Class_Essay

MMPBL/502: Managing the Business Enterprise December 20, 2010 Kudler is fine organization, which is in San Diego’s Metropolitan area. It is known as Kudler Finest Foods that consists of three stores with each acquiring 16,000 square feet space. The stores are La Jolla, De Mar,Encinitas. These stores consists of five departments; fresh bakery and pastries, fresh meat and seafood, fresh produce, cheese and specialty dairy products, and wine. This is no ordinary organization because of its reputation, well stacked shelves, and exquisite products. Like every organization, Kudler is very committed to providing its customers with the best products and services every day. This company focuses on the following primary functions of management; strategizing and planning, organizing, leading, and controlling. The goal is to establish what level of management is responsible for the different functions of the organization. As well as what affect the five Porter's model has on this organization. Strategizing and planning is assisting many part of Kudler to set future goals. Activities are used because there are necessary in accomplishing these goals. In order for these goals to be effective, they will need to be coordinated to support Kudlers’ mission statement. Yvonne Reynolds, Director Store Operation is responsible for this functioning. Organizing involves how Kudler handles human, financial, physical, informational, and technical resources. These are arranged and coordinated to perform tasks to achieve desired goals. Brenda Wayne, director administration of human resources is the person for this portion. Kathy Kudler is the president of Kudler Finest Food. She is responsible for leading the organization. This involves clearly communicating company goals and their importance, inspiring, and motivating employees. This is done by leading by example for others to follow. Which means, guiding employees and creating condition that encourages others from diverse background; at the same time, working together in achieving the company’s success. Controlling is measuring kudler performance, comparing it to set goals, implementing necessary changes, and monitoring progress by providing feedbacks. This duty belongs to Harvey Stephens, director of finance and accounting. In his book Competitive Strategy, Harvard professor Michael Porter describes five forces affecting the profitability and competitive position of companies. These are the five forces he noted: 1. Intensity of rivalry amongst existing competitor Threat of entry by new competitors Pressure from substitute products Bargaining power of buyers (customers) Bargaining power of suppliers. Rivals Rivals are competitors within an industry. Rivalry in the industry can be weak, with few competitors that don’t compete very aggressively. Or it can be intense, with many competitors fighting in a cut-throat environment. Factors affecting the intensity of rivalry are: * Number of firms – more firms will lead to increased competition. * Fixed costs – with high fixed costs as a percentage of total cost, companies must sell more products to cover those costs, increasing market competition. * Product differentiation – Products that are relatively the same will compete based on price. Brand identification can reduce rivalry. New Entrants One of the defining characteristics of competitive advantage is the industry’s barrier to entry. Industries with high barriers to entry are usually too expensive for new firms to enter. Industries with low barriers to entry, are relatively cheap for new firms to enter. Threat of New Entrants: New entrants to an industry can raise the level of competition, thereby reducing its attractiveness. New entrants frequently bring additional capacity to an industry. Thus it is possible that prices will be bid down and industry profit diminished. In the knitwear industry, new entrants could quickly enter the industry because it costs little in time or money to enter the market and compete effectively, and there are few economies of scale in place, or have little protection for the key technologies, so that new competitors can quickly enter the market. Treat of Substitutes Substitutes are new products (or services) that are quite different than the original product or service. A threat exists when a product’s demand is affected by the price change of a substitute product. When the demand for a product declines due to either lower prices of better performing substitute product, low brand loyalty, new current trends or low switching cost. There is a high threat of substitutes in the knitwear industry such as sweater, cardigan and cashmere or other dressing and the fashion trend change in every season, people wants to buy the fashionable clothing and make the elastic of the knitwear is very high. Supplier's power Bargaining supplier power is the amount of pressure suppliers can place on a business. According to Porter, (2008) if one supplier has a large enough impact to affect a company's margins and volumes, then they hold substantial power. These are two reasons Kudler may have the power. Very few suppliers of the products are available and there are no current substitutes. Buyer’s power. This is type of impact customers can place on kudler business. Porter, (2008) noted that if one customer has a large enough impact to affect a company's margins and volumes, then they hold substantial power. The two reasons customers probably have power are: the availability of the current substitute products. The product is not important to the buyer; they will do without it for a length of time. Kudler is using the latest technology to enhance the organization. It currently employs the Internet, intranet, file transfer protocol and e-mail systems as means of communications. The Internet enables them to serve the World Wide Web and share information, buy and sell products and draw customers to the company. According to Gomez-Mejia & Balkin,(2002) intranet allows an organization’s employees to communicate with each other and to access company information and databases through their desktop or laptop computers access to intranets typically is limited to a firm’s employees, and access to restricted data can further be limited to certain employees. One advantage of an intranet is that employees can work at remote locations and be connected to kudler. It also used as a private network especially when doing business with the United States postal services or united parcel services. The use of technology has made everyone jobs much easier especially knowing that all of the product and services are available at their fingertips. In conclusion, Kudler is a fine organization with a good reputation and product line. They are well established and have drawn their own customer base. However, looking to the future they might have a problem with competitive advantage. As time and technology change substitutes become available and this will affect how the company current does business. Kudler foods has to understand the dynamics of its industry in order to compete effectively in the marketplace. Porter, (1980) defined the forces which drive competition, contending that the competitive environment is created by the interaction of five different forces acting on a business. Porter suggested that the intensity of competition is determined by the relative strengths of these forces. Kathy has the right approach in moving the company but needs the entire management in helping the company forward. Reference Luis R. Gomez-Mejia, David B, Balkan. (2002) Managing Information Systems: McGraw-Hill. Michael E Porter. (2008) “The Five Competitive Forces that Shape strategy”, Harvard Business Review; P.86. Porter, M.E. (1980) Competitive Strategy, Free Press, New York.