A cost leadership strategy may have the disadvantage of lower customer loyalty, as price-sensitive customers will switch once a lower-priced substitute is available. A reputation as a cost leader may also result in a reputation for low quality, which may make it difficult for a firm to rebrand itself or its products if it chooses to shift to a differentiation strategy in future. Differentiation strategy, differentiation is aimed at the broad market that involves the creation of a product or services that is perceived throughout its industry as unique. The company or business unit may then charge a premium for its product. This specialty can be associated with design, brand image, technology, features, dealers, network, or customers service. Differentiation is a viable strategy for earning above average returns in a specific business because the resulting brand loyalty lowers customers' sensitivity to price. Increased costs can usually be passed on to the buyers. Buyers loyalty can also serve as an entry barrier-new firms must develop their own distinctive competence to differentiate their products in some way in order to compete successfully.
Drivers of, globalization : Integration of, theories and
E the firm hopes to take advantage of economies of scale and experience curve effects. For industrial firms, mass production becomes both a strategy and an end in itself. Higher levels of output both require and result in high market share, and create an entry barrier to potential competitors, who may be unable to achieve the scale necessary to match the firms low costs and prices. The second dimension is good achieving low direct and indirect operating costs. This is achieved by offering high volumes of standardized products, offering basic no-frills products and limiting customization and personalization of service. Production costs are kept low by using fewer components, using standard components, and limiting the number of models produced to ensure larger production runs. Overheads are kept low by paying low wages, locating premises in low rent areas, establishing a cost-conscious culture, etc. Maintaining this strategy requires a continuous search for cost reductions in all aspects of the business. This will include outsourcing, controlling production costs, increasing asset capacity utilization, and minimizing other costs including distribution, r d and advertising. The associated distribution strategy is to obtain the most extensive distribution possible. Promotional strategy often involves trying to make a virtue out of low cost product features.
Cost leadership strategy, this strategy involves the firm winning market share by appealing to cost-conscious or price-sensitive customers. This is achieved by having the lowest prices in the target market segment, or at professional least the lowest price to value ratio (price compared to what customers receive). To succeed at offering the lowest price while still achieving profitability and a high return on investment, the firm must be able to operate at a lower cost than its rivals. There are three main ways to achieve this. The first approach is achieving a high asset turnover. In service industries, this may mean for example a restaurant that turns tables around very quickly, or an airline that turns around flights very fast. In manufacturing, it will involve production of high volumes of output. These approaches mean fixed costs are spread over a larger number of units of the product or service, resulting in a lower unit cost,.
In particular he identified two competencies that he felt were most important: product differentiation and presentation product cost (efficiency). He originally ranked each of the three dimensions (level of differentiation, relative product cost, and scope of target market) as either low, medium, or high, and juxtaposed them in a three dimensional matrix. That is, the category scheme was displayed as a 3 by 3 by 3 cube. But most of the 27 combinations were not viable. In his 1980 classic Competitive strategy: Techniques for Analyzing Industries and Competitors, porter simplifies the scheme by reducing it down to the three best strategies. They are cost leadership, differentiation, and market segmentation (or focus). Market segmentation is narrow in scope while both cost leadership and differentiation are relatively broad in market scope.
No.2: discuss the various business strategies that firms can implement to take advantage of different markets or trading blocks? For this purpose porter has proposed his generic strategies which are the best to implement, in my point of view, to take advantage of different markets. These strategies are given as below. Segmentation strategy, differentiation strategy, cost leadership strategy, michael Porter has described a category scheme consisting of three general types of strategies that are commonly used by businesses to achieve and maintain competitive advantage. These three generic strategies are defined along two dimensions: strategic scope and strategic strength. Strategic scope is a demand-side dimension (Porter was originally an engineer, then an economist before he specialized in strategy) and looks at the size and composition of the market you intend to target. Strategic strength is a supply-side dimension and looks at the strength or core competency of the firm.
Globalization : making a note worth and
Hence, primark's must constantly assess its strategy with consideration to its pestle as external factors that in one way or the about other affects its internal and business operations. Assessing the strengths, weaknesses, opportunities, and threats of Primark, we go back to its established management or business structure. The need for re-tracking the management or business structure is important in analyzing its swot. As to my knowledge upon my encounter with Primark's business operations, its strengths are gained in its simple, systematic and organized business structure, having assigned proper authorities to proper positions. Moreover, its recognition for valuing high quality of products and quality services with its customers garnered more strength to attract more people. On the other hand, Primark's weaknesses can be found in its way of managing people. Although, Primark is a member of Ethical Trade Initiative, study shows given different negative issues concerning its business operations and transactions like child labour, purports less value on ethical matters.
Different issues were attacking Primark concerning exploitation and abuse on labour force, other environmental concerns, poor working conditions, and disvaluing workers' rights. Primark in different surveys was labelled as a fashion industry with oppressive regime. The primacy of autocratic and rigidity on standard structures can be a weakness as well as threats to the life of the company. Since, it goes globally, opportunities are in wide array not only on the part of venturing into regions with much income and profit to gain but also an opportunity depression to share and provide quality products to fashion-conscious people with vogue to fashion lifestyle. Conclusion, given this analysis we come to realize that each organization has its own external and internal problems to handle. The process in which we enable to identify and analyze such problems is by using proper management method of analysis like swot and pestle. The importance of these methods is squared to the importance of the business itself.
