Introduction
All organizations within an industry strive to achieve their goals and objective through setting up strategies that are cost effective so as to run their operations effectively. It is therefore important for management of organizations to ensure that they study the environment in which they are conducting their businesses so as to avoid incurring losses.
History
Shomei card firm is a firm that was started in the year 1980 by a young couple who were known as Chris and Bob Harolds.They came from Wareham Massachusetts. They produced greeting cards that were made from a collection of objects such as: wildflowers, leaves, feathers and mosses. The materials and objects were later on dried and then glued on washi, thick, cottony paper imported from Japan. The greeting cards consisted of short sayings and poems that were written on the paper using the black calligraphic pens to express different sentiments for the customers.
Body
Competitive advantage refers to the gain derived as a result of utilizing assets, attributes, market condition and the establishment of relationships that distinguishes a firm from its competitors that operate within the same industry. It may involve use of natural resources to manufacture products instead of artificial products that may be costly to acquire; a firm may be located at special places where customers can access them hence lead to increased revenue for an organization.The use of skilled manpower to run the affairs of an organization so as to increase returns for an organization is part of competitive advantage strategy that can be used to outcompete rivals within an industry.
Trend that strengthens and weakens competitive advantage and industry position strengths of Shomei and competitors
The greeting card industry’s trend of improving the performance brings about changes to a firm within an industry and lead to strengthening and weakening of its competitive advantage.Hercules Card is a greeting card firm that that has been dominating the greeting card industry. It has been having a good distribution channel, retail outlets, efficient production and its products have been recognized for a longtime. It has been setting strategies that are meant to attract a larger market segment in the industry.
Hercules card firm trend of manufacturing high quality cards can be an expensive affair since firms as Shomei produces cards have been in the market for a longtime therefore has a greater clientele of customers due to its stability. If the trend of the Hercules firm is to produce high priced cards in order to generate higher profits, it may in return incur losses since most customers have been purchasing low priced cards therefore the market share for those cards can decrease with time. The trend of increasing the paper prices and payroll costs would adversely affect the performance of the industry. This is because the firm already faces stiff competition from the competitors and the customers can find alternative methods of conveying their messages to their friends through the use of the internet (Florida, 2002).
The cost of producing good quality cards can be costly affair because suppliers of raw materials should be paid their dues on time. The raw materials may be expensive to obtain since the management of firm has to meet the cost of producing those cards and must sell at a profit in order to remain competitive in the market. The entry of Hercules card firm into an industry can be difficult this is because of the stability of the Shomei firm since it has patents, good deal of retailers who supply raw materials to run the affairs of firm.
Shomei card use of alternative methods to produce its products makes it to have a higher competitive advantage over its rival markets in the industry since diversification of producing different goods can lead to higher returns for an organization. If the cost of production increases for the three major greeting firms it can lead to increased prices for their products this is because they have to ensure that they meet the cost of producing and cost of purchasing their raw materials from different suppliers in the market.
The trend of producing insufficient inventory for customers may lead to low stocks which lead to customers switching to other alternative sources to satisfy their needs such as the internet where people can browse information and send messages through the electronic method. The act of producing many cards and later on supplying them in large quantities to the customers can deny the other firms the chance of generating returns that can lead to increased profits.
The increase in the cost of production for Shomei firm can lead to reduced revenue since the prices of those products can be increased so as to meet the expenses of running the operations of the organization. The rivals in the market can take advantage of the situation thus lower prices so as to capture a greater customer base.Recruitment of qualified personnel to carry out the tasks within an organization is an added expense therefore the management of firm can increase prices for the cards supplied to the customers in the market in order to operate in a cost effective manner (Florida, 2002).
The trend that affects Shomei viability in the industry
The use of the internet by the customers has been contributing to decline sales for the Shomei card firm. It has contributed to customers desire to produce their own greeting cards than purchasing them from the industry thus posed as a major challenge to the firm. Customers’ decision of sending of messages through the electronic mail method to friends and customers in different parts of the world may affect the viability of the firm within the industry, therefore declined sales for the firms cards (Harolds, 2008).
The future strategy of Shomei firm of producing products that are commensurate with the needs, tastes and preferences of the customers is a positive move since the customers can determine the revenue a firm will generate over a specified period of time. Establishing the target market of old men and women, young professional men and women can make an organization to realize higher returns. The customers can contribute to increased sales volume within the industry as they can utilize their income to purchase cards that can be sent to their friends located in different parts of the world.
The Shomei card firm trend of producing greeting cards such as: every cards, holiday cards and other different kinds of cards can lead to increased sales volume for an industry.This is because different cards can be prepared on different occasions since they occur at different times of the year thus meet the needs of the customers at those specified periods. Shomei card firm other future trend involves expanding its business through employing over 10 artists so as to produce products such as impressions cards that are made from non natural objects such as wire, wicker and plastic materials. The opening of a factory to manufacture washy raw materials and building a factory in Portland and Oregon is a positive trend as firm since it can perform its activities without incurring lots of costs during its operations (Harolds, 2008).
It is important for the management of organizations to carry out extensive research on strategies that lead to increased returns within an organization. For instance Shomei greeting card firm should embrace technology and produce products that can satisfy the needs of all consumers in the market.
References
- Best, M. (2001).The New Competitive Advantage, New York: Oxford University Press.
- Florida, R. (2002).The Rise of the Creative Class, New York: Basic Books.
- Harolds, C. (2008).Subject You, Analyst From::Shomei strategy statement.