ABC Products and services definition
ABC, Inc. is a worldwide wholesale establishment, which deals in numerous chains of large discount departmental stores along with depository stores. Specifically, the corporation specialises in apparel, footwear specialty, cash and carry, warehouse clubs as well as discount stores and hypermarkets.
Besides, the establishment has expanded its product range including all manner of fashionable products, accessories, garments, ornaments and bouquet. Further, the firm has not only expanded in terms of product range but also in geographical coverage. Currently, the firm boasts of over 300 stores worldwide.
The business focus according to porter’s generic strategies
In order to participate successfully and gain competitive edge as well as outperform rivals in the market, ABC follows a number of tactics aimed at developing expertise, knowledge in addition to capabilities. Specifically, the corporation utilises cost-leadership, differentiation as well as focus cost-leadership strategies.
Cost-leadership
ABC utilises low-cost strategy to increase its client base. Actually, through the cost-leadership strategy, the firm is capable of serving as well as meeting the needs of clients residing in rural neighborhoods. In principle, other retailers often focus on urban clients ignoring the rural clientele. As such, ABC Inc. has developed low-cost management technology that is of great significance in its operations.
In this regard, the advancement of low-cost materials management is invaluable in enabling the establishment to procure, allocate and trade merchandise at lower prices compared to its rivals (Gamble and Strickland 57). In reality, the low-cost competence of ABC enables the wholesale store to attract customers from other competing firms thereby increasing proceeds.
Differentiation strategy
Actually, a number of retail stores majorly focus on wealthy clients who consider quality as core to their purchasing decisions. Conversely, ABC pursues a differentiation strategy that entails designing and offering products that meet the specifications of different consumers.
Based on the strategy, the firm provides designer clothes that are expensive, distinctive appliances as well as highly personalised services for the wealthy clients (Miller 38). On the other hand, ABC pursues the differentiation tactic to meet the requirements of clients through offering low-cost products.
Focus cost-leadership
The focus cost-leadership strategy is applied by ABC Company to increase its presence and compete effectively in the mass market. The major aim of the strategy is to increase the firm’s online stores as well as physical stores.
Increasing the presence of the firm’s products to specific segments of clients provides the customers with seamless shopping experience in the business’s physical and online stores (Porter 36). The online stores are designed to be accessed by the customers through mobile devices.
In essence, the business stores are capable of selling products locally to the esteemed customers. The strategy has increased the firm’s market share through increased customer base. In addition, the strategy has increased the business’s performance particularly in terms of increased sales.
Divisions in ABC Company
The main divisions in ABC Company include marketing, store operations and human relations along with information management systems. To begin with, the store operations division is responsible for sales, management, teller operations along with receiving and prevention of losses. Second, the marketing department ensures public relations, visual displays and promotion of the firm’s products.
Third, the merchandising division is responsible for planning, buying and controlling the organisation’s stock. Forth, the selection, recruitment, training and development of personnel are the obligations of human relations department.
Lastly, the firm’s information management systems department is responsible for redesigning the firm’s structure in order to support decision-making, alliance and leadership abilities of the organisation when the store experiences growth prospects.
The extent to which Management Information Systems (MIS) division generates business intelligence and achieves competitive advantage
The designs and machineries that transmute raw data within organisations into expedient gen are significant for business operations. In this regard, management information systems division enables firms to handle voluminous data that are capable of ascertaining, developing and generating prospects for businesses.
Actually, management information system is significant in augmenting as well as refining the firm’s response towards the competitors’ actions. In other words, MIS provides apposite and quick reactions to competition through the analysis and collation of relevant information significant to the operations of firms.
Besides, through the MIS segment, the firm is capable of improving its operational efficiency and flexibility by trimming down bureaucracy within the establishment thereby incurring reduced costs in operations. Moreover, MIS augments the levels of planning that leads to increased efficiency (Porter 58).
Porter’s value chain analysis and porter’s five forces
Value chain analysis
ABC’s inbound and outbound logistic management, which are the firm’s primary activities entail fast and receptive delivery structure. The firm has a well-developed distribution channels that makes the transportation of the products to delivery centers be within the shortest time.
