Retail

A further comparison of a quarterly period between March 2007 and March 2008 reveal that the results surpass the expectation of the company owing to the continual strength of grocery, healthcare and entertainment business segments of the United States. The implication from the above figures is that Wall-Mart is a financially strong company and has very good potential of penetrating the global world markets (Schumacher & Simley, Wal-Mart Reports February Sales).

In concluding the analysis therefore it is important revisit the main themes which arise from the study. First the fact that Wal-Mart has enormous potential of dominating not just local but international market cannot be overemphasized. In fact, Wal-Mart is actually planning to venture into the financial market more so Wal-Mart Canada which is threatening to enter the low-cost credo into the industry of finance (Shaw, Wal-Mart files for Canadian banking licence).

The company has actually made an application for a banking license thereby reaching the levels of well known retailers like the Canada Tire, the Sears and the Loblaw (MarketWatch. Wal-Mart may be a mulling small-store strategy: report). At the same time, it has to be noted that despite the good potential of doing well that the company has, it has to be noted that it will not be a smooth sailing for the company. The industry is dominated by other similar companies which are equally doing well thus the company needs to be fully prepared as it plans to expand its operations.

For instance the company needs to set up an aggressive campaign strategy aimed at increasing the public awareness for the products ands services of the company. Equally, there is need for the company to employ sound financial systems which will ensure that the company continues to accumulate its financial strength without engaging in any fraudulent activities or any other form of mismanagement (Dalrymple, Get Rich with Good Habits).

Work Cited

Dalrymple, Mary. Get Rich With Good Habits. E*Trade Financial, 2007 Frank, T. A. A Brief History of Wal-Mart, Washington Monthly, April 1st, 2006. Available at www. reclaimdemocracy. org/walmart/2006/history. php> accessed on 08-10-2008 MarketWatch. Wal-Mart may be a mulling small-store strategy: report, New York, 2007 Money & Co. Wal-Mart returns to darling status on Wall Street, Los Angeles Times, 2008

VIZIO HDTV, a well-known brand which was founded by a Taiwanese American William Wang, the brand slogan “Where Vision Meets Value”, headquartered in Irvine, California. In 2007, VIZIO skyrocketed, became America’s best-selling brand of flat panel HDTVs, but also become the first 10 years of the major U.S. TV sales market leading American brands. VIZIO is committed to bringing innovative practice feature-rich flat panel televisions to market. VIZIO offers a variety of award winning Plasma and LCD HDTVs including the new XVT series. VIZIO’s products in Costco (Costco Wholesale), Sam’s Club store (Sam’s Club), Sears (Sears), Wal-Mart (Walmart), Target Stores (Target), BJ’s Wholesale, the nation within the other retail providers and authorized online partners have sales office. VIZIO has won numerous awards including Inc. 500 best computer and electronics companies, “Good Housekeeping” (Good Housekeeping) named “Best widescreen” award, CNET’s “Top 10 Holiday Gifts”, “PC World “and” best Buy “award and so on.

The Flat panel TVs market is a really competitive one. There are several great and well known International Brands such as Samsung, LG, Sony, Sharp and so on. TV is the necessary product of every house, office and also for the exhibition. It’s a large market and keeping growing, that’s why so many companies want to be the leader brand of this industry. Here I provide one graphic as below to show that Vizio is the Top one brand in North America and Samsung is the second place but the gap between those two brands is not very big. Besides USA, Samsung, LG & Sony win more market share in other area such as Europe and Asia so there’s still a challenge waiting for VIZIO.

Conclusion

VIZIO is a really successful brand in USA but they need to keep their price advantage and well know what customers need. Samsung is a really threatening competitor, try to win more market share from them, make the gap bigger. Try to explore to the Asia market. I think the target for VIZIO in 2013 2014 is that they need to gain more reputation and customers in China. Make a strategy to win their attention, understand their culture and try to find the consumer formula, do the research for the better sales mode such as selling place, product position…etc.Vizio is founded by a Taiwanese and its headquarter is just in Irvine. Those points are very attractive to me because I can find some similar things. Furthermore, I worked for an electronic components company before, the
company provides the components to VIZIO’s factory. Also, I was an sales and my customers was two very famous Korea top TV brands. That’s why I want to do the further research to VIZIO. Work Cited

CUSTOMER PERCEPTIONS OF FACTORY OUTLET STORES VERSUS TRADITIONAL DEPARTMENT STORES Dr. G. S. Shergill* Department of Commerce, Massey University, Albany Campus, Private Bag 102 904 NSMC, Auckland, NEW ZEALAND Ph: 0064 9 414 0800 x9466, Email: G. S. Shergill@Massey. ac. nz & Y. Chen Department of Commerce, Massey University, Auckland, NEW ZEALAND, Email: alwaysyinyin@hotmail. com CUSTOMER PERCEPTIONS OF FACTORY OUTLET STORES VERSUS TRADITIONAL DEPARTMENT STORES Abstract

This paper examines customers’ perceptions of two different types of retail stores; factory outlet stores and traditional department stores; as well as their purchasing preferences. In addition, the paper compares these preferences across demographics. It explores four critical factors which significantly influence customers’ perceptions of both types of retail store. Findings are base on a mall intercept survey with 205 respondents across a range of demographics.

The results indicate that factory outlet stores are perceived as having comparatively lower prices and attractive promotions in comparison to traditional department stores, while traditional department stores have competitive advantages in terms of the other three factors. Also it is found that different demographic characteristics play an important role in influencing differences in customer perceptions regarding the different types of stores. The main implication of these findings is that factory outlet stores are perceived favourably and that they need to build more positive marketing strategies accordingly.

Keywords- Factory outlet stores, Traditional department stores, Customer preferences. Nowadays, an increasing number of customers choose factory outlet stores as their alternative shopping places, rather than continuing to shop at traditional department stores. Since customer loyalty is becoming more important for marketers in achieving sales performance goals (Kulpa, 1998), this increase in the use of factory outlet stores as an alternative choice poses a significant challenge to traditional department stores. This circumstance means that the competition between these different retail channels has become extremely intense.

A factory outlet store is owned and operated directly by a manufacturer to sell only its brand of merchandise, whereas a traditional department store does not manufacture products itself but instead sells a variety of products manufactured by independent firms (Meyers, 1995). In a factory outlet store, the manufacturer has full control over the product offering, in-store customer service and the quality and price of the product sold, as well as the physical attributes of the store. Traditional department stores are owned 1 and operated independent of manufacturers.

Manufacturers of the products sold at these stores have limited control over in-store customer service, prices of the products sold and the physical attributes of the stores. Initially factory outlet stores were established to offer end-of-line goods and seconds at the lowest possible prices (Lombart, 2004). As a result it was mainly customers in lower socio-economic groups who were willing to buy through this channel. These outlets have begun, however, to be gradually accepted by more customers, in part due to special annual sale promotions which began during the 1980s (Lombart, 2004).

Additionally, customers’ increasing value-consciousness has stimulated the development of factory outlet stores. This has especially been the case in the United States, where there are over 10,000 factory outlet stores now in operation (Meyers, 1995). Nowadays, factory outlet stores which provide the same range of brand name merchandise attract more and more customers, and have developed into showcases in much the same form as that of traditional department stores (Fernie and Fernie, 1997).

It is unclear, however, whether customer perceptions of factory outlet stores versus traditional department stores may differ in general and across demographics, as well as how such differences may be seen. The findings will assist marketers, particularly those employed by manufacturers, in understanding the ways in which customers view both traditional department stores and factory outlet stores. This insight will allow such marketers to set more suitable customer-oriented marketing strategies and business objectives, achieve superior financial performance and develop their marketing performance in the retail industry.

The main objective of this paper is to explore customers’ perceptions of these different types of retail stores, as well as their purchasing preferences. In addition, the paper examines customer preferences across demographics regarding customers’ perceptions of factory outlet stores and traditional department stores. The paper contains five sections. Following the introduction is an overview of literature, summarising previous studies, and sets the hypotheses to be tested. The next two 2 sections deal with research methodology, data analysis and findings.

Conclusions and implications are discussed in the last section. LITERATURE REVIEW Factory outlet stores vs. Traditional department stores Factory outlet stores An increasing number of factory outlet stores have been built for various reasons. Some of these stores have been created to deal with seconds’ products, some are presented as discount stores associated with new distribution channels, and some have been designed by manufacturers in order to reduce the price of their products through savings on overhead costs (Parker et al. , 2002).

This last reason has been pursued in order to attract more current and potential customers in price-oriented and price-sensitive markets and satisfy customers’ varying needs and wants (Parker et al. , 2002). Initially, the factory outlet store was identified and established as an off-price retailer (Joshi, 2003). Internationally, especially in Europe, factory outlet stores were built and developed for four basic reasons: to sell discounted products; to reduce overhead costs and carry out sales promotions; to create flexibility of stock running; and to achieve brand promotion (Joshi, 2003).

The roles and functions of factory outlet stores have changed significantly over the past few decades. They are no longer designed only as low price stores, but are also used for branded product promotions, especially in Europe and the US. For example, manufacturers of the Reebok, Levi, Gap and Warnaco brands regard their brand promotion to be one of the key functions of their factory outlet stores (Joshi, 2003). Factory outlet stores have also been designed as specific seconds stores and discount stores, and are located in many of Japan’s major cities (Joshi, 2003).

There has been a 62% increase in factory outlet stores since 1990 and the trend is for this increase to continue (Rudnitsky, 1994). Factory outlet stores have been developed using original styles by including some specific characteristics of conventional shopping centres in order to provide products with attractive prices and a leisurely shopping environment for most price-oriented customers (Golub and Winston, 1983). 3 Nowadays, the factory outlet stores are normally recognised as “… gaining a larger market share through price reductions, which are aimed at capturing the mass market” (Hellofs and Jacobson, 1999, p. 3). Therefore, the factory outlet stores need to develop their level of customer satisfaction and ensure that the products sold in these stores are of a reasonable quality in comparison to the previously built brand images (Parker et al. , 2002). Overall, the trend in factory outlet store development is quite satisfactory. For example, according to a survey discussed in Happy Campers at Outlets (Rauch, 2005), around 84% of respondents agreed that the prices in these stores met, and even exceeded, their expectations.

Also, nearly 93% of the respondents indicated their intention of making a return visit (Rauch, 2005). In summary, the development of factory outlet stores is rapid. They are seen as offering reasonable and lower prices than traditional department stores, and a much better shopping environment and atmosphere than ever before. Therefore, the sales performances achieved by factory outlet stores are satisfactory, tending towards positive maintenance and a continuous increase in this type of store.

Traditional Department Stores Nowadays, traditional department stores are facing a significant threat because the number of consumers who shop at traditional department stores is decreasing, although the sales of these stores have increased (Nasri, 1999). The number of customers who shop at traditional department stores has dropped sharply (Li, 2003). This means that department stores are in an endangered situation, and are receiving a lessening portion of the total retail sales. This situation has led to a significant decrease in the number of department stores (Li, 2003).

Traditional department stores are perceived by customers as playing a distinctive fashion role and offering a range of up-to-date fashion merchandise with reasonable prices, high levels of customer service and a comfortable shopping atmosphere 4 (Johnson, 1994). Customers are more willing to enter into, and purchase products in, traditional department stores, which offer more excitement and emotional attachment than do outlet stores. As a result traditional department stores tend to be developed to create and satisfy various demands of customers of different ages and with differing perceptions of fashion trends (Facenda, 2005).

This could be a competitive advantage which traditional department stores can utilise to attract and maintain customers, as well as increase market share as an effective defence against the threat presented by factory outlet stores. In summary, unlike discount stores, traditional department stores tend to be challenged into finding and creating a winning combination of a diverse customer and merchandise mix, along with service and price expectations, rather than addressing and focusing on attracting bargain-seeking customers through niche target marketing (Coward, 2003).

Therefore, the first hypothesis to be tested in the research can be stated as follows: H1: There is a significant difference in customers’ store preferences (traditional department stores, or factory outlet stores) across their demographics. Product Brand Image Loyal customers may hold strong and positive images of a brand which are hard to change and lead to long-term sales revenue (Wyner, 2003). A well-known brand as one important extrinsic factor can significantly affect customer perceptions (Ailawadi and Keller, 2004).

Retailers have an obvious opportunity, and are in an ideal position to build these kinds of positive experiences for customers (Schmitt, 2003). Brookman (2004) noted that brand images should be used to link merchandise ranges and store design. Parker et al. (2002) also recommended that good brand imagery leads to good sales revenues. Ailawadi and Keller (2004) pointed out that there was a direct relevance between branding and customer perceptions of retailer imagery, which has been confirmed by a large number of researches in this topic area. Inman et al. 2004) pointed out that customers associate different branded product ranges with different types of retail stores. Accordingly, store image is impacted significantly by customer perceptions 5 of the different branded products and services offered by retailers (Ailawadi and Keller, 2004). The greater the breadth of different products and services offered by a retail store, the greater the number of customers who will frequently patronage the store, as the variety of product categories provided in the same store provides a much more convenient shopping experience for customers (Messinger and Narasimhan, 1997).

Furthermore, the depth of within-category brand products is another very important factor in influencing store image in customer perceptions, and could be a main stimulator in the customer store choice decision (Ailawadi and Keller, 2004). Developing a selection, a range of styles, and favourable categories of branded products are the most important keys to increasing customer perceptions of store image and, as a consequence, achieving higher sales (Dreze et al. , 1994). Therefore, the design of brand-name products can be a comparable factor in creating images for factory outlet stores and traditional department stores.

The customer image of retail stores is highly and positively influenced by the quality of the manufactured product brands (Ailawadi and Keller, 2004). Accordingly, Jacoby and Mazursky (1984) noted that carrying strong positive images of brands could improve the positive image of retail stores. Furthermore, they noted that it was much easier to increase sales and achieve market share by increasing both the images of the brands and of the retail stores in the current saturated retail environment (Jacoby and Mazursky, 1984).

