6.2 Discussion: Compare & Contrast Strategies
Conduct a critical analysis of a posting by two of your classmates by the end of the workshop.
a. The topic of your discussion response should be your classmates posting and should be written as if you were reviewing his/her posting in an academic journal. Your discussion response should, therefore, answer the following questions as applicable:
i. Were your classmates arguments articulate and logical? Were the facts correct?
ii. Was the interpretation your classmate provided reasonable and consistent with experts in the field? Was your classmate consistent with both the substance and intent of his/her references?
b. The focus for your critical analysis is not whether you agree with your classmate, but how well his/her position was presented. Each response should be at least 200 words in length and cite two academic sources.
Peer Review 1:
Sherwin-Williams Competitive Advantage
Sherwin-Williams (SHW) was founded in 1866 and is the world’s largest paint and coatings enterprise, promoting its products to expert, business, industrial, and retail clients in over one hundred twenty countries. Sherwin-Williams is the leader inside the worldwide paint marketplace, which generated $125 billion in income. The agency has about 12% market proportion on this notably fragmented industry (approximately 33% share inside the U.S.). While the top 10 players manipulate most people of marketplace percentage, there are over 5,000 overall competitors (Barriga, Leyland, 2018).
Competitive Advantage
The boundaries to access are as a substitute low given the capital mild nature of the enterprise. For instance, Sherwin-Williams spent simply 1.4% of sales on capital costs (preserving and developing manufacturing and distribution ability) in 2017. Over time, control expects that degree to stay at 2% or beneath despite a lot larger tiers of investment following the company’s Valspar acquisition. However, just due to the fact Sherwin-Williams’ competition wide variety over 5,000 does not mean the firm lacks competitive advantages (Barriga, Leyland, 2018).
Sherwin-Williams enjoys the industry’s largest global distribution network way to its community of over 4, six hundred enterprise-owned stores. In truth, 90% of the U.S. Population lives inside 50 miles of a Sherwin-Williams location, and control eventually wants to increase its North American store depend to about 5,000. In contrast, PPG, 2nd biggest enterprise, has just over 1,000 worldwide shops (Barriga, Leyland, 2018).
Then there’s the business enterprise’s strong portfolio of leading and trusted manufacturers. Contractors, who presently make up 68% of the market (the other 32% are DIY customers), accept as true with Sherwin-Williams’ paints, sealers, and coatings to help them get the task performed quicker and greater profitably (Barriga, Leyland, 2018).
That is because Sherwin’s top-class merchandise are regarded to be extra-long lasting, take less time to use (one coat in preference to), and dry quicker. And due to the fact paint prices normally constitute just 15% of a contractor’s overall fees, Sherwin-Williams’ relied on manufacturers result in sturdy pricing energy, such as a 3% to 5% rate hike the company initiated in October 2017 (Barriga, Leyland, 2018).
As a result of Sherwin-Williams big community of shops, long operating records, sturdy brands, and direct in-store relationships with customers, it has constructed up number one manufacturers in architectural paint, stain & defensive end, aerosol paint, vehicle uniqueness paint, portray tools, and timber sealers (Barriga, Leyland, 2018).
In addition to robust pricing power, Sherwin-Williams margins additionally benefit from the organization vertical integration. Big-container retailers should pay wholesale prices for his or her paint stock, however Sherwin-Williams produces its own coatings, ensuing in better earnings. The commercial enterprise additionally calls for little capital, supporting Sherwin-Williams consistently generate terrific free coins waft (Barriga, Leyland, 2018).
Sherwin-Williams has earned superior shelf area in foremost huge-container shops. The enterprise’s scale and popularity suggest it is also in a position make specific deals such as the partnership it recently announced with Lowe’s (LOW) to be its best nationwide supplier for interior and exterior paints. Sherwin-Williams plans to boom its training (Barriga, Leyland, 2018). The aggregate of robust pricing strength, vertical integration, and a big retail keep base has allowed Sherwin-Williams to achieve enterprise leading profitability with a running margin near 10% (Barriga, Leyland, 2018).
Scope
The biggest risk to Sherwin-Williams long-time period destiny is arguably market saturation inside the U.S. The organization has significantly greater stores than its subsequent biggest friends and enjoys a sturdy presence in most areas already. If Sherwin-Williams reveals fewer opportunities for profitable save boom than it currently expects, the inventory should discover itself in trouble. Though the enterprises global footprint has improved with the Valspar acquisition, it is miles nonetheless notably dependent on U.S. Boom opportunities (Begue, 2020).
