Competitive Advantages
This paper will discuss the competitive advantages of Costco and Riordan
Manufacturing. An analysis will be performed to expose which competitive
advantages Riordan has in common with Costco. An estimate on which competitive
strategies Riordan would use to improve innovation and sustainability of business
operations domestically and internationally will be given. An explanation will also
be presented to describe how the competitive strategies chosen may affect the
sustainability of long-term performance and how the global market would affect the
business strategy of Riordan.
Like Costco, Riordan manufacturing generates greater sales and margin to
optimize their investment. Riordan’s sales and product strategy has been proven
effective through their pricing and product selection, which sustains their strategic
goals and objectives. To retain their customers, they increase their sales through
employee satisfaction. The exceptional customer service is implemented in order to
satisfy their financial performance as part of their objective. This puts Riordan in the
lead to achieve their goals and secure some of the largest accounts to increase their
market. The value and the effectiveness of Riordan manufacturing is truly as effective
using the SWOT analysis. They also exemplify ways to generate planned revenues
with the delivery of their product, which in turn strengthens their competitive
advantage. The structure of their plan is based on financial goals, action plans and
objectives with reviews of their performance. Riordan is a plastic manufacturing
company that could improve their business operations by producing innovative
materials with environmental concerns in mind. These improvements in business
practices will redesign their products, which will refine Riordan’s global strategy and
opportunity to meet customer needs. The redesigning of their product will hence
make them globally competitive and innovative.
Riordan chose the pricing and product selection strategy because of the customer
base they would attract. Like Costco, Riordan focuses on a certain group of
customers. These customers are looking for and expecting a higher quality product.
Different from the lower quality products that Riordan’s competitors are
manufacturing. These higher end products cost more; however, the customer base
prefers better quality over quantity. A higher percentage of the customer base is
typically more willing and able to continue purchasing Riordan’s products on a
regular basis even when the economy is poor. This type of strategy ensures Riordan a
maximum growth opportunity when the economy is strong and a minimal impact on
growth when the economy is weak. Focusing on the satisfaction of the customers is
important to Riordan. High quality and satisfied customers are intertwined and cannot
be accomplished individually. Linked to high quality and customer satisfaction is
employee satisfaction. Riordan focuses on supporting their employees to help in the
accomplishment of the company’s goals. To do this Riordan realizes to maintain
employees the company must keep them happy to minimize the attrition rate.
According to Caitlin H., Costco maintains annual employee turnover rate of 17%
(Caitlin H., 2012). This is the same type of goal Riordan is trying to accomplish. By
maintaining a low attrition rate, Riordan maintains a well-trained and experienced
group of employees. This experienced group of employees helps to increase and
maintain the efficiency of the Riordan Manufacturing Company. Riordan knows that
it will cost more money in the long run to hire and train new employees, compared to
keeping and maintaining current employees. The money saved is freed to use in other
facets of the company. These employed strategies will save Riordan money, create
and maintain a loyal customer base, and ensure the sustainability of the company no
matter the condition of the economy.
The combining of historically separate and distinct markets that are national into a
larger global marketplace is known as the globalization of markets. As with any form of
globalization, a business will need to understand that there are international measurement
issues. At Riordan Plastics, they began with an international measurement with hopes that
they could prepare the company properly for the global market. The globalization of
production is also known as the sourcing of a service or services from one location. That
location can go around the world in order to take advantage of the differences in the
national costs of things like factors and production in capital, labor energy, and also land.
There are some international measurement issues that include things such as
historical comparisons, budget analysis, and also return on investments (Wheelen &
Hunger, 2010). Dr. Riordan insisted on using the resources that were available as a tool to
try and increase the organizations profits at the time the business was started. This was
because when Riordan became an international business, the rate of return, and customer
satisfaction were two factors that were most important. They also needed a good
historical comparison and a proper budget analysis in order to help them maintain
positive global success.
In this paper we discussed the competitive advantages of Costco and Riordan
Manufacturing. An analysis was conducted on which competitive advantages Riordan
has in common with Costco. An estimate on which competitive strategies Riordan
should use to improve innovation and sustainability of business operations
domestically and internationally was given. An explanation on how the competitive
strategies chosen may affect the sustainability of long-term performance and how the
global market would affect the business strategy of Riordan was given. Both of the
companies place a significant amount of importance in pricing and product selection.
While Riordan and Costco may be from different industries the two companies would
benefit operationally if they borrowed from one another different competitive
strategies.