Strategic Manufacturing Managment

Assignment One - Strategic Manifacturing Management

1- Who are the main customer groups (or potential customer groups) within the industry? In what ways might they exercise their influence? How would you describe their bargaining power?

There are two main kinds of customers, the ones who search for lowest price of standard products, especially interested in homebrand goods in reasonable quantity, and the ones who look for variety and quality of products (fairtrade, organic, etc), that can be found in the upmarket part of the supermarket, designed mainly for customers with high income.

The customers can exercise their influence by being critical about the quality and price of products, forcing prices to go down and bargaining for high quality or for more services. They can also put one competitor against each other. It is basically the use of barganing power.

The bargaining power could be increased by the customers' knowledge about the product and costing structure (they know the price to produce and the profit, then they can see if the seller's price is far enough), what makes then be price sensitive, therefore they might have stronger position, making their demands and the seller's profits may go down.

If the customers's can buy easily in other supermakets, do not having extra costs, transfering to other products, replacing purchases (switching cost are low), their barganing power is increased as well. In addition, when there is no differentation between products from different industries (standard or undifferentiated products), it is easy to buyers to find and choose alternative suppliers, in light of this, they exert pressure on price rather than product, making the supermakerts compete more against each other.

Woolworths anchors represent a moderate to low threat of backward integration (a form of vertical integration that involves the purchase of suppliers). In the occasion of backward integration, its future subject to a portion of the high...