Porters Analysis- Albertsons

Porters Analysis- Albertsons
PORTER?S value chain model ON albertsons

(i) Firm infrastructure
a) Good financial backing.
From the given document it can be inferred that Albertsons has a good financial backing. It is mentioned that the company has invested half a billion dollars for technological advancements and also they are into the drug retail market which is more profitable over groceries.
Moreover Albertson?s stands in 3rd place in revenue with 20 billion dollars behind Wal-Mart.
b) Organizational structure.
Albertsons ceo, Johnston believes in using IT as an enabler of business to keep prices competitive and make the shopping experience more compelling. Therefore the company would be well organized to implement IT for analytical processes. As the ceo himself is involved, the company would be well structured.
c) Quality management
ceo Johnston also has plans to bolster the company?s leadership with the best minds available and also use motivational techniques to invigorate his employees. These ideas show the character of the ceo in enhancing productivity from his work force.
Another point can be the innovational shopping techniques put forward by the ceo, like the self service checkout stations which tries to provide some form of quality service for the customers.
d) Planning management
Albertsons has many goals to achieve by planning out their technological advancements. They have invested 50 million dollars to study customer buying habits.
The ceo has also hired employees with good experience like cio Dunst from Safeway, and for the supply chain management team, some technology experts from companies like PepsiCo, Dell and even Wal-Mart. This allows the company to be in line with the latest technologies available and demonstrates the future planning undertaken by the ceo.

(ii) Human Resource management
The human resource services at Albertsons appears to be much better than their chief competitor Wal-Mart?s .It is mentioned that the average Albertsons employee earns more than a Wal-Mart ?s employee. Also employees at Albertsons enjoy benefits like health insurance and retirement packages
Another point is the use of motivational techniques to train and develop employees, which is mentioned above.
The interest shown in hiring top management employees away from their competitors like the current cio Dunst is also undertaken by the human resources team.
Something worth considering with the human resource management is culling of payroll as a result of the self service check out stations. This would help in repositioning the company when comparing the wage numbers with that of Wal-Mart?s. Retail analysts predict savings in excess of 100 million dollars.

(iii) Technology development
a) Introduction of innovative shopping methods like the self service check out stations and the revolutionary online digital shopping gives a different shopping experience.
b) The investment in R&D by the company shows their interest in technological advancement. Half a billion dollars set aside in the year 2004 for technology advancements say it all as well as the 50 million dollar invested in data warehousing for analytical software shows their dependence on technology.
c) Making the suppliers use rfid tags on all product shipments makes the supply chain management more tech savvy and reliable.
d) Use of edi capabilities also enable better processing transactions with suppliers.
e) cio Dunst intends to overhaul 90 percent of the company applications within 3 years.

(iv) Procurement
a) The self service checkout station is a fine example of input to the value-creating activities as it is a new experience of shopping.
b) Using data warehouse to study customer buying habits also provides a good idea on how Albertsons can study the market and change their decisions based on it.
c) By consolidating the distribution centers and using the web to coordinate shipments, Albertsons reduces the billing and invoicing costs, therefore effectively reducing costs in the supply chain in order to offer competitive prices in their stores.
d) Implementing the use of RFID?s to manage the supply chain more precisely is another procurement done by the company.
e) Hiring of smart people like the cio Dunst with 25 years experience in the industry is also a big gain to the company as he can bring in more innovative IT technologies so as to compete with their rivals.

(v) Inbound logistics
Considering transportation scheduling, the receiving of products can be tracked easily with the use of rfid tags so as to manage the supply chain effectively.
Data warehouses used to examine customer buying habits is another example of inventory storage capabilities of Albertsons.
Better processing of transactions with suppliers using edi capabilities.

(vi) Outbound logistics
Planned use of the internet to allow customers to do their shopping conveniently and use of gps to ease up the shopping by guiding the customer to the product in the store is one example of getting the finished product to the customer. The self service counter also is in the same category.
edi and rfid also help in getting the finished product to the customers by proper management of the supply chain.

(vii) Operations
The end services to the customers based on the given case study document include the plans for digital shopping experience by using the internet portal to download the shopping list and the self service check out stations.

(viii) Marketing and Sales
In terms of marketing, Albertsons has done a good job by providing a different shopping experience with their futuristic stores. By providing self check out stations and plans to provide a digital shopping experience using the internet and gps, they would definitely gain some edge over their rivals by making shopping interesting to the new generation.
Another marketing strategy would be the use of loyalty cards to encourage their regular customers to buy more products and receive some sort of rewards or discounts.
In the sales area, Albertsons is trying to reduce the cost of their products by implementing reduction in costs to its supply chain, make current customers buy more when they visit, providing better services in their stores like butcher, baker and gourmet coffee bars compared to Wal-Mart?s neighbourhood markets.
Using analytical software to determine whether lowering or increasing the price of certain products would increase sales or not. This would play a major role in sales at that point of time.
Another controversial point would be the culling of payroll in the self check out stations as this would save huge revenue for the company and allow them to reduce rates of products significantly.

(ix) Services
Albertsons has done a great deal to provide good service to their customers.
a) The self checkout stations have been implemented to ease customers of having to wait in queue to pay their bills, hence saving their time.
b) Digital shopping experience makes shopping for a tech savvy person very simple. All the shopping can be done using their loyalty card and a hand held device at the store which will also guide the shopper through the store.
c) Also customers could receive text messages notifying them about special offers, photos and prescriptions ready for pick up and conflicts between scanned items and customer?s preset dietary or allergic reactions.
d) Albertsons provides services in their stores such as butcher, baker and gourmet coffee bars which is better compared to the new Wal-Mart?s neighbor-hood market that does not provide these services.

Porters Analysis- Albertsons 9.8 of 10 on the basis of 4099 Review.