CASE STUDY #3 GAP, INC.’S TURNAROUND STRATEGY What does a five-forces analysis reveal about the strength of competition in the U.S. family clothing stores industry? The competition of rivals in the U.S. family industry is strong because the competitors are numerous, buyer demand is growing slowly, and the rivals face high exit barriers. The threat of new entrants is weak because the entry barriers are high and the industry outlook is risky and uncertain. The threat of substitute products is strong because good substitutes are readily available, substitutes have comparable or better performance features, and buyers have low costs in switching to substitutes. The bargaining power of suppliers is weak because good substitutes for supplier products/services exist and the number of suppliers is large relative to the number of industry members and there are no suppliers with large market share.
Many consumers where highly interested in owning the technology but was not familiar with the details of how it works. Robert Stephens jumped on the opportunity to capitalize on innovation and the fact that it brings constant change and new problems. 2. What changes in the purchasing patterns of (a) all consumers and (b) women made the acquisition of Geek Squad particularly important for Best Buy? (a) Best Buy had a very high return rate so a full service, house call entity allowed for a decrease of their return rates by 25% - 35%.
Discuss how the economic environment in the US culture was changing. How did the changes affect the toy industry and Gilbert? There was a higher demand for low cost, low quality toys that A.C. Gilbert couldn’t compete, until the point where the company introduced 50 new toys for different age groups and toys for girls and preschool children. Although the company tried to change and adapt to the rapidly changing industry, their low quality toys hurt the company a lot, because of the high return rate on some of the poorly built toys. 5.
However, that market is high competitive and almost commodity-like. Company A would need to consider reducing its labor force or even moving its operation to low cost-region in order to be competitive in the iPod/iPhone headphone market. Another new customer group is the people who use noise-cancellation headphones. There are limited players in this market. Also, the quality of noise cancellation headphones vary a lot and the customers are willing to pay higher price for good product.
Notwithstanding increasing dividends and a moderately stable share price, the home improvement retail industry remains to struggle due to the fragmentary world wide economic complications. Throughout 2009 Home Depot recorded expenses as much higher as well as the drop in sales. While Home Depot the company is very strong, the drop in sales and net earnings brought fourth some restraints until the economy shows signs of improvement. With this in mind The Home Depot, Inc. initiated strategies in the fiscal year 2008, to help minimize losses while maintaining a strong customer base. Which in turn may have the company to increase their credit programs for consumers with the intention to increase sales.
Another modest force is competition from rivals. This is only a modest force because Blue Nile has a bigger brand recognition name and economies of scales due to their large size in addition to the high customer loyalty from consumers. However they do have to be wary of the competitors who can easily steal their customers due to no switching costs. The second strongest of the forces has to be buyer power since buyers can switch instantly at no cost, they tend to be well educated in regard to what they want in addition to being very price sensitive . The strongest force they have to deal with is competition from substitutes such as the common retailers like Jared.
Situation Analysis Five Force: The force of Supplier is powerful, they sell raw materials at a high price to capture some of the industry's profits. The force of customer is powerful, too. Our auto-producing customers have the erratic production schedules. The competitive also struggling with earn decrease and production decrease. The threat of the substitution and new entry are weak.
Big Lots, Inc. (BIG) Industry: General Merchandise Stores Rating Recommendation: HOLD 12-mo. Price target: $51.63 Most recent closing price: $45.65 * Dividend Yield: 1.55% * Investment Thesis: * BIG is in a retail transformation where the scope and value is not being recognized by the market * Their new management team is positioning BIG for success over the long-term * While sell-side analysts are hopeful about the stock, they are underestimating the extent to which BIG's transformation will necessitate multiple appreciation because the company will be more competitive in the discount arena. * BIG’s Earnings Rating increased from a 5 to a 7. The discount store average rating is a 4.7. * BIG has a Valuation rating of 4 while the S&P 500 COMPOSITE index has an avg.
Also revenues are low. The company has produced a loss for the first five years of its existence. Another central issue with Eat2Eat.com is the lack of globalization (Ex 1- Phase 2). In today’s world global exposure is necessary to keep up with the competition and continue expansion and growth. In today’s world an internet-based company appeals as the best way to start a business because of the fast-paced business environments and driven people in the business world.
Wal-Mart’s Opportunities Issues The biggest problem for Wal-Mart is connected to the threat of rivalry. Competitors created an environment where a well-established company like Wal-Mart have a hard time to continue growing in the market. Since its first years, Walmart has had a massive impact on the market, growing quickly and sometimes overwhelmingly to reach the reputation of “richest company in the U.S.”. Later, however, towards the end of the 2000s, Walmart experienced a decrease in growth. The decrease in revenues was due to more specialized competition from retail competitors to Wal-Mart.