Furthermore, the Costco model demands an ever-changing assortment of goods. Packaging is critical, in that it must be designed to drive the average ticket consistently higher. Costco and other club stores rely heavily on packaging strategy to squeeze out growth.
Costco also pulls value from their logistics. The company operates what they term depots, which are state of the art distribution facilities, which the company feels gives them a competitive advantage.
Costco has also focused on marketing and customer service as a way to derive value. One such program is a new extended warranty policy on electronic goods, the largest non-food segment of Costco's sales. Combined with a concierge service, this warranty has lowered the costs associated with product returns.
Related to both marketing and procurement, Costco has made use of strategic alliances to improve their bottom line. For example, in 2007 they developed a business supplies program to forge stronger relationships with office supply manufacturers. This resulted in savings to the customers and allowed Costco to capture part of that billion-dollar business.
Human resources have also played a key role in Costco's value chain. The company runs as smoothly as it does in part because they have retained most of their key managers and executives for over 20 years. In cultivating this loyalty, Costco has been able to avoid the high costs associated with new managerial and executive talent and the inevitable learning curves associated with turnover at the top.
These four merchandisers all have different approaches to the value chain. Wal-Mart seeks to squeeze value from every aspect of its business, something that goes back to Sam Walton. Target has a similar approach, but puts stronger emphasis on branding and its product mix. The value chain at Costco is driven largely by its purchasing and distribution, with packaging playing a key role in improving one of the club store industry's biggest cost drivers - the average ticket. Sears has place significant emphasis on human resources as part of the value chain, and followed Wal-Mart's strategy...
Wal-Mart faces an industry that is generally challenging, but its strength in the industry results in the industry being favorable. Wal-Mart's success is predicated on excellence execution of key components of the discount retail value chain -- procurement, logistics and merchandising. Wal-Mart has numerous strengths, but as befits the world's largest company it has relatively few weaknesses. In its intensely competitive businesses, Wal-Mart sees many threats, but there are still
Tesco's Value Chain Analysis Value chain is defined as the special links that exists between the key value adding activities as well as their interfaces with all of the supporting activities (Lynch,2003). The concept of value chain has for along time been implied as a very strategic tool for evaluation purposes and is used for the purpose of distinguishing the various strengths as well as weaknesses that exists within the value
Wal-Mart: The Superpower of the Retail Market Walmart is America's largest chain of wholesale departmental and grocery stores and a multinational retailer corporation. Its first discount centre was established in 1962 by Sam Walton in Rogers, Arkansas, and was incorporated in 1969 (Roberts & Berg, 2012). As per statistics of Fortune Global 500, it is "USA's greatest retailer," "worldwide biggest private employer," and the "world's third-best public corporation" (Johanson, 2006). Today,
Many other stakeholders are simply not addressed in Wal-Mart's mission or vision at all. The environment is not addressed. The company's stakeholders in China are not addressed, although the firm's strong relationship with the Chinese government must place that government as a major stakeholder in Wal-Mart's enterprise. Although Wal-Mart does have stores in China, it is not nearly the factor for Chinese consumers as it is for American ones, although
03)(7) = 9.26%. A Target four-year has a yield of 4.757%, which corresponds with the higher risk level (A compared to AA) that Target represents over Wal-Mart. This will be used as Target's cost of debt. The weightings of debt and equity are 69% debt and 31% equity. This gives us a weighted average cost of capital for Target of: (4.757)(.69) + (9.26)(.31) = 6.15% Target represents a higher risk level compared
The use of Radio Frequency Identification (RFID) on individual chocolate packing is making it possible to know item-level inventory positions within the largest retailers for example including Wal-Mart, an early adopter of this technology (Zhou, 2009). The use of RFID is also excellent at managing traceability of specific lots or delivery portions of chocolate (Pacyniak, 2006). With the many quality management concerns within the industry as a result of
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