presentation on. by cora, ivy, kelvin, louise, michelle, shirley, stephanie 2000 introduction cost...
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presentationon
By Cora, Ivy, Kelvin, Louise, Michelle, Shirley, Stephanie 2000
Introduction Cost Advantage Sustainability Recommendations
AgendaAgenda• Introduction of Wal*Mart
• Ivy
• Cost advantage & drivers• Cora & Shirley
• Sustainability of competitive advantage• Kelvin & Michelle
• Recommendations & conclusion• Stephanie & Louise
Agenda
Business Idea
By Cora, Ivy, Kelvin, Louise, Michelle, Shirley, Stephanie 2000
Introduction Cost Advantage Sustainability Recommendations
Business ConceptBusiness Concept• Established in 1969 by Sam Walton• Successful retail chain
• 33% ROE• 35% sales growth
• Different retail formats• Discount store• Sam’s Club• Supercenter
• Principles• Cost advantage• Low price• Serving customers
Agenda
Business Concept
By Cora, Ivy, Kelvin, Louise, Michelle, Shirley, Stephanie 2000
Drivers of Cost AdvantageDrivers of Cost Advantage• Economies of scale
• Economies of learning
• Production techniques
• Product design
• Capacity utilization
• Input costs
• Managerial efficiency
Economies of Scale
Economies of Learning
Production Techniques
Product Design
Capacity Utilization
Input Costs
Managerial efficiency
Introduction Cost Advantage Sustainability Recommendations
By Cora, Ivy, Kelvin, Louise, Michelle, Shirley, Stephanie 2000
Introduction Cost Advantage Sustainability Recommendations
Economies of Scale
Economies of Learning
Production Techniques
Product Design
Capacity Utilization
Input Costs
Managerial Efficiency
Economies of ScaleEconomies of Scale• In Wal*Mart …
• Buying in bulk• Building own warehouse
Economies of LearningEconomies of Learning• Repetition to gain experience
• In Wal*Mart …• Experience on handling systems• Internal & external communication• coordination & performance
By Cora, Ivy, Kelvin, Louise, Michelle, Shirley, Stephanie 2000
Introduction Cost Advantage Sustainability Recommendations
Economies of Scale
Economies of Learning
Production Techniques
Product Design
Capacity Utilization
Input Costs
Managerial Efficiency
Production TechniquesProduction Techniques• Production method & business process
• efficiency & defects• In Wal*Mart …
• Cross docking• Different IT systems
Product DesignProduct Design• Designing products & services to economize costs & materials• In Wal*Mart …
• Cross docking• Pricing system
By Cora, Ivy, Kelvin, Louise, Michelle, Shirley, Stephanie 2000
Introduction Cost Advantage Sustainability Recommendations
Economies of Scale
Economies of Learning
Production Techniques
Product Design
Capacity Utilization
Input Costs
Managerial Efficiency
Capacity UtilizationCapacity Utilization•In Wal*Mart …
• Cross docking
Input CostsInput Costs• In Wal*Mart …
• Located in rural areas & small towns• Non-union labor & 30% part-time labor• High bargaining power• Supplier relationship with network linkage
Managerial EfficiencyManagerial Efficiency• In Wal*Mart …
• Profit sharing• “Store within Store”• “Shrink Incentive Plan”
By Cora, Ivy, Kelvin, Louise, Michelle, Shirley, Stephanie 2000
Introduction Cost Advantage Sustainability Recommendations
Obscuration
Undermining Incentives
Causal Ambiguity
Resource Immobility
ObscurationObscuration• Availability of financial information
• Difficulty in withholding profitability
Undermining IncentivesUndermining Incentives• Deterrence: large scale as threatening signal• Preemption: locating next to discount stores
Casual AmbiguityCasual Ambiguity• Multiple sources of competitive advantage• Difficulty in identifying KSFs
By Cora, Ivy, Kelvin, Louise, Michelle, Shirley, Stephanie 2000
Introduction Cost Advantage Sustainability Recommendations
Obscuration
Undermining Incentives
Casual Ambiguity
Resource Immobility
Resource ImmobilityResource Immobility• Intangible resources
• Staff• Motivation
• Shrinkage Incentive Plan• Profit sharing plan
• Communication• Information sharing• No superstar• “Yes We Can Sam”
•Autonomy
• Setting price individually• “Store within Store”
By Cora, Ivy, Kelvin, Louise, Michelle, Shirley, Stephanie 2000
Introduction Cost Advantage Sustainability Recommendations
Obscuration
Undermining Incentives
Casual Ambiguity
Resource Immobility
Resource ImmobilityResource Immobility• Tangible resources Intangible resources
• Tangible: EDI• Forecasting, planning, replenishing• Electronic invoicing
• Intangible: development of partnership• 300 vendors• 90% of sales value
By Cora, Ivy, Kelvin, Louise, Michelle, Shirley, Stephanie 2000
Introduction Cost Advantage Sustainability Recommendations
US GrowthUS Growth• Emphasize on Supercenter
• Growing sector
• Focus on customer service
• Large target group
• One-stop shopping
US Growth
Global Growth
Virtual Growth
Conclusion
By Cora, Ivy, Kelvin, Louise, Michelle, Shirley, Stephanie 2000
Introduction Cost Advantage Sustainability Recommendations
Global GrowthGlobal Growth US Growth
Global Growth
Virtual Growth
Conclusion
STRUCTURE HONG KONG CHINA
Geographic Structure
Limited & expensive land Easy access to stores Limited good spots
Cheaper land Developed areas
Industry Structure
Intense competition Retaliation
Huge market No dominators Lower operation costs
Demographic
Structure
Not many people drive Convenience as priority
Innovators
By Cora, Ivy, Kelvin, Louise, Michelle, Shirley, Stephanie 2000
Introduction Cost Advantage Sustainability Recommendations
Global GrowthGlobal Growth US Growth
Global Growth
Virtual Growth
Conclusion
CHALLENGES SOLUTIONS Cultural differences Lack of technical skills Image and reputation
Training “Buy China Program” Strategic marketing
By Cora, Ivy, Kelvin, Louise, Michelle, Shirley, Stephanie 2000
Introduction Cost Advantage Sustainability Recommendations
Virtual GrowthVirtual Growth• Web store
• Available in US and Canada first
• Reasons• IT systems and logistics• Reputation• Increasing store traffic• Flexible, simple, convenient shopping
US Growth
Global Growth
Virtual Growth
Conclusion
By Cora, Ivy, Kelvin, Louise, Michelle, Shirley, Stephanie 2000
Introduction Cost Advantage Sustainability Recommendations
ConclusionConclusion US Growth
Global Growth
Virtual Growth
ConclusionSustainable competitive advantages
Wal*Mart: number 1 in retailing
Focuson
Supercenter
EnterChinamarket
Goonline
presentationon