit. In red oceans, due to the market is over crowd, the profit and development prospect is not very well. 2. The authors allude to the fact that most companies borrow their strategic thinking from military models (see ‘Paradox of strategy’).
As Sainsbury's have a hierarchical structure they are most likely to lose a lot of money because for the marketing and research and development departments to carry out their functions they would need funding from the finance department. For this information to get to the finance department a lot of time would have been wasted and also for the finance department to reply to them, all this would cost them a lot of money. Advantages of Sainsbury's is that the power they have would be successful for the business as when work is being done the communication of the workers together when given commands from the manager and having to work better for the manager to impress them in order for more work to be done and at a more well-organized rate then if there was no pressure from the manager. Disadvantages would be that the workers would start to get stressed from having to complete the workload at too fast a pace for them to work at all times that they will start to work less and dislike there job and some days may not want to work as they are stressed to do work which is too much for them to cope as they are trying too hard to impress, this could lead to employees wanting to quit their job. Advantages are that when having to complete work set out by the manager to the employees it can be done efficiently so that the manager will be able to assess the employee and they could get a promotion to a higher part of their job.
There are two main profit maximization methods used, and they are Marginal Cost-Marginal Revenue Method and Total Cost-Total Revenue Method. Profit maximization is a good thing for a company, but can be a bad thing for consumers if the company starts to use cheaper products or decides to raise prices. This is what some firms in the leisure industry will aim to do, for instance, Cinemas will hope to achieve the highest level of profits. Although most firms in the leisure industry aim to maximise profit, some firms have other main objectives, such as to maximise growth. Growth maximisation is where the firm’s main goal is to increase the size of the firm as much as possible.
Therefore, company A needs to stop making this product. Although we can argue that if company A could reduce the cost dramatically, it can become profitable. However, as the demand of its headphones is shrinking and there are so many suppliers (due to low barrier of entry), there will be great price pressure on the product, as explained by William F. Samuelson and Stephen G. Marks (2010). The price reduction may over shallow the possible cost reduction the firm could achieve. Susan Schreter’s second step is to target new customers from within groups.
However, income is the main factor that will decide the average consumer’s decision. If a new study was revealed (hypothetically, of course) that there are severe adverse effects from the consumption of Acetaminophen in general, substitute goods would gain an advantage in the market. Ibuprofen and Aspirin treat nearly all the same symptoms that Tylenol does, and as a result can be considered substitute goods. Another shift along the demand curve is the general taste of the consumer. There are many factors that affect this.
• A differentiator gains a competitive advantage because it has the ability to satisfy customers’ needs in a way that its competitors cannot, which allows it to charge a premium price for its product. • Premium prices → increased revenue → superior profitability • A differentiator invests its resources to gain a competitive advantage from superior innovation, excellent quality, and responsiveness to customer needs • A product’s appeal to customers’ psychological desires is a source of differentiation. ▫ Example? 13 Differentiation • Generally, a differentiator chooses to divide its market into many segments and offer different products in each segment • A differentiated company concentrates on developing distinctive competencies in the functions that provide competitive advantage ▫ These are still expensive! • A differentiator must control its cost structure to ensure the price of its products does not exceed the price customers are willing to pay for them • When differentiation stems from the design or physical features of the product, differentiators are at great risk of being imitated ▫ Example?
Their Variable costs differ from fixed costs such as rent, advertising, insurance and office supplies. They will also need to make a change in marketing to make sure that they survive as a limited company, i.e. if a certain part of the company is not bringing in enough money, the executive would have to fire some certain employees. Another aspect that Hays Travel does is to maximise their chances to make a profit on selling holidays. Bulk buying would be perfect making a profit as you are selling more items.
Moreover, the goods from the outsourcings may not be as efficient as the goods that are made within the country. The consumers would choose the goods through the brand names or the prices; however, sometimes the consumers would choose goods by where they are made. Therefore, it is very significant to know where the goods are manufactured because it will increase the satisfaction of consumers since they are very demanding on the quality of goods. In addition, as the consumption of the goods decrease, the companies will earn less revenue that decreases the investment that they will spend for outsourcings. Thus, consumer demand has a big impact on outsourcings since people do not want to spend money on the outsourcings’ goods which make the companies earn less profits; on the other hand, the outcome will reduce the spending on
There are reports that say the economy will grow over the next few years (2010), but there is a possibility that they could be wrong and that won’t happen. If the opposite happens and the economy hits a decline, this could really hurt the business of Keystone and many other companies for that matter. On that note, people will start looking to save money and if they can find the same product that this company offers for a cheaper price, they might just do that. The last red flag that I would see when deciding whether to select this client would be the fact that they have recently started extending credit to customers with less than perfect credit (2010). Although this could mean nothing, this could also be the beginning of a downward spiral of bad debt.
One impact on the business it could have is by people not having jobs they will earn less money and so this would mean that they would have lesson money to spend and so this could have an impact on the profits and amount of money Tesco make. Also with unemployment crime level rises which mean there could be an increase in thefts in the store which could also impact profits for the company. Along with higher crime rates there could be more damage to the stores and property which could create more costs and loss of money on repairing the damage. Despite these negatives it could also mean that Tesco could have more jobs to offer and so help get people out of unemployment and get employed by Tesco. The current number of unemployed people in Spain is £5.9million which is 26.7% this could impact the business in many ways similar to the U.K but this would likely be to a more extreme level due to the fact that unemployment level is 19.2% more in Spain than the U.K.