Nevertheless, Jacoby and Mazursky (1984) also mentioned that a good product brand image would be damaged if it was associated with a retail store which had a poor image. Therefore, brand products sold in either type of retail store should be designed and managed to create and improve relevant customer perceptions. In summary, customers having good brand image tend to be much more loyal in their shopping patterns, whether at traditional department stores, or factory outlet stores.

Also, customers who wish to purchase high quality branded products would consider whether the quality and value of the brand products sold in traditional retail stores is higher than those products sold in factory outlet stores (Parker et al. , 2002). So, the second hypothesis to be tested in the research could be stated as follows: 6 H2: The brand images of those products sold in traditional department stores are higher than for those products sold in factory outlet stores. Retail Store Image The store image plays a very important role in creating profit and maintaining customer loyalty.

Therefore, it could be a determining factor in customer perceptions (Parker et al. , 2002). A high quality store image implies the possibility of differentiation, loyalty and profitability, while a low-quality store image paves the way for price wars by emphasising and intensifying customer price sensitivity (Hallanan, 1994). The conclusion that retail stores should develop a positive, clear and favourable self-image to be an alternative choice in customers’ minds was drawn by Martineau (1958).

Understanding the impact of product brand image, and how a retailer should be positioned, is extremely important in building the image of a retail store (Ailawadi et al. , 1995). Building the image of a retail store requires the identification of sufficiently different goods and services from those of their competitors, which tends to increase customers’ appreciation (Keller, 2003). There are lots of different attributes which significantly influence store image. These include the quality of merchandise and services, the tore appearance, the quality of the purchase service, the physical facilities, the behaviour and service of employees, the price levels, the depth and frequency of promotions and the store shopping atmosphere (Lindquist, 1974). Two basic dimensions can be used to analyse the store image. These dimensions are in-store atmosphere, and price and promotion (Ailawadi and Keller, 2004, p. 333). In-store atmosphere is one of the most important factors in the influence of customer perceptions of retail stores. Baker et al. 2002) pointed out that a store’s shopping environment plays an extremely important role in providing information and shopping guides to customers, and is the key attribute in building store image. The in-store environment; particularly physical features such as merchandise pricing, quality and store design and layout, as well as social service facilities such as employees’ service 7 and friendliness, as well as food-court service; can influence customers’ economic and psychological shopping behaviours (Baker et al. , 2002).

Certainly, store environment plays a major role in providing informational cues and signals to customers about the type of merchandise and service they should expect (Parker et al. , 2002). Merchandise quality and service quality are key variables in influencing store image (Parker et al. , 2002). This indicates that service attributes might be some of the most important factors in store image brand building, and deeply influence consumer purchase behaviours (Hicks, 2000). This leads to the creation of long-term sales revenue and profitability (Hicks, 2000).

Furthermore, when different retailers stock similar products and brands, an appealing in-store atmosphere can play a critical role in building retailer brand image (Ailawadi and Keller, 2004). In this research, the in-store atmospheres of factory outlet stores and traditional department stores are compared, especially in terms of the physical characteristics and social service features. Two further hypotheses need to be tested, as follow: H3: The physical features (such as lighting, air conditioning, washrooms, music, cleanliness, displays, etc. of traditional department stores are perceived to be better than those of factory outlet stores. H4: The in-store customer service features (such as friendliness, helpfulness of salespeople, etc. ) of traditional department stores are perceived to be better than those of factory outlet stores. Price and promotion is another factor which directly affects customer perceptions of different types of retail stores and their images. A store’s image in terms of price and promotion will be influenced by average levels of prices, seasonal variations in prices, and the frequency and depth of promotions (Dickson and Sawyer, 1990).

Different customers hold different perceptions of the store choice decision, according to the different images of stores. For example, large basket shoppers like every-day low price stores, while small basket shoppers prefer high-low promotional pricing stores (Bell and Lattin, 1998). Traditional department stores tend to create “… a diverse customer and merchandise mix, service expectations and price point …” in order to design a desirable shopping experience (Coward, 2003, p. 27).

For example, Coward (2003) suggested that 8 stores needed to rethink convenient designs, return policies and commission policies in order to make their service more flexible and satisfying for customers. Parker et al. (2002) pointed out that there is an incredible interaction between price levels and customer perceptions of product brand images and store images. In particular, comparatively lower price levels would lead to negative customer perceptions of the retail stores (Parker et al. , 2002).

To identify the different price and promotion images of retail stores, the hypotheses formulated are: H5: The price and promotion features of products sold in traditional department stores are perceived as being higher than that of factory outlet stores. H6: There is a significant difference in customers’ store ratings (traditional department stores vs. factory outlet stores) across their demographics. RESEARCH METHODOLOGY The study was conducted in a mid-sized multicultural city with a range of local and international retailers, including a number of traditional department stores and factory outlet stores.

Using Parker et al. ’s (2002) nineteen items developed for measuring store characteristics, a questionnaire was constructed which measured preferences for generic stores. A five point scale was used in the questionnaire, anchored by 1=very poor and 5=very good. In addition, four items designed to measure the demographic characteristics of the respondents were also included. The data was collected using intercept surveys. The respondents were selected equally at both types of retail outlets. The usable sample was 205 respondents. The sample profile is given in Table I.

DATA ANALYSIS AND FINDINGS Sample Profile The sample profile of 205 respondents is summarised in Table I below. There are 107 female and 98 male respondents in the survey. The majority of the respondents are less than forty-five years of age (approximately 71% of the total sample). Furthermore, the majority of the respondents had completed secondary school and completed at least one trade diploma, or certificate degree. Additionally, around 78% of the respondents earned 9 a yearly gross income (before tax) of over NZ$20,000. Respondents with a yearly income over NZ$60,000 only comprised 9. % of the sample, with the majority having a yearly income of between NZ$20,000 and NZ$40,000. Table I: Gender Sample Profile (N=205) Percentage Female Male Total Under 25yr 52. 2 47. 8 100 15. 6 25. 9 29. 8 18. 5 7. 8 2. 4 100 16. 6 30. 2 38. 5 14. 6 100 21. 5 45. 4 23. 9 9. 3 100 Demographics Formatted: Swedish (Sweden) Age 25-34yr 35-44yr 45-54yr 55-64yr Over 64yr Total High School Degree Education Trade Diploma/Certificate Bachelor Degree Masters Degree Total Individual tax) yearly Less than NZ$20,000 NZ$20,001–$40,000 NZ$40,001–$60,000 Over NZ$60,000 Total ross income (before The reliability analysis was utilised to test whether the nineteen questions used in the questionnaire fit the factor analysis criteria. Using Cronbach alpha, we found that the nineteen items’ reliability for traditional department stores was . 889 and for factory outlet stores was . 880, both figures being at an acceptable level (Nunnally, 1978). Factors which Customers keep in mind while Shopping at Traditional Department Stores (TDS) and Factory Outlet Stores (FOS) Table II displays the factor analysis results for different scales of TDS in the questionnaire.

Four factors were extracted through the factor analysis for TDS. Factor 1 concerns the in-store customer service characteristics of TDS. The variables relating to 10 customer service in the stores; such as friendly, helpful, familiar with merchandise, exchanges, salespeople’s’ pressure and enough salespeople; are loaded more highly than other variables contained in Factor 1. Customers are especially concerned with whether the salespeople in traditional department stores are helpful.

Within Factor 2, higher loadings are given to quality, wide selection, newest styles and fully stocked in regards to the products sold in the stores. These loadings indicate that Factor 2 largely displays concerns about the brand images of products sold in TDS. Table II: Factor Analysis Results for Traditional Department Stores and Factory Outlet Stores Traditional Department Stores Factor 1: In-store customer service features Factor 1: In-store customer service features Factory Outlet Stores Variables Factor 2: Brand images of products Factor 2: Brand images of products

Factor 4: Price & promotion features Salespeople are friendly Salespeople are helpful Salespeople are familiar with merchandise Exchanges happily Less pressure from salespeople Enough salespeople Quality is good Selection of products is wide Styles of products are newest Stock level Store is attractive Store is not crowded Store is clean Store is neat Store is bright .600 . 746 . 637 . 571 . 601 . 580 . 449 . 763 . 771 . 702 . 458 . 545 . 763 . 745 . 672 .628 . 717 . 652 . 590 . 640 . 639 . 471 . 694 . 779 . 740 . 556 . 697 . 822 . 677 . 160

Factor 4: Price & promotion features Factor 3: Physical features Factor 3: Physical features 11 Prices are good Value for price Markdowns are attractive Prices of products are marked clearly .655 . 810 . 468 . 360 .359 . 325 . 882 . 739 Customers shopping in TDS tend to pay more attention to whether products sold in the stores display a wide selection, with the newest styles and are fully stocked, rather than being concerned about their quality, as the loadings of these three variables are 0. 763, 0. 771 and 0. 702, respectively, while the loading of quality is only 0. 49. Furthermore, Factor 3 shows significant loadings on the variables of attractive, not crowded, clean, neat and bright, at 0. 458, 0. 545, 0. 763, 0. 745 and 0. 672, respectively. Therefore, Factor 3 can be identified as containing the physical features of TDS. Specifically, the variables of clean and neat have much higher loadings than the others. This implies that these two factors significantly influence customer perceptions of the physical features of TDS. Factor 4 shows customers’ considerations regarding the price and promotion features of products sold in TDS.

Within the fourth factor, comparatively higher loadings are found for the variables of price, value for price, markdowns and clearly marked price. These loadings are 0. 655, 0. 810, 0. 468 and 0. 360, respectively. In particular, customers’ who preferred traditional department stores tended to give more consideration to whether they could gain reasonable value from their purchase. Table II also displays the factor analysis results for the different variables of the factory outlet stores (FOS) in the questionnaire. Again, a similar group of four factors is extracted through factor analysis.

As in the TDS analysis, Factor 1 concerns the in-store customer service features of FOS. The variables regarding customer service have higher loadings than the other variables contained in Factor 1. Respondents were concerned as to whether the service offered by the salespeople is helpful or not, as it is given the highest loading, at 0. 717. The variables of quality, wide selection, newest styles and fully stocked, regarding the products sold in FOS are included in Factor 2. Their high loadings indicate that Factor 2 is related to measuring the brand images of the products 12 sold in the retail stores.

The customers who shop in FOS tend to give more consideration as to whether the products sold in these stores are comparatively new styles and have satisfactory stock levels, as shown in the related high loadings of these two variables (0. 779 and 0. 740, respectively). These customers do not pay much attention to the quality of the products sold in FOS, however, as this variable’s loading is only 0. 471. Moreover, Factor 3’s variables of attractive, not crowded, cleanliness, neat and bright have loadings of 0. 556, 0. 697, 0. 822, 0. 677 and 0. 160, respectively. Thus, Factor 3 can be identified as concerning the physical features of FOS.

More specifically, customers tend to be concerned about the cleanliness of FOS, but few of them indicate that store brightness is important. Lastly, Factor 4 concerns the price and promotion features of the products sold in FOS. Higher loadings are given to the price, reasonable price for value, markdowns and clearly marked price variables included in the fourth factor, at 0. 359, 0. 325, 0. 882 and 0. 739, respectively. Customers of factory outlet stores tend to be more concerned as to whether the markdowns of the products sold in the stores are attractive, and whether the prices of the products are clearly marked.

Customer Store Preference across Demographics To know if there is a trend to shop at factory outlet stores, we asked respondents which store they normally prefer to shop. To control for any possible response bias, we selected respondents equally at both types of retail outlets. As shown in Table III, the number of respondents who prefer TDS as their shopping place is 113, compared to 92 respondents choosing FOS as their preferred shopping place. This implies that a sizable number of customers prefer and/or are shopping at factory outlet stores.

Table III: Frequency analysis of store choice Frequency Traditional department stores Factory outlet stores 113 92 Percentage 55. 1 44. 9 13 Total 205 100. 0 Chi-square is next used in order to examine whether there are any significant effects from the different demographic characteristics on customer decision-making in regards to shopping choices. As shown in Table IV, significant differences exist in customers’ store choice as regards to their different genders, levels of education and gross yearly income, as the relative P-values for these variables are 0. 001, 0. 000 and 0. 003, respectively.

Nevertheless, there are no significant differences between customers’ shopping preferences in regard to age, as the P-value is 0. 690. Table IV: Store choices and demographic characteristics Department Chi-squa re values 11. 343 Traditional Demographics Gender Female Male Total 47 66 113 19 28 36 18 8 4 113 13 24 56 20 113 60 32 92 13 25 25 20 8 1 92 21 38 23 10 92 107 98 205 32 53 61 38 16 5 205 34 62 79 30 205 20. 223 . 000 3. 065 . 690 . 001 P-values Factory Total Outlet Stores Stores Age Under 25yr 25-34yr 35-44yr 45-54yr 55-64yr Over 64yr Total Formatted: Swedish (Sweden) Education

High School Grad. Trade Diploma/Certificate Bachelor Degree Master Degree Total Individual yearly tax) gross income (before Less than NZ$20,000 NZ$20,001–$40,000 NZ$40,001–$60,000 Over NZ$60,000 Total 18 46 33 16 113 26 47 16 3 92 44 93 49 19 205 14. 256 . 003 14 More specifically, female respondents tend to prefer shopping in factory outlet stores, while nearly two-thirds of the male respondents prefer to shop in traditional department stores. Furthermore, customers with higher levels of education are more likely to choose traditional department stores as their shopping preference.

As shown in Table IV, the number of customers who possess degrees and prefer shopping at traditional department stores is much higher than the number of those customers who are willing to go to factory outlet stores. In addition, customers who earn a higher yearly income; particularly those whose gross yearly income is between NZ$40,001 and NZ$60,000, or over NZ $60,000; tend to choose traditional department stores over factory outlet stores. These statistics are summarised in Table IV above. Therefore, H1 is supported on gender, education and income, but not on the demographic of age.