Additionally, Sherwin-Williams market reputedly has few barriers to entry, nothing can stop Home Depot or different competitors from building new shops in a region and pressuring charges, but the organizations manufacturers, recognition, and assist mitigate chance from new competition, which include Amazon. Valspar also makes Sherwin-Williams an extra attractive partner for large stores (Begue, 2020).
Over the fast term, it also needs to be talked about that Sherwin-Williams operates in a cyclical enterprise wherein call for paint is tied to the health of the overall economy. This is particularly genuine for the duration of economic downturns while the use of settlement painters declines, and greater fee touchy purchasers tend to desire cheaper paint manufacturers (Begue, 2020).
Sherwin-Williams carried out a terrific task of continuing to win marketplace share over time. That has been because older human beings are usually less inclined to repaint their homes and are much more likely to rent contractors, for whom Sherwin-Williams’ top-class services are desired. This fashion is expected to keep for the foreseeable destiny besides at some stage in monetary downturns (Begue, 2020).
Finally, in a fragmented enterprise wherein acquisitions are commonplace, there’s execution risk with any deal. Sherwin-Williams’ song report on no longer overpaying for belongings and hitting synergistic value targets is higher than most. However, inside the past year integration fees for the Valspar deal were higher than expected, showing that even appropriate management is not always best. Fortunately, huge acquisitions like Valspar are uncommon with Sherwin-Williams who prefer to spend its unfastened cash waft on buybacks and dividends. Only approximately 30% of its unfastened coins drift has ended up going to bolt-on acquisitions over time, which includes shopping nearby paint stores to make bigger its retail footprint (Begue, 2020).
References
Barriga, A. Leyland, J. (2018). The Sherwin-Williams Company (NYSE: SHW).
Sherwin Williams. Retrieved from
Begue, T. (2020). 5 Ways to Sharp your Competitive Edge.
PPC Magazine. Retrieved from
Peer Review 2:
A company has a comparative advantage at producing something if they can produce it at lower cost than any other company. Having a comparative advantage is not the same as being the best at something. In fact, any company can be completely unskilled at doing something, yet still have a comparative advantage at doing it. A competitive advantage is an advantage over competitors gained by offering consumers greater value, either by means of lower prices or by providing greater benefits and service that justifies higher prices.
For example, someone who is the best at doing something is said to have an absolute advantage. Michael Jordan has an absolute advantage at basketball. For all I know, Michael Jordan may also be the fastest typist in the world, giving him an absolute advantage at typing, too. If Jordan takes time out from shooting hoops to do all his own typing, he sacrifices the large income he earns from entertaining fans of basketball. If, instead, his secretary does the typing, the secretary gives up an alternative secretarial jobor perhaps a much lower salary playing basketball. That is, the secretary is the lower-cost typist. The secretary, not Michael Jordan, has the comparative advantage at typing! The trick to understanding comparative advantage is in the phrase lower cost. What it costs someone to produce something is the opportunity cost, the value of what is given up. Someone may have an absolute advantage at producing everything, but he has a comparative advantage at many fewer things, and probably only one or two things.
Competitive advantage is determined by the presence of smart and prudent goals. Business organizations need to have strong strategies that leverage their key strengths as a means of attaining economies of scale. The business strategy of the organization should be based upon operational efficiencies. Additionally, successful organizations strive to create an environment where they can achieve their critical targets through dynamic business processes and functions. Organizations need to have the ability to successfully deploy strategies that can take advantage of new opportunities. Additionally, they must be able to respond to complex situations in an efficient and effective manner. McDonalds is an industry leader in the fast-food industry. Its key competitive advantages have included nutrition, convenience, affordability, innovation, quality, hygiene, and value-added services. The success of the organization has been its ability to leverage its key strengths so that it can overcome weaknesses. The long-term profitability of McDonalds will depend upon its ability to embrace change. It needs to improve operational efficiencies to reduce costs. It should integrate technology as a means of ensuring that its key standards can be attainable. Burger King and KFC are two competitors of the organization. Burger King has been successful because it has been able to focus on product diversification, reliable customer services, and continuous innovation. KFC has been successful because of its emphasis on quality food along with huge restaurants that provide considerable excellence to its customers.
References:
Barney, J. (1991). Competitive Advantage. Journal of management, 17(1), 99-120.
Vignali, C. (2001). McDonalds:think global, act localthe marketing mix. British food journal.
6.4 Discussion: Applications of Economic Theory
Conduct a critical analysis of a posting by two of your classmates by the end of the workshop.
a. The topic of your discussion response should be your classmates posting and should be written as if you were reviewing his/her posting in an academic journal. Your discussion response should, therefore, answer the following questions as applicable:
i. Were your classmates arguments articulate and logical? Were the facts correct?
ii. Was the interpretation your classmate provided reasonable and consistent with experts in the field? Was your classmate consistent with both the substance and intent of his/her references?
b. The focus for your critical analysis is not whether you agree with your classmate, but how well his/her position was presented. Each response should be at least 200 words in length and cite two academic sources.
