All In This Discussion Thread You Are Tasked With The Select ✓ Solved

Allin This Discussion Thread You Are Tasked With The Selection Of Yo

All, in this discussion thread, you are tasked with the selection of your 2 companies for the first quiz question for this module. The quiz for Module 1 consists of 3 essay questions, worth 15 points each. For the first question: You are asked to identify 2 unique companies - one that you believe pursues a lowest-cost strategy and another that pursues a differentiation strategy. Relying on personal knowledge, company annual reports, or articles in newspapers and business periodicals, discuss these companies' competitive strategies. In this discussion thread, you will share with the class the 2 companies you have selected for your analysis. Each student is expected to select 2 unique companies - in other words, each company can be used only once for the question. So my suggestion is to select early and post here - the first student who selects the company will be allowed the use of that company. At that point, different companies must be selected. student 1 A company that pursues the lowest-cost strategy would be Walmart, which I am sure comes to everyone's mind when thinking about this topic. If you are looking to buy products at the lowest price possible, Walmart is where to go. They can offer their products at “Everyday Low Prices” just as their slogan suggests on a large scale. Walmart can keep their prices low by the enormous volume of sales and the large customer base. Walmart cost-effectively manages its supply chain. “Supply chain management based on electronic product information, vendor role in distribution, and layout of warehouses: Walmart has a supply chain system that is regarded in multiple quarters as one of the most technologically advanced and efficient” (Hyde, 2018). In my opinion, Walmart sometimes has a bad reputation for not being the nicest looking or lacking cashiers, but that does not seem to matter as the price seems to drive their sales and people are taking advantage of their prices and products. I believe the growth for e-commerce will only help their sales and keep them on the top as a company that offers the lowest prices around. A company that comes to mind that pursues the differentiation strategy is Chipotle Mexican Grill. Their number one focus is the quality of the ingredients that go into their food. Chipotle will not have the cheapest fast food but it will have the best quality ingredients compared to its competitors. According to Herosmyth (2020), Chipotle uses local and sustainable ingredients and prides itself in working with family farmers that are located within a 130-mile radius of each restaurant location. They also offer non-GMO ingredients that help them stick out from the rest. As their food is not the cheapest, their differentiation strategy is working as they are one of the top Mexican fast-food restaurants in the US. Compensation professionals that utilize the differentiation strategy need to focus on their client’s needs and beliefs to be successful as the cost of the products is not the top influencing factor. Why would a customer want to buy our product even though you can find similar products for less? Whereas the success of the lowest-cost strategy is solely reliant on the cost of the products. The customer service and company values may not be as important as the price is driving the sale. How do we keep the price of production and distribution low and still offer our employees a competitive advantage while keeping the prices low? Both Walmart and Chipotle manage their compensation remarkably and that is why they are two very successful companies. I believe they do a good job of managing the changing customers and environment while sticking to their core values (Chipotle) and offering the lowest prices (Walmart). References Herosmyth. (2020, February 24). 9 perfect brand examples of why it pays to differentiate. Hyde, R. R. (2019, June 25). How Walmart model wins with everyday low prices. Investopedia. (Links to an external site.) student 2 Amazon has an amazing pricing strategy they have been using over the years. When Amazon first started out in 1995, it was in selling books at low prices. Then the company evolved to e-books and priced below wholesale costs for their Kindle platform. I became a fan of Amazon when I started going to school and I relied heavily on ordering my textbooks and needing them delivered within two days. Amazon has become a leader in providing on-time delivery, easy payment options and tens of thousands of items available to purchase. When the COVID-19 pandemic hit and everybody hunkered down at home and started shopping online for essential supplies, Amazon brought in $75.4 billion in revenue, a 26% gain over 2019. (Dumaine, 2020) The company continues to offer low prices, Black Friday specials, and more discounts when you join Amazon Prime. Tiffany & Co, on the other hand, is an example of a differentiation strategy. Founded in 1837, Tiffany & Co has become known for their exquisite and timeless designs that are appreciated by wealthy and affluent customers. One trademark logo of the company that definitely differentiates itself is the iconic blue box. The company's annual report reflects, Tiffany & Co. had a total revenue of $4,424 million for the 2020 fiscal year, and they continue to produce high-quality luxury jewelry. Compensation professionals have several tasks that they are responsible for to ensure companies are operating smoothly. Amazon is going to need to ensure their company is cost-effective and attractive to recruit and retain new employees. When Amazon was ramping up for the