Customer Perceptions of Brand Images of Products Sold in Traditional Department Stores and Factory Outlet Stores Table V below provides a comparison of the brand images and T-test results of products sold in traditional department stores and factory outlet stores. According to these results, H2; which holds that the brand images of products sold in TDS are higher than those of products sold in FOS; is supported (see Table V). In other words, the overall mean rating of TDS branded products is significantly higher than that of FOS branded products, at 16. 02 and 9. 1, respectively. Specifically; according to the analysis of the individual items of product features; the respondents gave higher ratings for products sold in TDS (regarding their wide selection, newer styles and satisfactory stock levels), than for the products sold in FOS. There is a significant difference between the mean ratings of the branded products sold in TDS and FOS. Thus, the results from the data analysis show that there is a significant difference in the brand images of the products sold in traditional department stores and factory outlet stores.

Customers tend to have higher, and more positive, images of branded products sold in traditional department stores than they do for branded products sold in factory outlet stores. 15 16 Table V: Comparison of brand images of products sold in stores Factory Outlet Brand Images of Products Sold Traditional Stores in the stores Department Stores Mean SD Mean SD P-values Quality is good Selection of products is wide Styles of products are newest Stock level 3. 88 4. 05 4. 02 4. 07 16. 02 .70 . 81 . 93 . 88 2. 69 3. 11 2. 53 2. 16 1. 91 9. 71 .77 . 89 . 87 . 94 2. 73 .000 . 000 . 00 . 000 . 000 Overall Customer Perceptions of Store Images of Traditional Department Stores and Factory Outlet Stores Table VI below provides a comparison of the store images and T-Test results of both types of retail stores. As shown, the respondents’ overall mean ratings, as well as their item-wise mean ratings of TDS physical features are significantly higher than for FOS, at 19. 87 and 16. 13, respectively. Therefore, H3 is accepted. That is, the physical features of traditional department stores are perceived as being better than those of the factory outlet stores.

There is a significant difference between the mean ratings of the physical features of TDS and FOS. Thus, the respondents indicated that the physical characteristics of traditional department stores are more attractive than those of factory outlet stores. Further to this finding, the respondents’ overall mean ratings, as well as their item-wise mean ratings of TDS in-store customer service features are significantly higher than those for FOS, at 22. 18 and 20. 48, respectively. Therefore, H4 is accepted.

That is, in-store customer service features of traditional department stores are perceived as being better than those of factory outlet stores in New Zealand Furthermore, H5; which holds that the price and promotion features of products sold in traditional department stores are perceived as being significantly higher than those of factory outlet stores; is accepted, as indicated in Table V. The applicable overall mean ratings of TDS and FOS are 12. 70 and 16. 11, respectively. Also, the individual scale 17 items of price and promotion features are much higher for the factory outlet stores.

This finding indicates that respondents consider the prices of products sold in FOS to be comparative lower than those sold in TDS and that the promotions offered by FOS are more attractive and satisfactory. Table VI: Comparison of the features of traditional department stores (TDS) and factory outlet stores (FOS) Features Traditional Factory Outlet P-values Department Stores Stores SD Mean SD Physical Features: Mean Store is attractive . 000 . 94 3. 32 . 84 3. 63 Store is not crowded . 000 . 85 3. 25 . 81 3. 70 Store is clean . 000 . 83 3. 44 . 75 4. 10 Store is neat . 000 . 86 3. 49 . 73 4. 16 Store is bright . 00 . 70 2. 62 . 73 4. 28 Overall In-store Customer Service Features: Salespeople are friendly Salespeople are helpful Salespeople are familiar with merchandise Exchanges happily Less pressure from salespeople Enough salespeople 19. 87 Mean 3. 86 3. 76 3. 77 3. 39 3. 48 3. 91 22. 18 Mean 2. 88 2. 82 3. 38 3. 63 12. 70 2. 96 SD . 67 . 73 . 86 . 84 . 81 . 85 3. 45 SD . 83 . 88 . 91 . 88 2. 71 16. 13 Mean 3. 59 3. 52 3. 42 3. 07 3. 36 3. 51 20. 48 Mean 3. 99 3. 66 4. 22 4. 24 16. 11 3. 10 SD . 82 . 82 . 88 . 87 . 87 . 96 3. 95 SD . 65 . 76 . 79 . 84 2. 26 .000 . 000 . 000 . 000 . 000 . 000 . 000 . 000

Overall Price & Promotion Features of Products Sold in the stores: Prices are good Value for price Markdowns are attractive Prices of products are marked clearly .000 . 000 . 000 . 000 . 000 Overall Customer Perceptions of Traditional Department Stores and Factory Outlet Stores across Demographics To investigate Objective 4 (to evaluate whether demographic characteristics are related to customer perceptions of traditional department stores and factory outlet stores), the ANOVA and T-tests are used to determine whether there are significant relationships between customers’ store ratings and their demographic characteristics.

Table VII 18 displays the customer perceptions of overall store ratings and their relevant four demographic characteristics. As shown in Table VII, only the income level shows significant mean differences in the ratings of TDS. In other words, customers’ concerns regarding the physical features and price and promotion features of TDS are highly influenced by their income level. More specifically, the higher the customer’s income is the more favourable will be the mean ratings for physical features and price and promotion of TDS.

There is, however, no difference in the customer perceptions of TDS and FOS across gender, age groups and educational levels, as the respective P-values are all much higher than 0. 05. Therefore, H6 is supported only on income, but not on gender and education levels. Table VII: Store ratings and Demographic Characteristics Demographics Traditional Department Stores Physical Physical features features In-store customer service features In-store customer service features Mean SD Mean SD

Mean SD Mean SD Price & promotion features Price & promotion features Product features Product features Factory Outlet Stores Traditional Department Stores Factory Outlet Stores Traditional Department Stores Factory Outlet Stores Traditional Department Stores Factory Outlet Stores Formatted Mean SD Mean SD Mean SD Mean SD Gender: Female Male P-value 3. 93 4. 02 . 682 . 54 . 64 3. 32 3. 12 . 059 . 60 . 63 3. 66 3. 74 . 307 . 58 . 57 3. 43 3. 40 . 832 . 64 . 68 3. 14 3. 22 . 636 . 70 . 65 4. 02 4. 03 . 635 . 58 . 56 3. 97 4. 04 . 734 . 65 . 69 2. 48 2. 7 . 476 . 74 . 61 Age: Under 25yr 25-34yr 35-44yr 45-54yr 55-64yr Over 64yr 3. 88 3. 95 4. 05 3. 94 3. 86 4. 48 . 270 . 55 . 60 . 57 . 59 . 66 . 74 3. 23 3. 22 3. 20 3. 38 3. 14 2. 76 . 330 . 69 . 62 . 64 . 44 . 69 . 82 3. 82 3. 63 3. 71 3. 59 3. 85 3. 73 . 450 . 56 . 57 . 60 . 52 . 57 . 89 3. 47 3. 39 3. 38 3. 59 3. 28 2. 73 . 097 . 59 . 66 . 64 . 57 . 76 . 66 3. 24 2. 99 3. 31 3. 13 3. 27 3. 10 . 206 . 69 . 70 . 58 . 65 . 77 . 68 4. 09 3. 88 4. 05 4. 14 4. 09 3. 80 . 225 . 48 . 57 . 60 . 46 . 56 . 56 4. 13 3. 90 4. 09 3. 99 3. 86 3. 90 . 532 . 58 . 8 . 63 . 72 . 75 . 67 2. 54 2. 32 2. 44 2. 50 2. 44 2. 10 . 572 . 80 . 64 . 65 . 74 . 56 . 65 Formatted: Swedish (Sweden) P-value 19 Education: High School Grad. Diploma/Certificate Bachelor Degree Masters Degree 3. 96 3. 85 4. 02 4. 11 . 201 . 62 . 53 . 60 . 65 3. 38 3. 34 3. 11 3. 14 . 058 . 68 . 52 . 68 . 53 3. 59 3. 70 3. 76 3. 63 . 480 . 55 . 50 . 60 . 67 3. 51 3. 55 3. 26 3. 42 . 590 . 74 . 56 . 65 . 71 2. 94 3. 15 3. 31 3. 15 . 066 . 72 . 65 . 65 . 72 3. 99 4. 09 3. 97 4. 08 . 552 . 60 . 50 . 63 . 45 3. 83 3. 99 4. 10 4. 00 . 281 . 85 . 59 . 6 . 85 2. 57 2. 41 2. 30 2. 63 . 075 . 72 . 52 . 70 . 82 P-value Yearly gross income: Less than NZ$20,000 NZ$20,001–$40,000 NZ$40,001–$60,000 Over NZ$60,000 3. 90 3. 87 4. 11 4. 27 .64 . 54 . 58 . 62 3. 22 3. 28 3. 19 3. 06 . 524 .66 . 63 . 59 . 55 3. 67 3. 66 3. 78 3. 74 . 674 .56 . 59 . 56 . 58 3. 44 3. 48 3. 29 3. 34 . 413 .68 . 67 . 63 . 65 2. 88 3. 20 3. 30 3. 43 .71 . 67 . 59 . 68 4. 02 4. 05 4. 01 3. 99 . 960 .57 . 57 . 53 . 66 3. 85 3. 97 4. 12 4. 28 . 060 .76 . 65 . 62 . 58 2. 61 2. 38 2. 31 2. 55 . 130 .75 . 61 . 63 . 93 P-value .010 .005

CONCLUSIONS AND IMPLICATIONS The findings on customer store preference across demographics show that customers with different genders, levels of education and gross yearly incomes tend to make different store choices, however, they perceive traditional department stores and factory outlet stores similarly regardless of their age. More specifically, male customers regard traditional department stores offering famous branded products as their first choice, however, female customers are willing to shop at factory outlet stores in order to seek branded products with comparatively lower prices.

Female customers tend to be more price oriented and price sensitive. Furthermore, the higher the level of education customers have the more likely they are to choose traditional department stores as their shopping preference. This finding indicates that more highly educated customers tend to have greater concerns in regards to the shopping environment and atmosphere offered by traditional department stores. In addition, customers earning higher yearly incomes are more willing to choose traditional department stores over factory outlet stores.

In regards to customer perceptions of brand images of products sold in traditional department stores and factory outlet stores, there is a significant difference in the brand images of products sold across these stores. The brand images of products sold in traditional department stores are perceived more positively than are those of products 20 sold in factory outlet stores. Customers perceive traditional department stores as offering wider and more satisfactory selections of various types of merchandise in comparison to factory outlet stores.

The stock levels in traditional department stores are also seen as being superior. Obviously, the wider selection and greater breadth of different branded products offered in the stores, the greater the number of customers who will be more attracted to TDS. In regard to customer perceptions of store images of traditional department stores and factory outlet stores, there is a significant difference between traditional department stores and factory outlet stores.

Firstly, respondents feel that the physical features of traditional department stores are more satisfactory, comfortable and attractive than those of the factory outlet stores. Customers believe that they will enjoy shopping at traditional department stores, as they provide them with a more comfortable in-store shopping environment and atmosphere. Secondly, there are significant differences in the in-store customer service features of traditional department stores and factory outlet stores. Customers believe that traditional department stores provide a higher quality of in-store customer services.

TDS are also seen as having better exchange policies and an adequate number of salespeople offering to meet customers’ different wants and needs. Therefore, traditional department stores do have distinctive advantages in terms of their in-store customer services, in comparison to those offered by factory outlet stores. Thirdly, traditional department stores have much higher prices when compared with factory outlet stores. This is due to their different marketing orientation and segmentation.

Customers tend to be attracted by the prices and value of products sold in factory outlet stores. Schneiderman (1998) found in his research that customers believed that factory outlet stores could provide greater value for their money than did traditional department stores. Results on the examination of customer perceptions of traditional department stores and factory outlet stores across demographics indicate that only income levels have any significant effects on customers’ mean ratings of traditional department stores, but that 21 o significant differences exist across the variables of gender, age and education. This means that customer perceptions of physical features and price and promotion features of traditional department stores are highly influenced by their different income levels. Customers with higher incomes tend to be attracted to physical features and price and promotion features of traditional department stores. They are interested in shopping in a comfortable environment and seeking famous and fashionable branded products, rather than being price sensitive, bargain seeking customers.

The implications of these research findings include the point that traditional department stores should maintain their competitive positions by continuing to offer good physical facilities and environments, satisfactory in-store customer services and famous branded products, in order to maintain and attract more customers. This will also help to maintain their market share and gain competitive advantage against the intense competition created by factory outlet stores. Customers perceive that the prices offered in traditional department stores are much higher than those of factory outlet stores.

Therefore, department stores are facing a big challenge from factory outlet stores in terms of price and promotion strategies. As a result, they need to assess their value positions and adapt more reasonable prices to provide satisfactory value for customers. Clearly identifying and dividing their current and potential customers into different target segments is necessary for retailers in setting differing price strategies. During sales seasons, more attractive promotion of branded products could be undertaken in traditional department stores.

Certainly, customers tend to purchase more when there are large sales and attractive promotions of branded products in traditional department stores. In order to target appropriate segments, traditional department stores need to identify what relevant level of branded products should be sold and assign these products reasonable prices in stores across different ages, genders, and levels of education and income. Traditional department retail stores also need to provide more selection characteristics (in terms of their branded products adapting to the newest styles frequently and maintain good stocks level), in order to 22 eep their competitive advantages through being perceived as offering more positive brand images of the products sold in their stores. Furthermore, strategic alliances between different traditional department stores and their distributors could also be developed. In such an alliance, competitive advantages (such as better offerings of quality in-store services and providing similar branded products with reasonable prices and promotions) could be shared by traditional department stores, , which should reduce costs for the alliance partners.

