Competitive Advantage Analysis
To: Board of Directors, Jakley Holding Company
From: Albert Higgins, Manager.
Subject: Competitive Advantage Analysis
Before deciding the specific line of business and its location it is important to conduct a SWOT analysis. This analysis will enable you to know the major strengths, weaknesses, opportunities and threats facing your business. One of the key factors to consider in this is the nature and level of competition in the industry. The chosen line of operation in this case is in the supermarket. It is important to note some of the big chain stores currently operating in Chicago city. These range from Wal-matt, Kroger, Walgreen, Kmart amongst others. In addition to these, there are other small but highly competitive pop n mom stores especially in the neighborhoods.
The purpose of this memo is to recommend the type of upscale supermarket to be opened and mainly to indicate how that store can establish and develop a competitive edge against the existing supermarkets.
Examination of the variables
The term competitive advantage refers to an enterprise or a firm’s ability to sustain and maintain its market and brand leadership. In a certain industry, competitive advantage in this case might be brought forth by a firm’s level of technology,
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The existing chain stores in Chicago currently have their own strengths and weaknesses. Their major strength emanates from their sheer size. The size of their capital base ensures that there is easy and large access to finances; they also reap the benefits of economies of scale. They have access to the state of the art technology and a large pool of human resources from which to choose from.
The major weakness that they have and what has been a bone of contention is the some of the customers’ views on their ability to provide personalized services. This emanates from the fact that many do not want to break the tradition of Mom n Pop stores. These large stores, many claim by maintaining uniform standards, structures and outlook fail to customize their businesses in line with the specific neighborhoods norms and practices.
There are various business level strategies an enterprise would center on. Many of the chain stores situated in Chicago currently use the cost leadership strategy. They are able to offer goods at competitive prices due to their ability in purchase in bulk and spread the overhead costs.
For a new entrant to survive in this kind of an environment, it would need to focus its attention on providing a single line product. In this case it would specialize in distributing groceries to the neighborhoods.
The level of competition existing in the market requires a unique approach. The big chain stores have attacked the neighborhoods and are reaping all the benefits emanating from their rich capital base and access to finances.
It should be recognize too the fact that customers tastes and preferences are distinct and dynamic. It is not possible to predict with certainty what specific customers want but it is to give a general indication of the direction of their tastes. A large population of the customer would want to visit stores where they are able to conduct a wide range of activities, access varied goods and products under one store. It is these customers that the big chain stores focus on. An equally large population of the customers, who are largely conservative, would wish see the retention of the neighborhood store, customized to fit the neighborhood tradition
Being new entrants into the scene, we are currently at a disadvantage and are pitted against some of the effectively managed corporations in the world. Our strategy has to be the best to enable its penetrate the market.
To strike a competitive edge we need to attack the chain stores weaknesses and lay out a strategy to strengthen the same, our strategy should aim at customer experience and satisfaction.
Taking a glance at the major chain stores you will find that most of them have neglected the tradition practices of doing business. Most of the activities and practices are mechanical and automated, and have no room for personalized services. While customers may, value promptness and thoroughness of services, many may still yearn for the personalized and traditional form of buying. In the neighborhood our supermarket should yearn to combine the modern business trends with the traditional touch.
Customizing the supermarket outlook structure, presentation and goods is vital if we want the supermarket to be recognized as distinct and as standing out from others. The big chain stores have the same structure and adornment such that there is nothing unique that would differentiate a supermarket forms one neighborhood to another. Customer psychology has it that it is essential for the products and services to be identified with the customer. This way the customer feels he/she has a sense of ownership. This is what the supermarket should seek to cultivate on. It will be essential towards developing and establishing a brand leadership and recognition.
The best strategy in this should be an integrated low-cost strategy (www.albany.edu). The strategy will allow us to integrate both all the strategies that seeks to focus on the customer satisfaction while being mindful of our products’ reasonable prices, our competitive advantage should be our ability to understand the nature of the customers in the neighborhood and customize our products to fit their distinct tastes.
The key aim in launching the supermarket will be to maintain a sense of uniqueness in our operations. A general survey around the neighborhood indicates that there are very few big stores that specialize in provision of groceries. Many have diversified to other products. The established supermarket should seek to nurture this image of being distinct from others. It should be able to stand out from the rest and be the most preferred destination for family goods.
Specializing in groceries will give the supermarket an upper hand over others and consequently a competitive advantage. It will allow the purchases to be done in bulk and ensure that the company enjoys the discounts that go with bulk buying. This can in the long run have an impact of lowered prices for our goods guaranteeing us cost leadership as far as groceries are concerned.
The evaluation of the success in the above recommendations can only be done after the supermarket is up and running. It is this time that we can evaluate the performance of the different department depending on the level of sales and profit in relation to the other players in the industry.
Should this strategy flop, the company should initiate a program that will see it expand the nature of products in the market. It would hence not only offer groceries alone but also diversify to other products. With a large pool of resources at our disposal, we are a step ahead of the small pop n mom stores and can always diversify to other goods all to another line of operation all together.
Creating competitive advantage. Beyond philosophy building great consumer experiences. Retrieved on 24/09/7 from http://www.beyondphilosophy.com/what-we-think/
Business – level strategy. Retrieved on 24/09/07 from http://www.albany.edu/faculty/ja0754/bmgt481/lecture4.html