pandemic, they hired 175,000 additional employees to help with the added business, but ended up having issues with unsafe working conditions. Ensuring the company is legally compliant and adhering to all employment requirements will also be managed by compensation professionals. Amazon and Tiffany & Co. are very successful companies and will continue to grow in the future and be around for a very long time. References Dumaine, B. (2020). Amazon was built for the pandemic. Fortune, 181(6), 86-92. Retrieved from Engle, P. (2015). Why do we love amazon? Industrial Engineer, 47(10), 20. Retrieved from Reimers, I., & Waldfogel, J. (2017). Throwing the books at them: amazon's puzzling long run pricing strategy. Southern Economic Journal, 83(4), doi:10.1002/soej.12205 Tiffany & Co SWOT Analysis. (2020). Tiffany & Co. SWOT Analysis, 1-7. Retrieved from student 3 McDonald's is a company that uses the lowest-cost strategy as its low-cost pricing often out beats other fast-food chains. Customers visit McDonald's for their low-price drinks, value-menu options, and fast food deals. "We know that customers motivated primarily by value and deals come more often and spend more," McDonald's Chief Executive Steve Easterbrook (Gasparro, 2017). McDonald's was not as competitive over the years without their famous dollar menu, but continuing with customizable burgers and deals is still cheaper and popular than other fast-food restaurants. The company has also invested in better fresh ingredients, implementing breakfast and coffee options, self-order kiosks, remodeling, and now mobile ordering. By updating the McDonald's image, the company has allowed itself to keep its low-cost options and has since improved sales. The company that pursues the differentiation strategy would be Apple. Apple is well known for this strategy as the company focuses on making its products unique and appealing to various consumers. While there are many other competitors, Apple continues to succeed in its product demand. Due to this demand for their products, Apple has power over their prices. "By focusing on customers willing to pay more and maintaining a premium price at the cost of unit volume, Apple also set up an artificial entry barrier to competitors" (Nielson, 2014). Apple allows its products to be sold to third-party retailers such as Wal-Mart or Best Buy, but customers still pay original retail prices. By offering this options to these retailers, Apple can ensure other competitors do not have an advantage over others and while continuing to make money. The lowest-cost strategy is used within companies to offer the actual lowest cost in products within the marketplace. The main focus of McDonald's compensation professionals would be providing exemplary service and appearance while offering low-cost products. The current pandemic has hit the fast-food industry hard, as the decline in profits has abruptly stopped. With the decline in cases within the select areas, many fast-food restaurants like McDonald's have created ways to continue businesses while social distancing. Mobile dining apps such as DoorDash or Grubhub have allowed McDonald's to continue offering their services while offering low-cost products. With the differential strategy, the primary approach is to create new and unique products that attract customers over other competitors. Apple develops many devices for their customers, knowing they will buy the products based on quality. Compensation professionals at Apple need to ensure that continual quality is presented within their products and remain competitive against other companies. References Gasparro, A. (2017, October 24). McDonald's focus on low prices brings in customers. Retrieved February 11, 2021, from (Links to an external site.) McDonald’s Corp SWOT Analysis. (2019). McDonald’s Corporation SWOT Analysis, 1–8. Nielson, S. (2014, February 16). Apple's premium pricing strategy and product differentiation. Retrieved February 11, 2021, from (Links to an external site.) student 4 Ikea has long been recognized as a low-cost furniture provider. Idea provides itself on providing fashionable, functional, and affordable housewares items. They have gained a competitive advantage by reducing prices and still providing a variety of options. Ikea specializes in a culture that is focused on the lowest costs; this includes the manufacturing process. Ikea’s goals are focused on affordability, sustainability, design, and functionally (Terry-Armstrong, 2012). They also focus on overall efficiency requiring the time to be flat-packed. To further increase efficiency, Ikea utilized robots that can pack 720 units per hour, providing a significant competitive advantage over other housewares and furniture providers (Terry-Armstrong, 2012). Additionally, Ikea provides little in custom orders, allowing them to maximize IT structure and supply chain management. Items are manufactured in bulk. LUSH cosmetics offers cosmetics and toiletry items that are fresh, handmade, and often organic. Lush focuses on clean and ethical buying that is sustainable and never tests on animals. LUSH stores are visually inviting and vibrant. LUSH’s differentiation strategy allows them to focus on premium prices since their concept is stand-alone (Lush Brand Positioning & Differentiation, 2016). LUSH’s culture focuses on social and corporate responsibility, boasting sustainability and environmental impact. LUSH boosts its brand values and attracts more socially aware consumers. Compensation professionals contribute immensely to the overall compensation strategy and culture of an organization. Although Ikea offers low cost to their customers, employees are rewarded greatly through a robust