Regarding implications for factory outlet stores, they need to learn from the comparative disadvantages of traditional department stores and engage in enhancing their current competitive positions on price and promotion offerings, in order to improve customer perceptions of their stores. Maintaining their comparatively lower prices and providing frequent promotions of branded products is one of the most useful price and promotion strategies for factory outlet stores in maintaining and enhancing their competitive positions in this area.

Meanwhile, manufacturers which utilise factory outlet stores need to control the values of the products through assessments. As a result, customers who are not only price sensitive, but are also value seeking will be satisfied with the prices and promotion features of the products sold in the factory outlet stores. It is extremely important for manufacturers to immediately improve their products’ brand images. Widening the selection of characteristics, improving stock levels and offering positive branded products in the stores are ways which this could be achieved.

Nowadays, factory outlet stores are no longer established for the sale of seconds or comparatively lower quality products with lower prices. Therefore, they need to build more positive brand images for the products sold in the stores instead of being perceived as discount stores. They need to invest more in the stores’ physical facilities to offer a better shopping environment and atmosphere. As a result, however, prices may increase significantly due to the costs of such upgrading, meaning that such a strategy might be risky (Parker et al. , 2002). Therefore, factory outlet stores need to evaluate their choices carefully in 23 rder to balance any price increases and distribution channel developments. REFERENCES Ailawadi, K. L. and Keller, K. L (2004). Understanding retail branding: conceptual insights and research priorities. Journal of Retailing, Vol. 80 (4), pp. 331-342. Ailawadi, K. L. , Borin, N. and Farris, P. (1995). Market power and performance: A cross-industry analysis of manufacturers and retailers. Journal of Retailing, Vol. 71 (3), pp. 211–248. Baker, J. , Parsuraman, A. , Grewal, D. and Glenn, B. (2002). The influence of multiple store environment cues on perceived merchandise value and patronage intentions.

Journal of Marketing, Vol 66 (4), pp. 120–141. Bell, D. and Lattin, J. M. (1998). Shopping behavior and consumer response to retail price format: Why large basket shoppers prefer EDLP. Marketing Science, Vol 17 (1), pp. 66-88. Brookman, F. (2004). Retailers Get Smart About Displays. WWD: Women’s Wear Daily, Vol. 188 (44), p. 8. Coward, A. (2003). Cowan & Associates suggests department stores should support a customer-created shopping experience. Display & Design Ideas, Vol. 15 (6), p. 27. Dickson, P. R. and Sawyer, A. G. (1990). The price knowledge and search of supermarket shoppers. Journal of Marketing, Vol. 4 (3), pp. 42-53. Dreze, X. , Hoch, S. J. and Purk, M. E. (1994). Shelf management and space elasticity. Journal of Retailing, Vol. 70 (4), pp. 301-326. Facenda, V. , L. (2005). New Fashion for the Season. Retail Merchandiser, Vol. 45 (8), p. 10. Fernie, J. and Fernie, S. (1997). The development of a US retail format in Europe: The case of factory outlet centres. International Journal of Retail & Distribution Management, Vol. 25 (11), pp. 342-350. Golub, K. L. and Winston, M. (1983). Outlet Malls. Appraisal Journal. Vol. 51 (3), p. 452. Hallanan, B. (1994) In Store Brands, Quality http://www. gsb. stanford. du/research/faculty/news_releases/rajiv. lal/lal. htm Sells: Hellofs, L. L. and Jacobson, R. (1999). Market Share and Customers’ Perceptions of Quality: When Can Firms Grow Their Way to Higher Versus Lower Quality? Journal of Marketing, Vol. 63 (1), pp. 16-25. Hicks, T. (2000). People Power: Smart Staffing Will Help Build A Brand. SGB: Sporting Goods Business, Vol. 33 (9), p. 14. Inman, J. J. , Venkatesh, S. and Roselline, F. (2004). The roles of channel-category associations and geodemographics in channel patronage. Journal of Marketing, Vol. 68 (2), pp. 51-71. 24 Jacoby, J. and Mazursky, D. (1984).

Linking brand and retailer images—Do the potential risks outweigh the potential benefits? Journal of Retailing, Vol. 60 (2), pp. 105-122. Johnson, J. L. (1994). Reinventing the Department Store. Discount Merchandiser, Vol. 34 (5), pp. 54-55. Joshi, S. (2003). Who’s buying at factory outlets? Financial Daily from THE HINDU group of publications. Retrieved on May 12, 2005 from the WWW: http://www. blonnet. com/catalyst/2003/06/05/stories/2003060500070200. htm . Keller, K. L. (2003). Strategic brand management: Building, measuring, and managing brand equity (2nd ed. ). Upper Saddle River, NJ: Prentice-Hall.

Kulpa, J. (1998). Service levels are key for Medic customer loyalty. Drug Store News, Vol. 20 (7), p. 204. Li, J. (2003). Sincere plotting turnaround in cut-throat times. Hong Kong iMail (China). Lindquist, J. D. (1974). Meaning of image. Journal of Retailing, Vol 50 (4), pp. 29-38. Lombart, C. (2004). Factory Outlet Centres in Belgium. European Retail Digest, Vol. 41 (Spring), pp. 1-3. Martineau, P. (1958). The Personality of a Retail Store. Harvard Business Review, Vol. 36 (1), pp. 47-55. Messinger, P. R. and Narasimhan, C. (1997). A model of retail formats based on consumers’ economizing on shopping time.

Marketing Science, Vol. 16 (1), pp. 1-23. Meyers, C. R. (1995). Attracting factory outlet stores can spell success for a community. Economic Development Review, Vol. 13 (2), pp. 51-55. Nasri, J. (1999). Traditional Retailers Prepare To Confront E-Commerce Challenge. Weekly Corporate Growth Report, Vol. 10 (172), pp. 10505-10507. Nunnally, J. C. (1978). Psychometric Theory (2nd ed. ). New York: McGraw Hill. Parker, R. S. , Pettijohn, C. , Pettijohn, L. and Kent, J. (2002). An Analysis of Customer Perceptions: Factory Outlet Stores Versus Traditional Department Stores.

The Marketing Management Journal, Vol. 13 (2), pp. 29-44. Rauch, M. (2005). Looking Ahead. Incentive, Vol. 179 (2), p, 14. Rudnitsky, H. (1994). Too much of a good thing. Forbes, Vol. 154 (4), pp. 46-47. Schmitt, B. H. (2003). Experience management: A revolutionary approach to connecting with your customers. New York: John Wiley & Sons. Schneiderman, I. P. (1998). Value Keeps Factory Outlets Viable. Boston Daily News Record, Vol. 28 (85), p. 10. Wyner, G. A. (2003). A Guide to Marketing Effectiveness. Marketing Management, Vol. 12 (5), pp. 6-7. Formatted: Italian (Italy) Formatted: Swedish (Sweden) 25

The composition of this research paper will concentrate on the topic of analyzing one of the major companies in the shoes and footwear industry which is that of the Crocs Inc. As a part of the latest leading players in manufacturing and marketing footwear, this paper would as well render definite attention in investigating and studying the performance of Crocs Inc. from the time of their foundation and up to present time of their operation.

Given the fact that the said footwear manufacturer and marketer is among the leading of the companies in the business today, this would as well make the improvements and changes that have taken place from the time Crocs Inc. started to produce slippers and footwear for the people around the world. Moreover, this research would also draw comprehensible analysis with regard to the innovations and improvements that Crocs Inc. has contribute in the global business of footwear. In addition to this, the particular methods and strategies that Crocs Inc.

has implemented from the past years, as their way of establishing and instituting their competitiveness as a company, would also be discussed throughout the paper. Nonetheless, this research paper holds on to the main objective of drawing a clear and comprehensive company analysis of Crocs Inc. as one of the major players in the global footwear manufacturing and marketing business. The following would be discussed:

• A Brief Background of Crocs Incorporated

• Mission and Vision

• Innovations and Development

• Study of Competitive Strategy

• Overall Performance Assessment

Towards the end, this research paper intends to provide and present definite and factual analysis of the present condition and stability of Crocs Inc. as an independent company footwear industry. This would also draw specific conclusion as to where the company has been through from the moment they venture in to the footwear business to the present time being where they are regarded as one of the strongest footwear manufacturer and marketer.

A Brief Background of Crocs Incorporated The company, Crocs Incorporated, has originated and started to venture in the shoes and foot apparel business when the three major founders of the company from Boulder, Colorado decided to create and market their own brand of innovative footwear which they called as Crocs Shoes. At first, the Crocs types of shoes are originally designed and intended to cater for the boating and outdoor shoe market mainly because of its distinct feature of slip-resistant and non-marking sole.

Eager to reach higher grounds in the business and through the enthusiasm of the company to serve a larger scope of market, the Crocs Incorporated started to manufacture and market their products for the general public. In the 2003, the trademark of Crocs Footwear has become a legitimate global phenomenon wherein it is broadly accepted by the market as an all-purpose shoe that is designed to render a fusion comfort and fashion for the people. Hence, for the succeeding years, the Crocs Incorporated has started to concentrate and accommodate rapid growth in the company from a small footwear venture to a global and competitive shoe business.

As of the present time, the company has totally developed and established their own product line as they continue to build more warehouses and shipping programs for quicker assembly and delivery of their merchandise to their clients from different parts of the world. To endure its sturdy growth, the company has also hired a competent team for senior management and acquired another business called Foam Creations Inc. In the present day, the once small shoe venture is now available worldwide and could be purchased through the internet with more and more people from all walks of life wearing Crocs.

Although the company has experienced a rapid success over the years, they still operate and stand behind the core values of Crocs Footwear as they continuous to stay committed in producing slip-resistant, lightweight, fashionable, comfortable and multi-purpose footwear that can be buy for affordable price.

Crocs Vision and Mission Statement

As a relatively young player and independent business entity in the footwear industry, Crocs envisions a business that primarily caters to the desire of people and market for a new and innovative product in foot apparel and shoes.

Crocs Vision statement is lifting and enhancing the quality and definition of a superb product in foot apparel, more especially in molded footwear category. On the other hand, rendering the people and the broad market of footwear business with the product that is fresh and innovative is of the primary mission of the company. The Crocs main goal is to present a wide variety of footwear products that are useful and modern in such a way that would provide comfort and functionality without jeopardizing the sense of fashion.

Hence, rendering the people with the product that soothes to the quality of ideal footwear at low and affordable price for everyone. Innovations and Development As one of the newest and present leaders in the global footwear business, the Crocs Incorporated is regarded as one of the leading innovators and manufacturers that uplift the use of shoes and foot apparel for the service of the people. The company is known to be a master innovator that paved the way towards the fusion of comfort and fashion in purposeful footwear that the public could wear.

In a sense, the main innovation that the company has done in this industry is that Crocs Footwear instigate and elevate the presence of fashion in foot apparel without the jeopardizing the comfort and quality of the footwear that soothes the desire of people for functionality and serenity. The Crocs Footwear uses innovative closed-cell resin, which they called Croslite as their trademark in producing genuine merchandise and footwear for their global market and consumers.

Through this material, it enables the Crocs Incorporated to produce soft and lightweight, non-marking and odor-resistant shoes. This distinct innovation serves as the unique possessions that make Crocs Incorporated to produce foot apparels that are ideal for casual wear and for recreational purposes like boating, hiking, fishing and/or gardening. This also enables the company to effectively promote and market their own line of footwear merchandise to a wide array of consumers and market worldwide.

Study of the Company’s Competitive Strategy

As for the steadfast and speedy success of the company, the Crocs, Incorporated has relied mainly on their competitive strategy in a establishing and instituting their market stability as one of the major players in the footwear industry. Through the course of the past years, Crocs, Inc. has already utilized various strategic ways which enables the company to ensure and stimulate their growth as an independent business entity.

Thus, Crocs is known to have a great team of competent and effective higher and senior management officers that primarily take charge in implementing and designing competitive strategy for the company. In a sense, one of the main and significant competitive strategy that Crocs, Incorporated has implemented in their company is their Retail Distribution Strategy. Just like any other successful businesses, Crocs has done a great job strategizing the proper way of marketing and selling their products through creating a broad network of retail partners domestically and abroad.

As a relatively young company, Crocs has done a great a job in building a sturdy and mutual partnership with major national department stores, independent specialty stores and sporting goods retailers that have been their competitive edge against their direct competitors, as these retailers and partners have delivered a great job in advertising and selling their innovative footwear merchandise. Also, the core values of Crocs Incorporated that render strict details in protecting the business and interest of their customers is one of the main competitive strategy that helped the company institute a firm foundation in their business.

In addition to this, Crocs also remain as one of the businesses that prefer not to sell their branded merchandise through Costco, as their own strategic approach of protecting the price integrity and enhance brand equity of their product. Moreover, the Crocs incorporated, as one of newest leaders in the footwear business, also employs a distinct retail channel strategy that is specifically designed to elevate the Crocs brand towards creating more cohesive product placement for its retail partners and more availability of their merchandise in a wide variety of retail environments where its core customers shop.

In addition to this, Crocs also implements a unique product segmentation strategy, which Adam Baker, Vice President of Merchandising at Crocs Incorporated, regards as the company’s main competitive edge in building a sturdy future in this business, as this strategy mainly allows Crocs to mold their merchandise to better meet the needs of company’s retail partners as they continue to lead in the molded footwear category.

Overall Performance Assessment

There are no doubts that Crocs Incorporated has come along way in the footwear business as a small foot apparel venture to a booming manufacturer and marketer in molded footwear category. From the time of their boom in the early two thousand, Crocs has already received various responses and comments coming from their main consumers and retail partners. Some of these are good while a part of these are criticisms and denunciation about the company’s actions and primary merchandise.

Through the years, the said company has been through various triumphs and failures, but Crocs still continuous to hold their ground and position as a sturdy business entity. Apart from all the negative and positive testimonials from the people who love and hate Crocs Footwear, it is of reasonable grounds that analyzing the financial records of the company is a better way to draw a clear overall performance assessment of Crocs Incorporated. It feels like just yesterday when the sales and popularity of the new Crocs Footwear is sky rocketing in both of the local and international foot apparel business scene.