Peer Review 1:
Microeconomic Factors in Macro Environment
Every enterprise must deal with several factors. In other words, and company as such can in no way exist and function in a vacuum. It is a part of a larger entity referred to as the business environment. In vast phrases, this environment can be divided into two classes. The first one is the micro-environment. This category affects the functionality of a specific enterprise itself. The latter one is the macro-environment which affects the operation of all current commercial enterprise entities available (Gujrati, 2019).
The two classes can be distinct, but both are vital to understand a good way to really see your business in its complete context. You need to be informed about the enterprise surroundings with a purpose to be able to music and realize how different factors influence your company (Gujrati, 2019).
Macro-Environment
The macro-surrounding is more well-known – it is far the surroundings within the economic system itself. It influences how all business corporations perform, perform, make choices, and form strategies simultaneously. It is dynamic, because of this that an enterprise has to continuously music its changes. It includes outside factors that the employer itself does not control however is simply laid low with. The factors that make up the macro-environment are economic factors, demographic forces, technological factors, herbal and bodily forces, political and criminal forces, and social and cultural forces (Gujrati, 2019).
Micro-Environment
The micro-surroundings are largely the environment that has an immediate impact for your commercial enterprise. It is related to the precise place wherein your enterprise operates and might at once influence all your business methods. In other phrases, it consists of all the elements that influence, specifically your enterprise. They have the potential to influence your day-by-day complaints and standard performance of the agency. Still, the impact that they have is not always a long-lasting one. The micro-surroundings consist of clients, suppliers, resellers, competitors, and the majority (Gujrati, 2019).
Reference
Gujrati, R. (2019). Microeconomic and Macroeconomic: Issues & Effects on Economic Growth.
International Journal of Recent Scientific Research. Retrieved from
Peer Review 2:
We studied many major themes and concepts during this course, including supply, demand, profitability, price elasticity, Federal Reserve changes to macro-economic issues and so on. I would like to address the Federal reserve changes that the Fed made to counter the drop in economy during the currently on-going COVID-19 pandemic.
Due to the pandemic, the economy was on a low and so the Fed had to get involved. The Federal Reserve stepped in with a broad array of actions to limit the economic damage from the pandemic, including up to $2.3 trillion in lending to support households, employers, financial markets, and state and local governments. We are deploying these lending powers to an unprecedented extent [and] will continue to use these powers forcefully, proactively, and aggressively until we are confident that we are solidly on the road to recovery, Jerome Powell, chair of the Federal Reserve Board of Governors said in April 2020. (Cheng,2021)
First off, the Fed lowered the Federal funds rate to almost 0 percentage so that banks, businesses, and individuals can borrow money during the pandemic. Because the pandemic caused unemployment and scarcity of funds and products, these low rates played a very crucial role in businesses staying in business and not going bankrupt. They also made changes in repo operations and started offering more money for a longer duration. Before coronavirus turmoil hit the market, the Fed was offering $100 billion in overnight repo and $20 billion in two-week repo. It has greatly expanded the programboth in the amounts offered and the length of the loans. It is offering $1 trillion in daily overnight repo, and $500 billion in one month and $500 billion in three-month repo. (Cheng,2021)
These actions taken by the Fed, helped the economy to stop from declining. Slowly but steadily the economy has started to move towards the recovery cycle. These actions by the Federal Reserve, not only impacted macroeconomics but also microeconomics. As the economy started going up, so did the demand and supply curve which had also gone down due to the pandemic. As the supply and demand started going up, so did the profitability and the aggregate price elasticity.
While primarily a health crisis, the COVID-19 pandemic has also significantly disrupted the U.S. economy and financial markets. In line with its mission, the Fed responded forcefully. During the initial several weeks of the crisis, the Fed used its interest rate policy to support the economy, took steps to stabilize financial markets, and introduced other measures to support the flow of credit to many sectors of the economy. These actions help minimize harm to the economy and set the stage for economic recovery when the public health crisis has sufficiently subsided. (Ihrig,2020)
References:
Cheng, J., Powell, T., Skidmore, D. & Wessel, D. (2021) What’s the Fed doing in response to the COVID-19 crisis? What more could it do? Retrieved from
Ihrig, J., Weinbach, G. & Wolla, S. (2020) How the Fed has responded to the COVID-19 Pandemic. Retrieved from