benefits package including 26 paid maternity leave after two years of employment (Australia), four weeks of paid paternity leave after two years of career, and optionally 12-month maternity leave at half-pay (Terry-Armstrong, 2012). Ikea focuses on work-life balance and a robust retention culture. However, additional add-ins like an extra contribution to pension funds and pay-for-performance bonus programs (Work with Us – Benefits, n.d.). LUSH’s compensation strategy includes employee discounts for retail items, structured bonus incentives, stock options, and equity incentive programs. LUSH provides a do-good culture that provides for charitable giving and sustainability efforts like funding projects that support their overall culture. LUSH's compensation strategy ties directly to the culture of the organization. References Lush brand positioning & differentiation . (2016, November 15). Why, Hello Sweet. (Links to an external site.) Terry-Armstrong, N. (2012). IKEA: the homeware category killer. BusiDate , 20 (2), 6–8. Work with us – benefits. (n.d.). ikea.com. Retrieved February 11, 2021, from student 5 A company that pursues a differentiation strategy is Whole Foods. Whole Foods achieves this strategy through its "main selling point, the organic or natural characteristics of its products." (Thompson, 2017). Through this strategy, Whole Foods aims its focus on the increasing market of going green. Setting up shops that are unique and community focused, Whole Foods strives to be different in their product offering based on the local flavor of each geographical area they lay brick. A key to the differentiation strategy for Whole Foods is their "strict quality standards for products" (Thompson, 2017). Each product on the shelves needs to meet rigorous standards, which leads to a higher average cost in product when compared with other grocery stores. A company that pursues a lowest-cost strategy is Costco Wholesale. Costco's strategy entails "maintaining the lowest price possible" (Gregory, 2017). Costco operates as a member-only institution. A customer needs to have purchased a membership prior to checking out of their stores. As a side note, my wife and I tried to use her parents' membership card on a visit and were nearly turned away. Costco offers products mostly in bulk to lower the price per unit. For example, you are able to purchase a 12-pack of macaroni and cheese, which saves you a few cents per box had you just gone to Walmart and bought 4 packs. Costco also offers its own Kirkland brand of products, which are typically rejects from more well-known brands that, for one reason or another, did not meet a certain standard. For example, Kirkland brand batteries are actually re-packaged Duracell batteries, according to Yahoo. Reference Gregory, L. (2017, March 25). Costco's mission, business model, strategy & SWOT. Retrieved February 12, 2021, from Thompson, A. (2017, January 31). Whole foods market's generic & intensive growth strategies. Retrieved February 12, 2021, from student 6 An example of a company that engages in the lowest-cost strategy is Menards. The hardware company, Menards, says it right in their advertisements, “Save big money at Menards.” Menards uses various methods to achieve low prices. Menards insists on low prices from their suppliers to pass those savings on to customers and manufactures several building materials, including steel siding and roofing (Klein, 2018). Menards also uses their rebate offers, in the form of an in-store credit, to build customer loyalty. In the case of Menards, compensation professionals would want to design a compensation system that enables stores to hire both full-time and part-time workers with a variety of skills, including knowledge of home-improvement, hardware, and customer service. The compensation strategy should include a competitive base-wage and benefits package to attract and retain quality full-time employees. A pay-for-knowledge program might be beneficial to build up high-quality management. Part-time employees would be an essential part of a retailer like Menards. A competitive hourly wage can help to attract these employees. Tesla is an example of a company that uses a differentiation strategy. Tesla stands out in the automotive industry for several reasons. They are not the only company that makes electric vehicles, but Tesla’s products are different because of “the possibility to customize your car; regular software updates; solar panels and supercharging compatibility; and self-driving features” (11 Amazing Differentiation Strategy Examples [in 2021] - MKTOOLBOXSUITE.COM, n.d., 5 section). Another significant differentiation is Tesla’s cost of ownership. Tesla vehicles have a considerably smaller number of parts, by some estimates about 20 compared to 2,000 in an internal combustion engine vehicle (How Tesla Sets Itself Apart, 2020). These unique features allow Tesla to adopt the differentiation strategy. A compensation professional working with Tesla would help design a compensation strategy that attracts creative, innovative employees. This type of company would want to attract and retain highly skilled employees, so they would need to offer competitive wages, benefits, and perhaps an incentive pay program for new, innovative ideas. References 11 Amazing Differentiation Strategy Examples (in 2021) - mktoolboxsuite.com. (n.d.). mktoolboxsuite.com. How Tesla Sets Itself Apart. (2020, February 28). Harvard Business Review. Klein, K. (2018, April 26). A 360-degree view of Menards - hardware retailing. Hardware Retailing. (Links to external site.) Top 7 Brilliant Cost Leadership Examples (in 2021) - mktoolboxsuite.com. (n.d.). mktoolboxsuite.com.