From the year 2004 to the year 2007, Crocs has drawn a sturdy growth in their yearly fiscal records. Crocs financial data shows a huge growth in revenue of about 3. 520 million dollars up to 847. 350 million dollars for the p of four years from 2004 to 2007. However, as time passes by and with the occurrence of recent global crisis such as the worldwide fiscal problems, the stunning financial and popularity triumphs of Crocs has started to drop.

As of the 2008 year ending fiscal report of the company, Crocs has experienced a drop of about 721. 6 million dollars from 847. million dollars in 2007. Thus, for the conclusion of last year, Crocs has recorded 5. 1 million revenue losses. Conclusion Although the said company has experienced steadfast and speedy growth in its business, Crocs incorporated, as one of the many players in the global footwear industry, remains not to be invincible with the current crisis and other problems that affect the condition of various businesses in the world.

Thus, despite of the strong foundation that company has already embedded, Crocs incorporated should not be complacent and confident not to pay attention on the common danger that the company and the entire footwear industry is facing. Nonetheless, through the data and numbers written in the recent fiscal record of the company, Crocs incorporated should double their effort recover and rise from the lost that they experienced from last year to be able to ensure the sturdy financial growth of the company and continue the remarkable performance and legacy that they did in the beginning.

References

About Crocs. (n. d. ). Retrieved April 14, 2009, from http://www. crocs. com/company/

About Crocs, Inc. (n. d. ). Retrieved April 14, 2009, from http://blog. crocs. com/about-crocs-inc/

Crocs History. (n. d. ). Retrieved April 14, 2009, from http://www. crocs-cayman. com/crocs-history. html

Crocs Strategy Clarified. (2007). Retrieved April 15, 2009

Barilla appears to be in a commodity industry, suggesting flat demand. Barilla positions themselves as the branded, premium, dry pasta. Their order qualifiers are consistency and quality, and their order winners are brand recognition and variety in shapes. In fact their product line is extensive – 800 products. However, Barilla faces demand fluctuations that strain their supply chain operations and making it difficult to anticipate product demand.

Barilla proposes a Just in Time Delivery system to help improve margins. Our overall recommendation is that a JITD delivery system is premature, and instead we recommend building a new information management system to resolve the information bottleneck between customer and the manufacturer and align incentives at each stage in the supply chain to reduce inventories. Only then can a JITD delivery system be properly evaluated.

The Impact of Fluctuating Demand on Operations

Fluctuating customer demand results in higher inventory for distributors who carry a cross-section of product lines, as demand among product lines fluctuates in unpredictable ways. Certain lines will stock out, while other inventory will merely sit. Thus the sitting inventory creates higher carrying costs. Unanticipated demand will result in higher stock without sufficient information to forecast demand. This is a mismatch in inventory allocation, and a information-transmission issue.

Since the manufacturer cannot anticipate which lines will be in greatest demand, lead time is increased, as the manufacturer cannot tailor production to the increased demand until determining which line to produce. These lead times essentially result in a whip-lash effect, in which the factories over-react to stock outs. This results in higher inventory and higher costs. These higher inventory costs contribute to the lower margins and stock outs impair Barilla’s brand equity as a premium brand – a premium brand should not have empty shelf space. The causes of the fluctuating demand

The underlying causes include customer demand, customer price sensitivity, some seasonality, the manner and duration of the promotions, the lack of sufficient information to anticipate demand, and the fragmented information stream from small shops. Customer demand is not well recorded. Though pasta volume tends to be steady other than some seasonality, demand among varieties is uncertain, and this flows up the supply chain. Furthermore, the extensive product offerings make it difficult to determine if certain lines are purchased as a substitute for others.

One aspect of this uncertainty is the fragmented information stream that results from the many small shops, each conducting inventory at different times, with few incentives to pass information upstream except when they decide to place a new order. This lack of real-time info about customer demand other than periodic orders is a large barrier to accurate forecasting. The promotion structure may be exacerbating the demand problems. We do not know the windows of promotions, but narrow promotion windows should increase ability to forecast demand, suggesting that they do not use promotions that are narrow enough to predict demand.

Internal and External Barriers to Implementation of JITD

First of all, there is an information bottleneck just past the customer, and the information relating to amount and timing of demand does not flow directly up the Supply Chain. Instead Shops, Distributors and Barilla’s Factories are forced to use existing orders to inform their supply decisions. Barilla’s Long lead time 10 days combined with distributors reviewing inventory levels once a week, does not allow orders to catch up with the demand. This will make the accurate forecasting that Barilla needs to perform JITD very difficult.

Distributors distrust giving Barilla info. Barilla has inadequately explained toe potential costs savings that could result from reducing inventory. Distributors also fear that they will lose the volume discounts they currently receive if the JITD system results in smaller batches. Externally there are concerns that greater dependence on Barilla due to a smaller inventory would place them at risk of supply chain interruption. Our recommendations to deal with the barriers to implementation Barilla could vertically integrate, buying the distributors, and centralizing shipment information.

Alternatively, we think that incentives could be aligned better to promote the free flow of information up the supply chain and reassure distributors regarding discounts. To reassure distributors, we would recommend basing discounts not on individual shipment size, but monthly volume, so that they would, on average, receive the same discounts under JITD. Also, Barilla should use promotions with short terms to create set periodic demand for promoted products. Rewards should be established as incentives to distributors and retailers to better document sales volume. This could invest in electronic barcode readers and tracking technology.

Similarly, Distributors should be educated about the specific gains that they could realize by assisting Barilla to produce more efficiently, including improved margins and reduced lead times. With accurate delivery, retailers only need to maintain minimum amount of inventory and thus reduce the inventory management cost. Good incentives will produce good information. Accordingly, we recommend, building a new information management system that better gauges distributor and retailer statistics to provide accurate customer demand. Only when demand can be forecast can a JITD system’s efficiency be properly evaluated.

Marketing plan for HK Disneyland Disneyland is the strong brand name in the world. Hong Kong is home to the fifth Disney Resort in the world and the city’s landscape and vibrant, diverse culture have inspired our Imagineers to create a variety of entertainment that is unique to Hong Kong Disneyland Resort. Hong Kong Disneyland Resort brings the magic of a world-class entertainment experience to people of all ages. Nowadays, HK Disneyland will be competing with local and other country theme park .

More competitors go into share the market. The following is explain more about plan for our company marketing planning on the few years Executive Summary HK Disneyland is preparing to launch more products, services and more attraction. To arrive this goals, I think enlarge to develop it. Our objective is creating news product/service and get more customer . Our company wills offers a unique combination of features at value-added price. We are target on different segments customers. It can be make higher demands in the future.

Moreover, objective is to achieve market share leader and financial objectives are achieve sales revenues increased more by 50% , the number of family tourists has increased by 20%, whereas the number of tourists aged below 16 has increased by 35% over the same period. HK Disneyland is a long-term investment and an important component of our tourism infrastructure. It helps develop Hong Kong into the premier destination for family tourists in the region due to growth of visitors. Current Marketing Situation

HK Disneyland faces to hypercompetitors and many theme parks in the theme park entertainment market. For example, Singapore Universal Studios, Ocean Park is enlarging the area and build a hotel, Shanghai Disneyland will build. Diversification products/services are increasing popular today; forecasts suggest that annual sales of such devices will grow more than 50% for the next few years. More visitors income increased and life standard quality is improving due to their country economy turns better , so visitors is growth especially China visitors.

China government has loosen the entry restrictions for citizens of many different countries. Hence, more intense demands are increasing. Moreover, nowadays rapid development of information technology, we can find some information and buy ticket and hotel in internet . New technology can improve our service too! The market segments will target all (we don’t ignore generation Y, because they are willing spend money on this status but still concentrate the family segments.

China market has 20 millions children, we can solve their tension and make them fulfillment. To gain market share in dynamic environment, Disneyland must carefully target specific segments with features that deliver benefits valued by each customer group. Market Description HK Disneyland welcome all different age of visitors to come for has a fun. Specific segment being targeted include Baby boomer, Honeymooners, family such as Full nester, Student, Generation Y, Children .

The following table shows how Disneyland suits the needs of targeted consumer segment. Disneyland consists of different product and service to cater the customer. E. g. Baby boomer like to watch parade and fireworks; Honeymooners take a photo for wedding album; family bring the child to see stage show ;student and generation Y enjoy the exciting rides and musical; children like cartoon character. In fact, all this entertainment facility is popular and caters all of the segments. Targeted Segment |Customer Need |Corresponding feature/Benefit | |Baby Boomer |- Sight seeing |- Inspiration Lake and Recreation Center | | |- with rich experience and extensive |- Park Promenade | | |knowledge |- Arboretum | | | |- Parade and fireworks | | |- Musical | |Honeymooners |- Desire romantic atmosphere |- Spa in hotel | | | |- Disneyland theme hotel | | | |- Romantic dinning restaurant | | | |- Take photo with cartoon character | |Family such as Full nester |-For relax and have a fun |- 3D film | |with child |-Have happy experience |- Musical | | | |- Parade and fireworks | | | |- Cartoon character | | | |- Rides | | | |- All activities and entertainment | Targeted Segment |Customer Need |Corresponding feature/Benefit | |Generation Y & student |- Exciting |- Rides such as Space Mountains | | |- Attractive |- Different and unique attraction such as 3D | | |- Cater friend gathering and have a fun |film, Musical | | |- Entertainments |- Halloween for scared ghost house, bright | | | |decorations of Christmas, celebrate the seasons| | | |with events | |Corporate users |- Convention room for meeting |- Explore the unique, modern and adaptable | | |- Banquet and event |places to host your guests | | |- |- Big area space for party | New Services To sustainable our company benefit, we need to Continuous improving firm. Add more values to satisfy our customers, therefore we can attack other competitors and bring our long term profit!

I suggest some new service and how to product-market expansion. The following is includes market penetration, market development, product development and diversification. For the transportation, we can provide shuttle bus. Because customers think that when they going to back home from Disneyland, they think take the bus to home is very far and consumes a long time. They want to back home quickly and don’t want to wait a bus for a long time. To convenience them, we supply shuttle bus in the peak hour in the peak seasonal such as Halloween, Christmas events. We only provide single journey from Disneyland to center (e. g. Mongkok ) . It can solve people crowed and block.

For new services, we would like add new technology in it. Such as Wi-FI in Disneyland, Mobile iPhone apps, hotel IP phone 5. ; Also, when customers watch the 3D film, we can provide functional Audio translator player to our come from different country visitors. They can use this player to choice their language to watch; For the disable or handicapped segment, we cant ignore them. We can provide guide dog to guide this group people visit around. We also have our crew to assist them. They can able to have good memory and experience. Moreover, we create a tour for disable and handicapped this group segment, because they want to have a fun but they need to pecial look after careful for them. This group really wants to visit but their family cannot take them out due to family member busy work. So that this group people can join our tour . They can feel our love and care them. They feel very touching . We will insert Story telling activities. Through cartoon character telling education story to children, they can learn more. They also can offer special price tickets and souvenir and first priority to enjoy our attraction and entertainment ; In additional, Baby boomer care about her health on her age. So we can add some health product/services elements in it. We can take some vacant lands to be farm.

This farm is farming organic foods and fruit. We can teach them how to farm and give some health knowledge to them. I believe that it have health and education elements . Every people like it and popular. Family like it much of this family tour; I would like to add circus. Performers may wear cartoon clothes to perform. It can target all segment. They don’t need outbound to see ; Insert Ferris Wheel in Disneyland ,more attraction and romantic ; Also, Take a land for four seasons garden. This garden has different varieties beauty flower and plants. In different season have different flowers to display; Then, I suggest customer take a cartoon clothes to wear and taking photo.

Let the participants involved (emerging trend) , they think so funny! ; Final, most of the tourists is interesting to know more our company at the back such as the stage at the back ,how performers change their perform uniform so quick? How do the performers make up…… etc. They are very interesting and want to explore the mysterious world of Disneyland. We can offer this suggestion to them. These new services and product is personalization. It can create and attract potential customers. We can make potential customer change to our actual customers. They will think more worth to visit! Competitive Review New theme park and new attraction sights to enter this market in the world.

It has pressures industry participants to continually add features and cut prices. Competitions from specialized devices for sms, email messaging, invest lots of money on shopping mall. Key competitors include: – Ocean Park target segment to all groups. They have different values and features. They have exciting entertainment such as rides and also have sightseeing such as shows, animal exhibits. Those activities brings the culture and education value. – Universal Studios Singapore target segment to all groups. They have different values and features. Tourists explore world’s largest Marine life park, ride the movie™ at studio, catch Animatronics performance, meeting at largest column –free ballroom. Competitor |Targeted Segment |Features |Price | |Ocean Park |All group |Aquarium, The abyss turbo drop, Ocean theatre, Sea jelly |Adult | | | |spectacular, Skyfair, Space Wheel, Sightseeing tower, |$ 250 | | | |Panda, Alligator, dolphins |Children | | | | |$ 125 | |Universal Studios Singapore |All group |Roller coasters, movie-themed shows, ocean’s creatures, |Adult | | | |FestiveWalk, Maritime Xperiential Museum,Spa,Villa,Wedding |$ 365 | | | |banquet, Best dinning and atmosphere |Children | | | | |$ 265 | Despite this strong competition, Disneyland can carve out definite image nag gain recognition among targeted segment. Our voice-recognition features for fairy stories , Disneyland cartoon ,firework and Disney souvenirs. That is differentiation for competitive advantage. Also, they got good experience and unforgettable memory after they visit.

