One business that I frequent is Craig's Cuts. When this business was established, it's stated hotel was to provide a low price, quality haircut. As the business has grown, it's 7s's have fallen out of alignment.Some of the main misalignments I have identified are with shared values, systems, and strategy.
Shared Values
The shared values of Craig's Cuts are good service at a low price.
Systems
Craig's Cuts has added systems that are unnecessary and add costs. One such system is the back massager they use along with the towel warmer. Why wood a low cost provider add such unnecessary frills? Along with these frills had come an increase in the price.
Strategy
Craig's cuts' strategy has been to locate in low cost locations. Recently new locations have opened in more expensive locations like University Mall.
Clearly before implementing any more changes, Craig's Cuts should consider their strategy and shared chairs and ensure that they are in alignment.
Friday, March 23, 2012
Friday, February 17, 2012
HP's OS
I recently read an interesting article about HP's OS becoming open source much like Google's Android. As I read the article, I thought about the value curve and how HP's OS would fit on it. I think when looking for an OS for a mobile device, users want (among other things) something reliable, competitively priced, and with a plethora of available apps. Apple and Google both offer quite reliable OS's so it is doubtful that HP's OS will have any advantage in that dimension. Google makes its Android OS available for free much like HP is planning to do with its, so it really has no advantage there either. Finally, the app offerings for both Apple's OS and Android are very similar and far outnumber the offerings of any other competitor which means that HP has a significant disadvantage in this dimension. After considering this value curve, it seems to me that there is no real reason for HP to continue supporting its OS and dumping resources into a project that is destined to fail. The market has no need for it since it is not offering anything that isn't already available. Perhaps HP could find a way to make it's OS provide more value to the consumer, but until they do, I have serious doubts that this project will be successful.
Friday, February 3, 2012
J.C. Penney
This week I encountered an interesting article regarding the transformation that will take place at JC Penney's. (http://online.wsj.com/article/SB10001424052970203718504577182751798318594.html?KEYWORDS=jc+penney) The article focuses on how JC Penney's is adjusting their strategy to compete better. As I read the article, I pondered why JC Penney's has been performing so poorly in recent history. I believe that Porter's five forces explain what has happened.
Substitutes. First of all, a lot of substitutes have cropped up into the space that has traditionally been held for department stores. I think one main competitor has been the various retailers on the internet who can provide the same or similar products for a lower price. Internet shopping has also become increasingly more convenient. Also, discount stores have entered this space as well with Target and Costco selling name-brand clothing.
Rivals. Another force that has changed over the past several years has been the rivals competing for the same customers. Kohl's has become quite popular by providing low cost, name-brand clothing and other department store products. In my experience, Kohl's stores are generally newer and less expensive than Penney's.
Barriers to Entry. I also believe that the barriers to entry have changed as smaller stores and manufacturers have been able to sell their products to a global customer base over the internet. Amazon has become a one-stop shop where small vendors and manufacturers can sell their wares. There is no longer a necessity for a new-entrant to acquire expensive space at the mall in order to compete for the same customers that Penney's is targeting.
Buyer Power. Another force that has changed dramatically is buyer power. People have a world of information at their fingertips and can easily price-shop for the best deals without leaving their homes. This is quite different from several years ago when a person needed to visit multiple stores in order to find the best price.
Supplier Power. This is one force that I believe has not changed much over the past few years.
Clearly the market has changed dramatically and Penney's has been slow to respond. The store now plans to offer specialty labels and a better shopping experience in order to attract customers. Also, the store is slashing all of its prices by at least 40% to reduce the number of sales and to provide an everyday low price. It will be interesting to see if these changes will allow Penney's to be a more attractive and profitable retailer.
Substitutes. First of all, a lot of substitutes have cropped up into the space that has traditionally been held for department stores. I think one main competitor has been the various retailers on the internet who can provide the same or similar products for a lower price. Internet shopping has also become increasingly more convenient. Also, discount stores have entered this space as well with Target and Costco selling name-brand clothing.
Rivals. Another force that has changed over the past several years has been the rivals competing for the same customers. Kohl's has become quite popular by providing low cost, name-brand clothing and other department store products. In my experience, Kohl's stores are generally newer and less expensive than Penney's.
Barriers to Entry. I also believe that the barriers to entry have changed as smaller stores and manufacturers have been able to sell their products to a global customer base over the internet. Amazon has become a one-stop shop where small vendors and manufacturers can sell their wares. There is no longer a necessity for a new-entrant to acquire expensive space at the mall in order to compete for the same customers that Penney's is targeting.
Buyer Power. Another force that has changed dramatically is buyer power. People have a world of information at their fingertips and can easily price-shop for the best deals without leaving their homes. This is quite different from several years ago when a person needed to visit multiple stores in order to find the best price.
Supplier Power. This is one force that I believe has not changed much over the past few years.
Clearly the market has changed dramatically and Penney's has been slow to respond. The store now plans to offer specialty labels and a better shopping experience in order to attract customers. Also, the store is slashing all of its prices by at least 40% to reduce the number of sales and to provide an everyday low price. It will be interesting to see if these changes will allow Penney's to be a more attractive and profitable retailer.
Friday, January 20, 2012
Ikea
This morning I encountered an interesting article in the WSJ discussing furniture retailer Ikea (For those who are interested, it can be found here: http://online.wsj.com/article/SB10001424052970204301404577172282991870056.html?mod=WSJ_hp_LEFTWhatsNewsCollection).
The article states that although the retail environment has been rough, Ikea has succeeded and is gaining market share. Its success has been largely attributed to its low-cost strategy, which is effective in attracting cash-conscious consumers during hard times. The furniture is not custom, and in fact has to be assembled by the consumer, which allows Ikea to provide their product at such a low price. The furniture retailer is doubling-down on this strategy as it vows to continue slashing prices in order to pass on supply chain cost savings to its customers. In terms of Porter's generic competition model, Ikea is definitely focused on cost leadership and is squarely in the NW quadrant. So far this strategy has proven to be quite successful for the retailer.
The article states that although the retail environment has been rough, Ikea has succeeded and is gaining market share. Its success has been largely attributed to its low-cost strategy, which is effective in attracting cash-conscious consumers during hard times. The furniture is not custom, and in fact has to be assembled by the consumer, which allows Ikea to provide their product at such a low price. The furniture retailer is doubling-down on this strategy as it vows to continue slashing prices in order to pass on supply chain cost savings to its customers. In terms of Porter's generic competition model, Ikea is definitely focused on cost leadership and is squarely in the NW quadrant. So far this strategy has proven to be quite successful for the retailer.
Subscribe to:
Posts (Atom)