Besides, the firm’s private operations handbook is significant in ensuring that the organisation’s personnel adhere to codes of conduct. Based on the firm’s operations, the stores as well as the warehouse membership clubs augment the corporation’s proceeds (Wright 96).
Besides, ABC’s low-cost strategy forms the core of sales and marketing approaches. Regarding support activities, ABC’s procurement is anchored on the reduction of purchase costs to provide clients with low-priced goods.
Moreover, the corporation utilises numerous refined expertise including bar code, computer systems and RFID technologies that aid in securing an unswerving stream of ABC’s merchandise. ABC utilises superior Information Communication Technology (ICT) systems including massive parallel processors that track the movement of the firm’s products in the delivery warehouses.
Porter’s five forces
Threat of new entry
Due to the exceptional trademark, delivery systems and locations as well as robust financial capital, ABC has the capability of discouraging rivals with intentions of entering the industry. Additionally, the outlays involved in erecting wholesale business such as ABC makes entry in the industry uninviting (Irwin 178).
Threat of substitutes
ABC offers convenience as well as low prices to its customers. In this regard, the industry in which ABC operates has higher threat of substitutes because other retail stores offer low prices on products.
Bargaining power of buyers
In the retail industry, buyers greatly determine the type of products and services to be offered. As such, buyers have greater degree of control in the industry. Besides, ABC has to provide quality products that meet the consumers’ requirements.
Bargaining power of suppliers
Companies within the retail chain trade control higher proportion of the market. As a result, ABC engages large number of suppliers. The control of larger segments of the market gives power to the firm since ABC can create scarce strategies to the suppliers by switching to other potential manufactures and wholesalers effortlessly and cheaply (Wernerfelt 175). In principle, the suppliers in the retail industry enjoy low bargaining power.
Competitive rivalry in the industry
Companies operating in retail industry are very aggressive. However, due to the market leadership capabilities of ABC, the establishment of its operations is uncomplicated. In other words, the firm utilises its technological advancements as well as financial strengths that offer increased competitive edge over rival firms. As such, the industry experiences high competition.
XYZ products definition and the business focus in terms porters three generic strategies
XYZ is one of the national Islamic banks in UAE and is fully owned by the government. XYZ offers various products to over 1.5 million esteemed clients across UAE. The bank’s main services include Islamic personal loans, corporate loans and investment advisory ventures.
In addition, the bank offers treasury and wholesale banking products. In fact, retail and wholesale services account for over ninety-seven percent while corporate services and products contribute over three percent. The bank is also one of the managing trustees of Equity Fund, which is the largest in UAE.
Close association with Shariah principle characterises Islamic banking operations. In other words, financial products and services provided by the Islamic banks are based on Shariah principles. The financial pillars include the asset backing principle, the loss and profit sharing principle, ban on certain financing economic sectors, ban on speculation, uncertainty and interest.
The associations of the firm’s products with the Islamic principles allow the firm to offer products at low prices compared with commercial banks. In fact, the cost-leadership strategy is achieved through evasion of any form of interest owing to the fact that interest is a prohibition in Islam.
In fact, XYZ reduces its costs through discount of overheads related to interest via creating profit and loss allotment banking system (Chan and Wong 570). Such a system is expected to allow XYZ share any accruing risks with the esteemed customers.
The low-cost strategies differentiate XYZ products particularly from the competing Islamic banks within the market. Besides, the differentiation and low-cost strategies have enabled the firm to operate favourably within the market segment. In other words, the firm has maintained its services delivery within the target market.
The firm’s main division
XYZ is divided in various departments that are coordinated through well-developed systems. However, the main divisions of the bank include promotion and development, management information systems, policy, Shariah and market analysis as well as research and development.
Business support unit utilises the management information system division to coordinate all the departments. Essentially, the management information system is critical in the information processing used to coordinate all the departments.
The management information system consists of processes that determine the nature of the bank’s capabilities towards service delivery to its customers. The most important function of the information system is the linkage the firm creates with the customers.
In fact, the processes are usually a combination of software that provides all customer interactions over the internet, linking people and providing exceptional handling of the situations that create customer relationship with the bank (Chan and Wong 577).
