Analysis of the competitive strategy within the industry
Staples Inc. is a company headquartered in the United States with more than 2,000 stores globally. It deals in office equipment and office machines. The industry in which Staples Company operates in is large and as well as diversified. The main products the company deals include office equipment and machines which they sell to other businesses in the 26 countries in which the company operates through subsidiaries and stores (Plunkett 56). Other products which make the industry diversifies include technology, computers and other related products.
There are many other companies operating in the industries and offer competition to Staples Company. The main competitors are Circuit City Stores, Wal-Mart and Office Max companies. To counter competition, the company reaches every sector of the market through channels designed conveniently to the company’s contract, on-line marketing, catalogues and stores customers. The company uses these different strategies to attract customers who possess different buying behaviors. It serves its customers with superior and high quality yet affordable products. Their stores are convenient thus building a competitive advantage in the market. The common slogan, ‘that was easy’ creates its identity thus building a user base, which leads to a strong demand.
Porter’s five forces model, developed by Michael Porter, is used for analyzing the attractiveness of industries. The five forces interact with one another to determine the strengths in which the companies compete and hence the attractiveness of the industry. One of the forces is the rivalry among the companies operating in the industry. In the office products industry, rivalry among the companies competing is high and thus a company that seeks to thrive in the industry would be required to come up with superior products, marketing and pricing techniques to gain a significant share of the market. The suppliers in the industry also have high bargaining power. Since companies are seeking to thrive through trusted sources for market solutions, their suppliers find a strong base for their bargaining power.
The buyers in the industry also have high bargaining power. Due to the many companies operating in the industry, customers want to purchase quality products at low prices. Staples Company has adopted a combination of high quality products and low prices as its competitive strategy thus enjoys loyalty from the many customers it serves. However, threats of new entrance are low to the company. Staples Company has quality products that it sells to customers of all buying behavior at low prices, thus reducing the threat of new companies entering the industry. Lastly, threats from substitute products are minimal to Staples Company. It has therefore engaged in production of substitutes to counter competition from other companies. From the interaction of these five forces, the industry can be said to be attractive for Staples Company and has possible niches that the company can occupy profitably.
Strategic Issues and Challenges based on SWOT Analysis
Opportunities available Staples Company include penetration into the developing and emerging economies and developing an improved relationship with the customers. The company also has an opportunity to incorporate any recycled contents as a strategy to devise a competitive edge over the other companies in the industry. Based on these opportunities, there are strategic issues that the company has explored to broaden its market share. Staples Company has closed some stores across the country as a result of declining store traffic. The company plans to shut down 225 stores located in the northern part of America before 2015 ends (Ryan 146). The company has been making more sales through online buying and thus many buyers in Northern America have adopted the digital and convenient mode. The 225 stores have been making lesser sales in the past two years while online sales have increased significantly. Therefore, there is a need to close them since they only add more expenses than revenue to the company. The company has massively expanded online marketing to penetrate into the developing countries. The company has only managed to penetrate into 26 countries in the world, leaving out about 169 countries. Through online trading, the company will expand its market share, as it will be able to reach other potential customers from the 168 countries.
The company has been reinventing the brand, which aims at changing its image from office materials to ‘an everything business.’ The strategy aims at diversification of its business operations. To build an improved customer relationship, the company also aims at developing an effective and efficient feedback system, which will be open for customers to give their views in the services and products sold to them. The feedback from the customers will help in identifying areas that need to be improved. Staples Company faces challenges such as competition from rivals such as Amazon. Competing companies come up with substitutes, which make customers shift to them, thus Staples Company has to engage intensively in environmental scanning and appraisal. Environmental appraisal helps in identifying any areas the company could make use of to counter any competition from them. However, environmental scanning is expansive and time consuming. The company faces changing policies as well as regulations form the government on Foreign Direct Investments. The government for instance, has increased taxation rates on any businesses that domestic companies run in foreign countries, Staples Company being one of the victims. They therefore are double-taxed as they domestic pay taxes and in the foreign countries it operates, which reduces their profitability.
Plunkett, Jack W. The Almanac of American Employers 2009: The Only Guide to America’s Hottest, Fastest Growing Major Corporations. Houston, Tex: Plunkett Research Ltd, 2008.
Ryan, Bob. Finance and Accounting for Business. London: Thomson Learning, 2004. Print.