Moreover, HK Disneyland has some product and services are HK Disneyland own and innovation such as it is a small world; the largest world film screen; three theme attractions, that are innovation and own in HK Disneyland and will not appear from other Disneyland; Besides, we have Toy Story Campus at HK Disneyland , that is innovation in Asia. TOWS MATRIX – DISNEYLAND | |Strengths (S) |Weaknesses (W) | | |Exclusive | | | -Disneyland patent right in HK(first cartoon |Smaller area size compare with other Disneyland | | |theme park) |Not attractive to generation Y. ( no more amusement| | |High standard of service |rides) | | |Strong brand name |Unchanged visual merchandising | | |Customer loyalty and have celebrity recommend|Less attraction | | |and support. | | |Strong network and support by HK government | | | |Comfort environment and warm atmosphere | | |Opportunities (O) |SO Strategies |WO Strategies | | | | | |Emerging trends destination |Take advertisement in family always visit |Enlarge Disneyland | |Solo tour (China Market) |place and internet. |- E. g. Disney Seas (a water world theme park) | |Pricing is cheaper than other Disneyland |Promotion to China market. |likes Tokyo | |Demand increasing due to people living |Provide diversification items in a program |2. To build up more attractive and values on | |standard enhanced, visitors growth up and |To promote Disneyland hotel and resort |Disneyland | |JPD rate raised |proving good services and quality |3. ) Don’t ignore target to generation Y. | |Threats (T) |ST Strategies |WT Strategies | |Increased competition. -Some countries |Offer special price for some seasonal |Review market strategy and whether need to | |built theme park are similar with |Insert Joint-related discount with other |refresh. | |Disneyland. E. g. : EVERLAND in Korea |brand company promotion |Create new customer and new product/service. | |,Universal Studies . Bring them to reminds of their childhood |Build image are suitable for all segment group | |Increased competition market share and |memory |Continuous improving firm and attend more SCR | |pressure on pricing ( Shanghai Disneyland)| |(Society corporate reasonability. | | | | | Objectives and Issues I have ser aggressive but achievable for the first and second years of market entry. First-year Objectives We are aiming for raising market share percentage; people aware of HK Disneyland and make them recall ; more different segments love and visit and make a buzz. Second- year Objectives

Our second- year Objectives are to achieve market leader and keep it stable and keep for a long time. Increases the popular level in world and make tourists first priority to visit it. Also, have good profit revenue. ] Issues Our major issue is the ability to establish a well-regarded brand name with meaningful position. We must invest heavily in marketing to create a memorable and distinctive brand image projecting innovation, values, benefit. We also must measure awareness and response we can adjust our marketing efforts as necessary. Marketing Strategy Positioning Visit Disneyland differentiation, we are positioning as the most value and benefits added to visit. The friend and family gathering place.

The strategy will focus on the attraction, entertainment, good atmosphere. Remind they will have unforgettable memory and remind they will loss if they never come. Product/Service/people strategy Tell the public that we will provide training to our staff, so our customers can feel our services have excellent quality service to provide. We will treat our staff happy, then staff can make happy and motivate to our customer. We will display beautiful, bright and well decoration, comfort environment, enjoyment , wonderment sight seeing and has a gorgeous time in the park . Price and promotion strategy We expect to lower the price of tickets when we expand and launch new attraction.

We will do some promotion of tickets and hotel. We will make some promotion and discount in dull seasonal. Because it can attract more people to come. Also, student and disable person offer some discount; offer some package for family segment. If customer birthday or wedding anniversary or Disneyland anniversary, we also offer big discount and gifts for them . Moreover, we will contact some corporate and company to joint-relate discount. For example, if they shopping at Eugenegroup shop and purchase, they take the shop receipt can get special offer price. Then, we will launch new Disney cartoon souvenirs (Limited sale and limited version) in a year.

It can attract customer to come and collect this valuable products. Place strategy Because is a fairy tale theme park, therefore the choice of location far away person smoke already place, the coordination specially designs the MTR subway to lead the paradise; The entire design extremely coordinates the paradise subject, enters the singularly varied paradise by the world through the tunnel. Establish strategic business units (SBUs) The Walt Disney Company Disneyland Disney Cruise Line Disneyland Hotel and Resort Disneyland souvenirs store Disneyland restaurant Action Programs Following are summaries of the action programes : 2010 July – 2011 July: Press Release: Hong Kong Disneyland Announces Expansion Plans. -Will have new Attractions in Disney and I phone apps -Concentrate to promote for China market on advertisements ( Media, web site,facebook. ) -Create and held on new different events for celebration and ceremony. 2011 July- 2012 July: -Make slogan and find different age of opinion leader and celebrity endorsement to promote for different segment group -To announce one of the new attractions is opening. -Continuing promote in advertisements and target all segment. Use different message and meaningful in advertisement media for all segments. – Keep promoting for China market -Sale promotion -Do more SCR and charity. Insert the new service such as for disable tour and new technology. -Photograph competition 2012 July- 2013July: Press Release: -All new products and new services finished to built and playing gradually. (details of new service and product ,see the above-mentioned articles -Continuing promote in advertisements and target all segment. Use different message and meaningful in advertisement media for all segments for the entire world. – Keep promoting for China market -Do more SCR and charity. – Slogan again and find different age of opinion leader and celebrity endorsement to promote for different segment group – Sale promotion continuing -Review the annual report

1. Introduction 1. 1 History: Wal-Mart first stuck its toe into Mexico in 1991 through a joint venture with Cifra, Mexico’s leading retail company, initially limited to developing Sam’s Club warehouse stores in Mexico. The tremendous success of the first Sam’s Club stores and the impending passage of the North American Free Trade Agreement (NAFTA) encouraged further collaboration, and Wal-Mart and Cifra expanded their joint venture through the 1990s.

Wal-Mart purchased a majority stake in Cifra in 1997. Prior to the joint venture, Cifra’s lineup included Aurrera autoservicios (superstores selling food, clothing, and a variety of other items), Superama supermarkets, Suburbia department stores, and Vips restaurants. To this roster, Wal-Mart added Wal-Mart superstores (shifting Aurrera to a budget niche and relabeling its stores Bodega) and Sam’s Club warehouse stores, as well as introducing two new restaurant formats.

Wal-Mart-Cifra had fewer grocery stores (though more stores of all formats) than either of competitors Gigante and Comercial Mexicana as of 1993, but had overtaken them by 2000 and today has 326 Wal-Mart, Aurrera, Sam’s, and Superama stores. Wal-Mart rolled out its “every day low prices” (EDLP) policy in Mexico in 1999-2000. It controlled 49 percent of Mexican supermarket sales in 2001. Wal-Mart also began to post price comparisons with other chains, a practice that in 2002 got it expelled from ANTAD, Mexico’s National Association of Supermarket and Department Stores.

Today, 62 percent of Wal-Mart Mexico’s shares are owned by the U. S. based parent, Wal-Mart Stores. 2. Vision The vision of the Company summarizes their commitment to Mexico: “Contribute toward improving the quality of life for Mexican families. ” Their basic belief is Respect for the Individual, Service to Our Customer, and Strive for Excellence, with Integrity being the underlying principle. 1. 3 The Mission Statement The mission upholding the Company’s permanence and success is value creating. All their efforts, strategies and actions are aimed at this objective. . Organizational Chart: Exhibit: 1 Exhibit: 1 2. Divisions of Wal-Mart Mexico: Wal-Mart Mexico’s size and geographic coverage dwarf those of its competition. It operates 694 stores in 73 Mexican cities. The Retail formats of Wal-Mart Mexico are: • Bodega Aurerra • Wal-Nlart Supercenter • Sam’s Club • Superarna • Suburbia and • Vips Although 360 of these stores are self-service (the others are restaurants [Vips] and department stores [Suburbia]), Wal-Mart Mexico has 55 percent of the Mexican retail market.

The three major formats (Aurerra, 30 percent; Wal-Mart Supercenter, 27 percent; and Sam’s Club, 29 percent) together provide more than 86 percent of its revenues. 44 percent of the entire countries population is concentrated in 25cities metro areas. A bit more than 18 percent live in the capital city’s metro area. Mexico’s rural population accounts for about 34 million or about 33 percent of the country’s total population. The retail industry does not have a ingle outlet in the rural concentrations, which leaves the market to neighborhood Stores, public markets, or street vendors, which, as individual businesses, do not have a significant presence in the market as a whole. |FORMAT |NAME |#OF STORES |# IN 25 MOST IMPORTANT |% IN 25 MOST IMPORTANT | | | | |URBAN AREAS |URBAN AREAS | Warehouse |Bodega Aurerra |161 |117 |73% | |Suparmarket |Superama |50 |50 |100% | |Hypermarket |Supercenter |86 |74 |86% | |Savings Club |Sam’s Club |61 |42 |68% | |Resturant |Vips |209 |190 |91% | | |El Porton |46 |42 |91% | |Apparel |Suburbia |53 |53 |100% | |Total | |666 |568 |85% | 3. Target Segments: One of the secret of Wal-Mart Mexico’s success is that it has a clearly defined target market.

The Aurerra format (162 stores) is targeted at lower- to lower-middle income classes; these Bodega stores offer 48,000 SKUs. Sam’s Club (61 stores) offers a much more limited variety of products (4,000 SKUs) and targets consumers and businesses buying in volume. The Wal-Mart Supercenter stores (89 units) offer the widest variety of goods (80,000 SKUs). Superama (48 stores) contributes only 3 percent of the company’s sales; these stores offer a variety of goods (35,000 SKUs) but are located in residential areas for convenience. Wal-Mart Mexico’s Suburbia 50 department stores target the middle class, offering fashionable apparel at reasonable prices; these stores contribute 6 percent of the company’s sales.

The Vip’s chain of restaurants (284 locations) represents 3 percent of the company’s sales. The vast majority of Wal-Mart Mexico’s stores are located in the 25 most important metro areas in the country. 4. Geographic Coverage [pic] [pic] 5. Responsibilities To the Stakeholders The Customer — The word ‘always’ can be seen in virtually all of Wal-Mart Mexico’s literature. Their belief is that the customer is always right, and the stores are still driven by this philosophy. Their commitment to the customers is to Offer the right merchandise assortment, in the right amount, and at the right time at Everyday Low Prices, Always. they ensure and improve the quality of their service to provide the best possible shopping experience.

Shareholders – Look after and grow the equity they have been entrusted with, observing the highest standards of integrity and the Corporate Governance best practices is their commitment towards their shareholders. The actions include • foster transparency, timely presentation of information to the shareholders and ethical company management, which in turn contributes towards increasing the value of the Company, all within a control environment and with Corporate Governance best practices. • Through the Statement of Ethics and Compliance program, they ensure that Integrity is an ever-present and global principle. • They develop and every day instill a culture of compliance with beliefs, laws, standards and policies.

The Employees – Wal-Mart Mexico believed in listening to employees and challenging them to come up with ideas and suggestions to make the company better. Its first contribution as a corporate citizen is its employment of more than 109,000 people throughout the country and the extensive training programs (4. 2 million hours in 2004) it provides for those employees. The firm highlights its diversity since 48 percent of its employees are female. At each of the Wal-Mart stores, signs are displayed which read, ‘Our People Make the Difference. ‘ One of Wal-Mart’s goals was to provide its employees with the appropriate tools to do their jobs efficiently.

They provide a sound organizational culture (Integrity, Respect for the Individual, Service to Our Customers, and Strive for Excellence). Personal and professional development for their people is a priority, as well as providing job security for them and economic stability for their families through continuous growth as a company and the diversity of our operations. They have also created programs to improve the quality of life for our Associates, promote gender equality, and benefit the Associates as well as their families. The Community– Wal-Mart is involved in many community outreach programs and has launched several national efforts through industrial development grants.

They create and foster programs that promote development and improve the quality of life for all families throughout Mexico. Their initiatives to do so are • Through their programs and on-going support of organizations, they contribute towards generating sustainable changes and creating solutions for malnutrition and food safety issues throughout the country. • They convert community actions into local commitment, allowing each business unit of the Company to become an agent of change. • Wal-Mex also provides direct financial assistance to support high impact projects regarding nutrition for communities in need. The Suppliers — The commitment towards their supplier is to support their development, growth and Consolidation.

The purchasing agents of Wal-Mart are very much focused people. ‘Their highest priority is making sure everybody at all times in all cases knows who’s in charge, and it’s Wal-Mart’. ‘Even though Wal-Mart was tough in negotiating for absolute rock-bottom prices, the company worked closely with suppliers to develop mutual respect and to forge long-term partnerships that benefited both parties’. Actions include the following • They provide development opportunities to suppliers through constant growth. • Through Regional Trade Fairs Wal-Mart Mexico develop local suppliers as a means of providing additional support for small and medium enterprises. They have created areas of development for the textile and garment-making industry, the production chain for perishables, and new regional products. • Our information systems help suppliers to plan production and buy of raw materials, thereby creating greater operations efficiencies and market competitiveness. 6. Financial Analysis: [pic] Financial Highlights 7. Strategic Analysis 7. 1 SWOT Analysis: A scan of the internal and external environment is an important part of the strategic planning process. The SWOT analysis provides information that is helpful in matching the firm’s resources and capabilities to the competitive environment in which it operates.

