A Retailer’s Value Chain


The value a retailer adds lies in providing more choices, greater convenience, better quality, availability, and lower prices. To do so, it must perform several activities. The first stage of this chain is store operations, in which the retailer must perform four kinds of activities. First, it must make the right choices about the mix of goods that its stores must carry (merchandising). Once the mix of goods has been determined, purchasing must seek suppliers who are dependable, that is, would deliver on time and at good prices. The retailer, on the one hand, must also make sure that it does not run out of items that customers want but, on the other hand, cannot afford to be stuck which inventory that customers do not want. It cannot hold the goods too long either, because doing so also costs money. Moreover, the prices of products such as semiconductors or computers drop so fast that a retailer can loose a lot of money by holding inventory. Thus, inventory management is critical.

 

The second stage of the chain is logistic. The retailer must get the goods from suppliers to the right stores, at the right time, at the right cost. The last stage is marketing. The firm must market itself and its products through its advertising, promotion, and pricing, which is often done with the help of or in alliance with suppliers. In some cases the retailer may also have a service network to repair or maintain products.

 

In performing the activities of its value chain, a firm must interact with suppliers, customers, and firms in related industries. These other firms also have value chains of their own. What we really have, then, is a system of value chains called the value chain system.

 

My Consultancy–Asif J. Mir – Management Consultant–transforms organizations where people have the freedom to be creative, a place that brings out the best in everybody–an open, fair place where people have a sense that what they do matters. For details please visit www.asifjmir.com, Line of Sight

Slow Cycle Markets


Slow-cycle markets reflect strongly shielded resource positions wherein competitive pressures do not readily penetrate the firm’s resources of strategic competitiveness. In economics, this situation is often characterized as a monopoly position. A firm that has a unique set of product attributes or an effective product design may dominate its markets for decades. This type of competitiveness position can be established even in markets where there is significant technological change.

 

Although the idea of monopoly, which has a single seller, restricted output, and high prices, is largely disallowed because of government policy restrictions, subtle and more complex variations are possible at local markets.

 

Effective product design may enable the firms that produced them to dominate their markets for many years. These firms’ advantages are drawn largely from their special core competencies, because their resources and capabilities are difficult to imitate. Because these markets (and hence the firms that operate in them) are largely protected, they usually enjoy the highest average price increase over time. Alternatively, price increases in standard-cycle markets often vary closely around zero.

 

My Consultancy–Asif J. Mir – Management Consultant–transforms organizations where people have the freedom to be creative, a place that brings out the best in everybody–an open, fair place where people have a sense that what they do matters. For details please visit www.asifjmir.com, Line of Sight