Value chain analysis of XYZ
The operations of XYZ are anchored on the provision of quality banking services to clients using sophisticated expertise. Specifically, the firm utilises modern expertise to save on outlays involved in logistics and inventory management.
Besides, the organisation also applies wire devices that are capable of loading large amounts of significant data. Moreover, XYZ has undertaken advancement of its e-business organisation. For instance, the firm has embarked on utilising eServer and z900 mainframes as well as Enterprise Storage Servers (ESS) that have been invaluable in data handling, resolution along with debit and credit communications.
Porter’s five forces analysis of the firm
Competitive rivalry
Like most firms in the industry, XYZ is influenced by the power of suppliers, threat of new entrants, and threat of substitutes, buyer’s power and the competitive rivalry. Competitive rivalry within the industry is very high and is determined by such factors including exit barriers, product differentiation, cost advantages and the brand identity.
Considering the exit barriers, the firm is well placed since various exit options are available. Besides, the firm has increased cost advantages given its decreased prices and reduced cost strategy. Moreover, the products and services of the firm are highly differentiated in order to increase the competitive advantage.
Given that most firms are offering the same prices, the rivalry within the industry is intense to the industry in which ABC operates (Murray 392). As such, firms have to differentiate their products and services and offer low prices in order to remain competitive.
Threat of substitutes
The changes made in the rival services and products can easily affect the low-cost strategy of the firm. In fact, the ability of XYZ to deal with cost constraints has increased its competitive advantage.
The threat of substitute products in the industry comes about due to possibility of price reduction strategies by the rival firms (Murray 394). Like the wholesale industry in which ABC is operating, the industry in which the XYZ is operating has increased threat of substitutes.
The bargaining power of buyers
The buyers’ bargaining power results from the capability of the buying process of the customers. Similar to retail industry, in the banking industry, buyers greatly determine the type of products and services to be offered. As such, buyers have greater degree of control in the industry.
Even though the firm targets specific clientele, the rival firms within the industry enable customers to have a greater say in terms of prices of products.
Bargaining power of suppliers
Even though the industry relies on suppliers for various materials critical in the operations, the suppliers have little influence on the determination of prices. The bargaining power of suppliers is low compared with other industries such as retail.
Threat of new entrants
Entering into the industry is difficult given the complexities in the operations of the firm and the specificities required in Islamic banking. Unlike conventional banks that few barriers to entry, Islamic banking have tight controls and religious regulatory framework that create increased barriers to entry (Murray 399). Just like retail stores such as ABC, XYZ have few competitors.
Recommendations
For ABC, the firm should continue to utilise product differentiation to remain competitive in the industry. In addition, the firm should apply technological prowess and its distribution network to increase its capabilities critical in augmenting competitive advantage.
On the other hand, XYZ should emphasise on the importance of technology in service delivery. Further, the firm should focus on cost reduction strategies, which form the core of its competitive edge in the industry. Generally, firms should focus on the capabilities and competencies that contribute to increased competitive advantage.
Works Cited
Chan, Rickey Yee-kyong and Yee H. Wong. “Bank Generic Strategies: Does Porter’s Theory Apply in an International Banking Center.” International Business Review, 8.5 (2009): 561–590. Print.
Gamble, Arthur and John Strickland. Crafting and Executing Strategy: The Quest for Competitive Advantage: Concepts and Cases. Boston: McGraw-Hill/Irwin, 2010. Print.
Irwin, Richard. “Strategic cost management: The value chain perspective.” Journal of Management Accounting Research, 37.16 (2003): 179-197. Print.
Miller, Danny. “The generic strategy trap.” Journal of Business Strategy 13.1 (2002):37-41. Print.
Murray, Alan. “A Contingency View of Porter’s “Generic Strategies.” Academy of Management Review, 13.4 (2008): 390-400. Print.
Porter, Michael E. Competitive Strategy: Techniques for Analyzing Industries and Competitors. New York: The Free Press, 2000. Print.
Wernerfelt, Birger. “A resource-based view of the firm.” Strategic Management Journal, 5.2 (2004): 171–180. Print.
Wright, Peter. “A refinement of Porter’s strategies.” Strategic Management Journal, 8.3 (2007): 93-101. Print.