Thus, it is instrumental in strategy formulation and selection and simultaneously to develop a competitive advantage. Strengths: ? Good Corporate Citizen: Wal-Mart Mexico has a positive reputation in Mexico as a good corporate citizen, having received prestigious awards for its actions. It publishes an annual social responsibility report, highlighting its activities as a corporate citizen in Mexico. Wal-Mart Mexico has been certified as a “Socially Responsible Enterprise” since 2001, one of only a handful of companies in Mexico to receive such an honor. ? Market Leader: It is by far the leader in the Mexican retail industry after less than a decade and a half of operations there providing low-price goods to everyone. ? Largest Private Employer:

Wal-Mart is Mexico s largest private employer, with 109,057 employees in valuable jobs in many local communities with 55 percent of the Mexican retail market. Wal-Mart argues that its first contribution as a corporate citizen is its employment of more than 109,000 people throughout the country and the extensive training programs (4. 2 million hours in 2004) it provides for those employees. The firm highlights its diversity since 48 percent of its employees are female. ? Large Market Share: Today, 62 percent of Wal-Mart Mexico’s shares are owned by the U. S. based Parent, Wal-Mart Stores. ? Largest Foreign Subsidiary Wal-Mart Mexico is the largest foreign subsidiary of Wal-Mart Stores and provides approximately 25 percent of the parent’s foreign sales. Environmental Performance Wal-Mart Mexico’s environmental performance includes investing over $8 million in 2003 and 2004 to open 73 water treatment plants and a variety of recycling, energy conservation, and pollution-reduction activities. It also emphasizes that more than 90 percent of the products sold in its stores are supplied in Mexico. ? Local Suppliers Wal-Mart Mexico sources from local suppliers. It has leveraged its volume buying power with its suppliers. It negotiates the best prices from its vendors and expects commitments of quality merchandise. So it can minimize the cost of the goods and can offer the customers a lower selling price as well. Good promotion and sponsorship Wal-Mart Mexico also is involved in a number of philanthropic activities, including programs focused on education, nutrition, homelessness, and health. In 2004, it sponsored a National Wal-Mart Mexico Volunteer Day, and 2,476 of its associates participated. ? Good Location Good location is one of the very important criteria for being successful in the industry. The vast majority of Wal-Mart Mexico’s stores are located in the 25 most important metro areas in the country. The retail industry does not have a single outlet in the rural concentrations, as these areas do not have a significant presence in the market as a whole. Increased sales Volume Wal-Mart Mexico’s large volume of sales also indicate its strength. The firm’s net income has increased dramatically from 2002 to 2004, from $485 million to $702 million. the total square meters of space have increased between 2001 and 2004, as have sales per square meter and net income per square meter. ? Proper Segmentation Wal-Mart Mexico has a clearly defined target market. The Aurerra format is targeted at lower- to lower-middle income classes; these Bodega stores offer 48,000 SKUs. Sam’s Club targets consumers and businesses buying in volume. The Wal-Mart Supercenter stores, Superama are located in residential areas for convenience.

Wal-Mart Mexico’s Suburbia department stores target the middle class, offering fashionable apparel at reasonable prices. Weaknesses: ? Location: Though majority of the stores of Wal-Mart Mexico’s location are very good, one of the stores has been located near a world historic site, the pyramids of Teotihuacan, has elicited global disapproval from activist groups and is a public relations disaster drawing large local protests. For many, it is just another example of Wal-Mart’s lack of sensitivity to community and humanity. ? Lack of clear Strategic plan Though Wal-Mart Mexico has a clear Vision, Mission and strategy they do not have an integrated version of these. Thus, they need a clear strategic plan for the future. ? Easily copied strategy

Competitors are learning to respond to Wal-Mart’s size, efficiency, and success. Wal-Mart stores operate according to their ‘Everyday Low Price’ philosophy. All of the main competitors are now competing with Wal-Mart now offers some version of its “every day low prices” (EDLP) formula. Wal-Mart’s competitors insist that there is now no significant price difference, and many Mexican consumers seem to have drawn the same conclusion. Opportunities: ? Scope of Diversification The convenience stores like corner stores, public markets, and street vendors business is relatively new in Mexico, there is a scope of diversification in future for Wal-Mart Mexico. Joint ventures Through a 50—50 joint venture with Office Depot and a 51—49 joint venture with Radio Shack, Grupo Gigante runs 98 Radio Shack stores throughout Mexico. Seems that Wal-Mart Mexico has an opportunity to follow such approaches to be more successful in future. ? Improved services Like Soriana, another competitor of Wal-Mart Mexico it can provides: discount specials, loyalty card programs, big-ticket item raffles and contests (e. g. , a BMW X5 automobile), outgoing employees, and mariachi band entertainment in order to appeal to female middle-class consumers. ? Foreign Penetration Grupo Gigante is successfully penetrating foreign markets.

Wal-Mart Mexico can also follow the same like its competitor in order to enter in a new era. ? Strategic Plan Though Wal-Mart Mexico does not have a clear strategic plan, there is a scope to make a good one to do better in future. Threats: ? Aggressive Competitive moves of Competitors The competitors of Wal-Mart Mexico proved themselves as quick respondents. They took various desperate initiatives to response with Wal-Mart Mexico’s approaches. As result shows that The Comercial Mexicana (CM) has slipped to third in terms of market share in the Mexican retail sector. Grupo Gigante currently has 13 percent market share in the Mexican retail industry.

Soriana’s sales have grown at an annual rate of 17 percent since 1994, and it has no debt. Some of their initiatives are: i. Appealing logos of competitors Chedraui’s corporate logo indicates “Chedraui: It Costs Less. ” Its mission is simply “to provide the products that customers want at the best price. ” ii. Foreign Penetration Grupo Gigante is successfully penetrating foreign markets. iii. Joint Ventures Through a 50—50 joint venture with Office Depot and a 51—49 joint venture with Radio Shack, Grupo Gigante runs 98 Radio Shack stores throughout Mexico. iv. Superior Services Soriana provides: discount specials, loyalty card programs, big-ticket item raffles and contests (e. g. a BMW X5 automobile), outgoing employees, and mariachi band entertainment in order to appeal to female middle-class consumers. v. Prices differences Comercial Mexicana and Soriana now aggressively publicize price differences with Wal-Mart and Aurrera. Wal-Mart’s competitors insist that there is now no significant price difference and now many Mexican consumers seem to have drawn the same conclusion. ? ANTAD The Asociacion Nacional de Tiendas de Autoservicio y Departamentales (ANTAD) is the trade association that represents the retail industry in Mexico. Wal-Mart left ANTAD in October 2002 because the association’s new ethics code explicitly stated that members should not publish any type of promotions stating another member’s prices.

Since Wal-Mart is not a member of ANTAD, all ANTAD members now publish their lower prices compared to Wal-Mart’s, when they have them. ? Sinergia Because of Wal-Mart’s huge purchasing power, three other retailers—Comercial Mexicana, Gigante, and Soriana—have formed a purchasing cooperative. This cooperative, Sinergia, first introduced in 2002 to compete against Wal-Mart. The cooperative was first thought of as a competitive-directed measure for purchasing imported goods, mainly electronics, where Wal-Mart has been enormously successful, but it now has been extended to such other types of merchandise as groceries and packaged food. ? Specialized Retailers The Mexican retail sector is fragmented; there are a wide variety of retail formats, many of which are informal.

Because many shoppers in Mexico do not have access to automobiles, and may not have large refrigeration space to store perishables, very small independent grocery stores have thrived for decades throughout Mexico. This business is controlled by the two Mexican beer makers. Cerveceria Modelo, with the Extra stores and 7-Eleven; and Cerveceria, Cuauhtemoc Moctezuma, with Oxxo (about 3,OOO stores). The concept is beginning to include gas stations, and many small entrepreneurs have a limited regional presence. Major national chains exist in the department, pharmacy, and electronics store formats. ? Mexican Economy The Mexican economy is very volatile; the retail sector is subject to this volatility.

Throughout the latter half of the 1990s, inflation and interest rates still annually averaged well over 10 percent. The peso continues in decline in value relative to the dollar. The economic volatility has a negative impact on consumers and business alike. Mexican consumers are very price sensitive because of the economic challenges that the country faces. ? Various Criticisms Despite extensive social responsibility activities and its record as the largest private employer in the country, the potential for criticism of its purchasing practices and supplier and employee relations, as well as its impact on local small businesses and communities, loom as a significant threat 7. PEST Analysis: PEST Analysis The purpose of PEST analysis is to analyze the external environment and identify the strategic opportunities and threats in the organizations operating environment that will affect to it pursues its mission. This analysis requires assessment of the environment in which the company operates. It also analyzes the country or national environment of the country and takes into account the wider socio economic and macro–environment that may affect the company and the industry. Political Factors Government: Mexico is a federal republic—hence its official name Estados Unidos Mexicanos—operating under a centralized government.

Governmental powers at the federal level are divided between executive, legislative, and judicial branches, but in political practice the executive, that is, the presidency, has had strong control over the legislative branch. Only in recent years has the legislative branch seen its power increase because of the strengthening of the multiparty system. The president is elected by popular vote for a six-year period and is both the chief of state and head of government. The president appoints cabinet members. The legislative branch is a bicameral National Congress consisting of the Chamber of Deputies and the Senate. The Chamber of Deputies has five hundred members, elected for three-year terms; the Senate has 128 members, elected for six-year terms.

In the judicial branch the Supreme Court of Justice is the highest tribunal. The federation is made up of thirty-one states and the Federal District (the capital). Each state has a governor, who serves a six-year term, and a unicameral legislature. Both are elected by popular vote. Before 1997, the chief of the Federal District was appointed by the president, but has since been elected directly by popular vote. The Federal District also has an Assembly of Representatives. The local administrative level is the municipality, which is governed by a popularly elected mayor and a municipal council for three-year terms. Suffrage is universal and mandatory (but not enforced) for those over the age of eighteen.

Leadership and Political Officials: The modern presidency stands in a long tradition of pre-Columbian rulers (tlatoani), Spanish colonial viceroys, and nineteenth century and revolutionary caudillos. The president holds great discretionary powers. Power and leadership are attained through the management of personal relations, which are ruled by principles of loyalty, trust, and reciprocity. These informal networks are interconnected in a pyramidal way and form the real centers of decision making. Vertical patron-client relations can be found in all segments of society. Interactions between politicians, union leaders, top bureaucrats, and ordinary people also take place through these networks. In recent years, academic credentials and technocratic knowledge have become more important than political and electoral experience.

Besides being chief of state and head of government, the president has traditionally been the leader of the Institutional Revolutionary Party (PRI), which held power from 1929 to 2000. During much of the twentieth century, Mexico was a one-party democracy. The PRI emerged from the revolution and incorporated mass organizations of workers, peasants, and urban middle classes. Because of its particular origins, its longevity in power, and the influence of diverse interest groups, the PRI is difficult to classify ideologically. There are two other significant parties in Mexico. The conservative National Action Party (PAN) began enjoying electoral success at the state level in 1985.

The social-democratic Party of the Democratic Revolution (PRD) emerged as a breakaway movement from the PRI in 1987 and began governing Mexico City in 1997. Both the PAN and the PRD aim at democratization, but the PRD also proposes a more equal distribution of wealth. The dominance of the PRI in federal elections was finally broken on 2 July 2000, when the candidate of the PAN won a stunning victory with 43 percent of the vote. Social Problems and Control: Both petty and organized crime increased in the 1990s. Muggings and burglaries, increasingly violent, became widespread. Drug-related violence constituted another serious cause of concern. Public security has thus become a key issue for ordinary citizens and the authorities.

At the same time, the police and the judiciary system are widely believed to be ineffective and lack public credibility, partially due to unresolved high-profile political assassinations and corruption. This has led to incidents of people taking the law into their own hands. Paid neighborhood watches are common wherever people can afford them. Private security guards no longer patrol only at banks and government buildings but also at medium-sized offices and shops. In response, the government founded an additional police force in 1999, the National Preventive Police. Military Activity: Mexico has had civilian presidents since 1946 and has not been involved in international disputes in recent decades. The primary role of the military is the maintenance of internal order.

The Ministry of National Defense (the army and air force) and the marines together comprised an armed force consisting of almost 240,000 members in 1998. Military expenditures have increased substantially in recent years and amounted to $2. 5 billion (U. S. ) in 1996, accounting for almost 1 percent of the GDP. In recent years the military has been involved in two serious problems: the armed uprising in the state of Chiapas and the struggle against drugs. Mexico is a major supplier of marijuana and heroin to the U. S. market and is the primary transshipment country for cocaine from South America. In 1998 the government spent $147 million (U. S. ) to combat drug trafficking, an amount that has increased spectacularly in recent years. Economic Factors

Mexico City is a place to love and loathe, with everything one expects to find in the world’s third-largest metropolis (only Tokyo and NYC are bigger). Mexico’s best and worst ingredients are magi-mixed in this polluted and bustling megalopolis of music and noise, brown air and green parks, colonial palaces and skyscrapers, world-renowned museums and ever-spreading slums. Mexico has been progressing economically since the Mexican Civil War in 1939 when its economy was devastated. Today, tourism, industry and agriculture play a major role in the country’s economy. Mexico has seen the fastest economic development in Western Europe since the 1960’s.

Tourism has played a major role since the 1960’s and in the last 40 years, tourism has been the fastest growing economic sector of the country’s GDP, helping to accelerate growth overall. Millions of visitors flock to Mexico and contribute almost $50 billion USD to Mexico’s economy each year. Agriculture contributes less than 5% of the nation’s GDP, which is high compared to other countries in Western Europe. Fishing is another important economic sector for Mexico. Industry contributes about 35% of Mexico’s GDP, but industry is still somewhat dependent on foreign investment. The most common products from this sector are motor vehicles, steel, textiles, chemicals and ships. Mexico is among the world’s most open economies, but it is dependent on trade with the U. S. , which bought about 82% of its exports in 2007. Top U. S. xports to Mexico include electronic equipment, motor vehicle parts, and chemicals. Top Mexican exports to the U. S. include petroleum, cars, and electronic equipment. There is considerable intra-company trade. Trade disputes between the United States and Mexico are generally settled through direct negotiations between the two countries or via WTO or North American Free Trade Agreement (NAFTA) panels. The most significant areas of friction involve agricultural products such as livestock and sweeteners. To address the issues that affect these industries in a manner consistent with the principles of free trade, the United States and Mexico have established technical working groups.

