It didn’t help that a lot of their online competitors copied BN’s method of buying gemstones from their suppliers for specific purchases. New Entrants: This is a weak force. When looking at the high costs to enter, as well the significant brand loyalties that already exist, the competition for new entrants keeps most new entrants from being successful. Buyers: This is only a moderate force, since jewelry tends to be custom, and therefore, people expect to pay higher prices than they might for other things. Most jewelry stores’ prices aren’t greatly different from others’ and buyers have very little influence on prices due to the high cost of raw materials to make the products.
These expedite delivery services created value for businesses due to shorter lead times, increase in productivity and greater satisfaction of customers. More so, for any organization to that wanted to enter the logistics industry, it must be able to purchase its own freight liner, airplanes and truck. This required very large capital investment so organizations such as FedEx and its competitors enjoyed low threat of
Sears and Wal-mart are known as big retail box stores who advertise their products in several markets. Their products are neither exclusive nor unique that are geared towards a trendy counterculture image. They also specialize in advertising their products to all kinds of people. As a result of their distinctive advantage in offering quality items at cheaper price, they cannot effectively produce a trendy counterculture image due to mass production and price. For Urban Outfitters, a trendy counterculture image for the most part, attracts a younger generation.
The entry of new firms causes excess capacity in MC in the long run. So many firms are attracted by the short run, high monopoly profits from product differentiation, that each firm operates with excess capacity – high up on its average cost curve – show this on a diagram. Thus MC is allocatively and productively inefficient. Firms will advertise in order to attract customers – another cost and inefficiency that comes from MC. There will be non-price competition including innovations and firms try to capture market share or make their product seem so unique they gain more monopoly power.
5) Competition is unfavorable. Brand identity is very important and is earned through reliability (low defect rate in memory chips). (In ’04, Samsung’s brand value was ranked 21st in the world.) Downward pricing pressure is increasing in the industry, as both new entrants to the market and incumbent players have shown a willingness to rapidly cut their margins on DRAM. There has been a drive by some players who have lost their technological lead (e.g., Nanya Technology), to cooperate and share technology in order to shore up their
I think Costco has the best strategy due to the cost efficient distribution through the use of the cross dock distribution. Cross docking allows the club has the ability to minimize inventory, improve product quality and increase responsiveness to any changes in the market conditions. Does one rival have a somewhat weaker strategy than the other two? Yes; BJ’s because they’re not as popular and they’re concentrated in the Eastern United States, which allows the company to streamline distribution and marketing. They’re also not benefiting from the economies of scales, because the margins are very thin and making low costs/high volumes are essential to profitability.
Urban Outfitters Continuing Case Study: Marketing a business. Explain why Sears or Wal-mart cannot effectively create a trendy counterculture image. Wal-Mart is better known for their lower prices and to do this they buy in big volume. Whereas the trendy market merchandise is more expensive; although Wal-Mart could buy this type of merchandise they would have to charge more. That is not what they offer or how they have in the past represented their company.
Wal*Mart Stores, Inc. , although combating in the highly competitive discount merchandise retailing industry , has been able to establish its competitive advantage through the development and deployment of its resources and capabilities and by differentiating itself from its competitors. I found the concept of internal resources and capabilities analysis and value chain analysis in differentiation very useful for me to understand and analyze this case of Wal*Mart. Wal*Mart competes in the merchandise retailing industry which has low profit margin, high buyer/supplier bargaining power, intensive rival competitions and relatively easy entry criteria. In an environment like this, a firm such as Wal*Mart would need to resort to itself, to explore the firm’s own resources and capabilities, and to search for the source of competitive advantage internally for creating profit. Because of this, I believe the internal resources and capability analysis concept is appropriate and useful when applied to the particular case of Wal*Mart.
1. How was Target’s pre-recession strategy vulnerable in an economic downturn? Target’s pre-recession strategy was vulnerable in an economic downturn largely due to its disaccording brand positioning that focused on delivering high quality products compared to its counterpart, Wal-mart, which took advantage of its “lower pricing” positioning during an era when customers were highly price sensitive. Initially the CEO of target, Steinhafel, responded to the recession by (1) cutting costs, (2) focusing on the value aspect of Target’s “Expect more, pay less” campaign and (3) expanding selection of grocery items. However all of these strategies were either short sighted or ineffective in contributing to the company’s bottom line.
The extended histories and successful advertising efforts have also contributed to this. The low cost of raw material and their significant amount of demand have lowered the bargaining power of their suppliers, another favorable cost control opportunity for concentrate producers. If we take a look at the down stream, the buyer power is not really high since the CPs has taken significant control of the distribution channels by different methods. On the other hand, high rivalry within the industry may not always be good for the profitability of bottlers, but not concentrate producers. For instance in this case, Coke and Pepsi concentrated on a differentiation and advertising strategy in the 60’s and 70’s.