The pestle analysis allows us to examine the external factors affecting the environment of an organization while swot analysis aids us to assess organization's internal strengths and weaknesses and further identify threats and opportunities external to its environment. Hence, these methods are helpful for us to understand and underline positive and negative factors affecting the external and internal environment of an organization like primark. In assessing the political, social, and economic factors external to the environment of Primark, we must consider different issues. Primark's business operations are subject to government policies and regulations. The business firm should conform to the set of policies and regulations stipulated and enforced by the government and policy making body while conforming to the set of regulations and policies, the firm should assume social responsibility as demanded by the global consciousness.
Nowadays, business sectors no longer busied themselves to produce bonds of profits and income but deeply involved in social programs to promote social awareness and equality. Cultural and social behaviors of different consumers are important to consider when establishing or venturing business in the global landscape. Furthermore, economic, environment, laws, and technology are inseparable entities in which influence the business operations. The economic stability of certain region can contribute allot to the business condition of certain firm, like primark. Technology on the other hand, brought a tremendous effect to the status and development of business operations and marketing programs. It generates new trends in a rapid movement, which if organizations are unaware will impede growth and development.
Does, globalization, diminish the Importance
In fact, Primark developed ethical strategy in order to promote labour rights issues within its organization. Certain guidelines and code of conduct must be defined in relation to the ethical implications of work to human labour rights. Primark, initiated and defined its ethical trade strategy in 2006, focusing on assessment of employees working conditions, factories operations' concerns and addressed necessary improvement. Primark's annual report of activity should be passed to the Ethical Trading Initiative board. Moreover, Primark stands to a summary principle that shared learning and collaboration is one of the most successful ways to achieve sustained positive progression with its supplier's factories. However, climate change within and outside Primark's environment changes as it faces the challenges posed by the global business market. Using pestle and swot analysis, let us examine the ins and outs environment of Primark's retail clothing industry.
Primark employs simple managerial operation on its stores structure. Each store has its own manager responsible in overseeing the status and business operations. With managers' inherent authority, they are given the power and control to manage the store within his/her point of responsibility. Moreover, in smaller or larger branches, assistant and deputy managers are assigned to control and manage the store. Within the store, there are different subdivided departments in which a manager is assigned like senior department managers and junior department managers who are in charge for individual departments. Moreover, under management, there are supervisors in charge of staff on a sales floor, on different departments like stock room staff, customer service staff, customer service desk, cashiers who work on the tills, cash office staff and staff responsible to look after fitting rooms. This interview management and business structure posits a simple way of managing human labour force, however, simple it may seem, yet inevitably creates serious problems and issues if and when proper assessment of the structure will be undervalued. Analysis on the internal and external environment of Primark retail industry. The Primark clothing retail industry is a member of Ethical Trading Initiative, a collaborative forum bringing together businesses to work on labour rights issues in their supply chains.
positions itself as marketing fashionable at cutthroat prices.Â. The original clothing store was established by Arthur ryan and his collaborator Micaela mitchell in Dublin Ireland in 1969. After various success in clothing business, great profits and gross income led them to open stores in local and regional areas. It acquired various premises in different business centers within its local and regional areas which eventually generate more profits and income. Primark is known for selling clothes at the budget end of the market. Its success is based on sourcing supply, making clothes with simple designs and fabrics and targets young, fashion-conscious individuals ages 35 below, offering them simple yet high quality clothes and apparels. Hence, these successes brought significant changes on Primark's retail business. The relevance of global trends and consumers' demands on lifestyle made Primark Store limited reinvent its business scheme and management structure. Primark's management and business structure, as a famous clothing retail store, recently, primark embarks in different retail products not only restricted on manufacturing clothes but also other related products such as apparels and accessories available to all human sizes.
But the debate seems to hinge on the rights, conditions and dignity of the producers.Â For this reason, retailers like primark (who like tesco find themselves on the front line of this debate because of their public profile) seek to anxiously protect their reputations. The suppliers sub-contracted smaller firms, which were using child labour to carry out embroidery and sequin yardage work. A panorama special on Primark will be broadcast on bbc1 at 9pm on 23 June: during their six-month investigation, the bbc uncovered the evidence which they passed to Primark. "The information provided by the bbc enabled us to identify that illegal sub-contracting had been taking place and to take action accordingly â the sub-contracting involved home working and in some instances children were also found to be working at home.Â we take this lapse. Under no circumstances would Primark ever knowingly permit such activities, whether directly through its suppliers or through third party sub-contractors.". According to Primark, the garments affected accounted for.04 of the retailers' worldwide sourcing. It currently has more than 170 stores and made a 200m profit in 2007 on total sales of more than.6bn. Primark: An overview, primark Stores Limited is an Irish clothing retailer. Its stores are located in various regions like united Kingdom, Ireland, and Spain.
Social ConflictEconomic Impact of, globalization, paper