During the last three decades Mexico has grown with an annual average rate of 4%, even with the changes from an inward-looking developing economic strategy towards a more open economy with a far-reaching trade liberalization program. But the story at the sub-national level is different; these changes have modified the regional development strategies and consequently the growth paths of the 32 Mexican states. There is evidence of an uneven growth, greater disparities and important differences in welfare standards among regions. Socio-Cultural Factors Orientation: Mexicans make several cultural subdivisions within the nation. The most common one identifies northern, central, and south or south-eastern Mexico. The extensive and desertlike north was only sparsely populated until the middle of the twentieth century, except for some important cities such as Monterrey.

It has traditionally housed only small indigenous populations and is generally regarded as a frontier culture. Densely populated central and western Mexico is the cradle of the nation. Highly developed Indian cultures populated this region in pre-Columbian times and it was also the heart of the colony of New Spain. Many prominent colonial cities are major urban and industrial centers today. Southern Mexico has a tropical or subtropical climate and some rain forest. It is characterized by a strong indigenous heritage and is also the poorest part of the country. Demography: The preliminary results of the 2000 population census calculated the total number of Mexicans as 97,361,711.

In 1950, the total population amounted to approximately 25 million, with the figure reaching nearly 50 million in 1970. These numbers demonstrate the rapid rate of demographic growth that was so characteristic of Mexico during the second half of the twentieth century. The growth rate has slowed, but the population is still very young. The average life expectancy in 1999 was estimated at sixty-nine years for men and a little over seventy-five years for women; the infant mortality rate was almost twenty-five per one thousand. In the late twentieth century, emigration to the United States (mainly of the illegal variety) became a significant phenomenon.

Linguistic Affiliation: Spoken by more than 95 percent of the population, Spanish is the official language of Mexico and was introduced through conquest and colonization. Mexican Spanish has its roots in the Spanish of Spain. In terms of grammar, syntax, and spelling there are no important differences between the two, but the pronunciation and sound are different. Certain words from the principal Indian language (Nahuatl) are incorporated into Mexican Spanish, especially in the domains of food and household. Some of these words have also been incorporated into other languages such as the English ‘chocolate’ from the Nahuatl ‘chocolatl’. The national culture of Mexico boasts sixty-two indigenous languages. In 1995 at least 5. 5 million people spoke an indigenous language.

The level of bilinguism, however, was high at 85 percent. Symbolism: The most important icon of Mexican national culture is the Virgin of Guadalupe, which illustrates the pervasive influence of Roman Catholicism in the national culture. She is viewed as the “mother” of all Mexicans. The dark-skinned Virgin is the Mexican version of the Virgin Mary and as such represents national identity as the product of the mixing of European and Meso-American religions and peoples. Her image was used in the struggle for independence against the Spanish. Mexicans have developed a particular sense of uniqueness, which is expressed in the popular saying como Mexico no hay dos (Mexico is second to none).

This sense is also expressed in numerous elements of popular culture such as food and music. Ethnic Relations: Social policies aimed at the emancipation of Indian groups and the elimination of profound socioeconomic inequalities have been employed since the 1930s. Nevertheless, indigenous populations are among the poorest and most marginalized groups in Mexico. Prejudice among broad sectors of the population toward Indians persists. Elites in provincial towns in predominantly indigenous regions are often openly racist. This situation has strained ethnic relations and there has been a rise of indigenous movements in recent years that demand a new space in the national culture.

Most significant has been the outbreak of armed indigenous rebellion in the state of Chiapas, where the Zapatista Army for National Liberation declared war on the government in January 1994. Food: Mexico possesses an extensive and sophisticated culinary culture, with a great variety of regional dishes. Three products constitute the heart of most Mexican dishes: corn, hot peppers (chiles), and beans, products that stem from pre-Columbian times. Corn is consumed in all possible forms: as a cooked or roasted corncob (elote), cooked grain of corn, porridge (atole), as wrapped and steamed dough with filling (tamal), but most importantly as a tortilla, a thin, round “pancake. Tortillas are made from corn dough and come in many sizes, although the traditional tortilla that accompanies most meals has a diameter of approximately six inches (15 centimeters). When tortillas are filled with meat or other ingredients they are called tacos or quesadillas, which are especially popular in central Mexico. Much of the sophistication of Mexican cuisine comes from the use of more than one hundred different types of chiles, which range from the large and “sweet” chile ancho to the small and extremely hot chile habanero. Mexican Family Values: The family is at the centre of the social structure. Outside of the major cosmopolitan cities, families are still generally large.

The extended family is as important as the nuclear family since it provides a sense of stability. Mexicans consider it their duty and responsibility to help family members. For example, the will help find employment or finance a house or other large purchase. Most Mexican families are extremely traditional, with the father as the head, the authority figure and the decision-maker. Mothers are greatly revered, but their role may be seen as secondary to that of their husband. Machismo: Machismo literally means ‘masculinity’. There are different outward behaviors to display machismo. For example, making remarks to women is a stereotypical sign of machismo and should not be seen as harassment.

Mexican males generally believe that nothing must be allowed to tarnish their image as a man. Hierarchical Society: Mexican society and business are highly stratified and vertically structured. Mexicans emphasize hierarchical relationships. People respect authority and look to those above them for guidance and decision-making. Rank is important, and those above you in rank must always be treated with respect. This makes it important to know which person is in charge, and leads to an authoritarian approach to decision-making and problem- solving. Mexicans are very aware of how each individual fits into each hierarchy–be it family, friends or business. It would be disrespectful to break the chain of hierarchy.

Technological Factors Most scientific research in Mexico is conducted in the public universities, mainly in the National Autonomous University and the Autonomous Metropolitan University, both in Mexico City. The National Polytechnic Institute, also in Mexico City, is the foremost research institute in engineering and technology. In recent years there has been government support for developing research centers outside the capital. There is also an extensive network of specialized autonomous research institutes that are dependent on state finances such as the National Institute of Astrophysics, Optics, and Electronics and the College of Mexico.

Just over half of the almost $2 billion (U. S. ) of federal expenditures in science and technology in 1998 was channeled through the Ministry of Public Education and another 34 percent was channeled through the Ministry of Energy. The majority of the latter funds are spent on research into the exploitation of oil. Public policy concentrates on three areas: promotion of quality and quantity of scientific research, establishment of linkages between science and industry, and the promotion of technological innovation. The National Council of Science and Technology is the most important funding agency for the physical and social sciences. In 1998 it had a budget of $287 million (U. S. , with 47 percent allocated to individual postgraduate grants, 25 percent to scientific research and technological development, and 22 percent to the National System of Researchers (SNI), a program of financial incentives to productive academics. In 1998, more than sixty-five hundred researchers were in the SNI. Information on corporate funding of research and development is unavailable but is estimated to be very modest compared to Mexico’s main trading partners. Mexico’s future development will have to be progressively more based on the effective generation and utilization of knowledge, in order to meet economic, social and environmental challenges. The role of the scientific & technological communities in knowledge supply and in its effective integration in innovation systems cannot be overemphasized.

If it wants to invest coherently in its own S&T assets, and assert its own intellectual and scientific capacities in the global knowledge society, Mexico must strive to go beyond the level of being an “economic province” of the much larger and US-dominated NAFTA. Overall investment levels in S&T remains low, although substantial investment in local human resources and infrastructure is required to ensure the absorption, adaptation and application of world-class technology. For instances, Mexico’s investment on RTD is the lowest of the OECD 2 (0. 31% of GDP), compares unfavorably with 0. 38% for Turkey and represents only one-seventh of the OECD average. This figure can also be compared with those of China (0. 7%), India (0. 8%) or Brazil (at least 0. 8%). Human resource formation, a critical output of research projects, also remains disappointingly low. Mexico trains fewer Ph. D. per year than comparable countries, with 3 Ph. D. s per million inhabitants, compared to 5 in India, 6 in Brazil and 19 in South Korea. Moreover, there is a significant regional disparity in the allocation of scientific resources, with 75% of all doctoral degrees being awarded by institutions in the Mexico City area. 8. Problem Symptoms: From the above strategic analyses it could be interpreted that, Wal-Mart’s current strong competitive position and its past rapid growth performance can’t guarantee that the company will remain as the industry leader or maintain its strong business position in the future, since there are huge threats for the Walmart in the Mexico city.

Competitors are now taking aggressive competitive moves and successfully imitating their strategies and diminishing the Wal-Mex advantage. 9. Current Strategies: Low Cost Provider Wal-Mart stores operate according to their ‘Everyday Low Price’ philosophy. According their vision to contribute to improve the quality of life for Mexican families, they invest to be near and offer them the best products at Every Day Low Prices. Wal-Mart has emerged as the industry leader because it has been better at containing its costs which has allowed it to pass on the savings to its customers. It continues to improve upon its key business processes, managing them centrally and investing in them heavily for the long term payback. 10. Strategy Implementation

The key features of Wal-Mart Mexico’s approach to implementing the strategy is the approach to implementing the strategy by building solid working relationships with both suppliers and employees, being aware and taking notice of the most intricate details in store layouts and merchandising techniques, capitalizing on every cost saving opportunity, and creating a high performance spirit. This strategic formula is used to provide customers access to quality goods, to make these goods available when and where customers want them, to develop a cost structure that enables competitive pricing, and to build and maintain a reputation for absolute trustworthiness. Wal-Mart Mexico has been regarded as an industry leader in ‘testing, adapting, and applying a wide range of cutting-edge merchandising approaches Wal-Mart’s secret of having phenomenal track record in Mexico is that it has brought a set of superior management techniques and technologies.

Press accounts have emphasized Wal-Mart’s low-price strategy, high-technology distribution network, and intense pressure on suppliers for discounts—“the same formula” as in the United States, Wal-Mart de Mexico also has connected with and replicated the U. S. Company’s huge, Automated distribution network. With NAFTA eliminating most trade barriers, Wal-Mex has direct links to U. S. -based distribution centers, but also has built twelve distribution centers within Mexico31. In addition to heightened efficiency, this multiplies Wal-Mex’s power as a purchaser, since Wal-Mart consolidates orders for all goods from outside the United States. Another contributor to Wal-Mex’s success is its use of a wide range of formats to appeal to varied classes of consumers, and particularly lower income consumers. Wal-Mart succeed to achieve economies of scale which reduces its costs of sales.

With this system, goods are continuously delivered to stores within 48 hours and often without having to inventory them. Lower prices also eliminate the expense of frequent sales promotions and sales are more predictable. Cross docking gives the individual managers more control at the store level. Wal-Mart has been led from the top but run from the bottom, a strategy developed by Sam Walton and carried on by a small group of senior executives. . Although recent growth has led Wal-Mart to add more management layers, senior executives strive to maintain its unique culture. 11. Limits to the success story Mexican retailers have proven to be quick studies.

All three of the main national autoservicio chains competing with Wal-Mart now offer some version of its “every day low prices” (EDLP) formula. Comercial Mexicana and Soriana now aggressively publicize price differences with Wal-Mart and Aurrera. In addition, some of the larger suppliers (especially soft drink and snack food manufacturers) have begun to print suggested prices on their packages, deterring retailers from charging more. Wal-Mart’s competitors insist that there is now no significant price difference, and many Mexican consumers seem to have drawn the same conclusion. Similarly, squeezing suppliers has become commonplace for large Mexican retailers.

Executives from competing chains report that they have also begun to shift toward centralized, highly automated distribution and tracking systems, and to create detailed procedure manuals. The net result of Mexican chains’ emulation of Wal-Mart is that Wal-Mex’s share of sales among the top five Mexican retailers has remained steady for the last two years. Closer to home, Wal-Mart has struggled in northern Mexico, particularly the Monterrey area. Executives of another chain offered several analyses of Wal-Mart’s difficulties in the region. Soriana and the Texas-based HEB were already entrenched by the time Wal-Mart arrived. Wal-Mart made some early merchandising mistakes, opening no-frills Bodegas that had done well in central Mexico but left more sophisticated northern customers cold.

Finally, as polarization between rich and poor increases in Mexico, Wal-Mart’s approach of selling to a broad middle faces structural limits. 12. Suggested Strategies ‘One little bad thing can wipe out lots of good things’. So every move in its business operation ought to be well thought-out and executed. Wal-Mart needs to address few areas in order to maintain or to capture an even stronger long term business position: Single-business strategy — Wal-Mart’s success is mainly based on its concentration of a single-business strategy. This strategy has achieved enviable success over the last three decades without relying upon diversification to sustain its growth and competitive advantages.

Given its current position in the industry, Wal-Mart may want to continue its single-business strategy and to push hard to maintain and increase market share. However, there is risk in this strategy, because concentration on a single-business strategy is similar to ‘putting all of a firm’s eggs in one industry basket’. In other words, if the retail industry stagnates due to an economic downturn, Wal-Mart might have difficulty achieving past profit performance. Other than this some other suggested strategies could be: 1. Expanding into states where it had no stores; 2. Continuing to saturate its current markets with new stores; 3. Perfecting the Super center format to expand Wal-Mart’s retailing reach into the grocery and supermarket arena 4.

And last but not the least following the current low cost strategy through minimizing the operating cost and as well as the selling cost. 13. Conclusion The ever-changing market presents continuing challenges to retailers. First and foremost, retailers must recognize the strong implications of a ‘buyers’ market’ . Customers are being offered a wide choice of shopping experiences, but no one operation can capture them all. A closer look at Wal-Mart’s performance in Mexico indicates that it is neither invincible nor exceptionally exploitative. Imitation by competitors, income polarization, and economic hardship that steers consumers toward the informal sector will limit Wal-Mart de Mexico’s reach in the future.

Hence, technology, demographics, consumer attitudes, and the advent of a global economy are all conspiring to rewrite the rules for success. Success in the next decade will depend upon the level of understanding retailers have about the new values, expectations, and needs of the customer. If Wal-Mart continues its customer-driven culture, it should remain a retail industrleader well into the next century. ———————– Ernesto Vega Chairman of the Board Eduardo Solorzano President and CEO Xavier del Rio Executive Vice Present, Real Estate Rafael Mature Executive Vice President and Chief Financial Officer Jose Angel Gallegos Executive Vice Present, Human Resources