Trader Joes and Coca Cola PDF

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Competitive Strategy...

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Trader Joes and Coca Cola Broadly the sources of gaining competitive advantage can be grouped into 2 categories – cost and Product or service differentiation. Trader Joe’s has created a sweet spot for itself in the supermarket industry. With the efficient use floor space and vigorous taste testing before placing a product on their shelves has given Trader Joe’s a broad economic moat (ability of a firm to sustain its competitive advantage) which is difficult to replicate. COMPETITIVE ADVANTAGE

BROAD NARROW

COMPETITIVE SCOPE

LOWER COST COST LEADERSHIP

DIFFERETIATION DIFFERENTIATION TRADER JOE’S

COST FOCUS

DIFFERENTITATION FOCUS

One of the kernel of a good strategy is Coherent actions - steps that are coordinated with one another to support the accomplishment of the guiding policy (Rumelt, The perils of a Bad strategy) To accomplish on its low-cost, unique product strategy, Trader Joe’s emphasizes on several interlinked strategies. They took full advantage of regulatory laws, leading to the birth of their famous ‘Two Buck Chuck’, which came into existence after the California’s fair-trade law, setting prices for alcoholic beverages but it did not cover private label wines. Trader Joe’s is also very efficient in knowing their Trade-Offs, which as Porter said is very essential to developing a good strategy. For instance, the company does not use loss leaders to get customers into the stores. Products as common as Coca-Cola were kept off the shelf of the store in the 1980s because they were always on discount. There is not much information available about the company’s financial statements because it is privately held and a long-standing tradition of secrecy around its methods. Although we can judge its financial efficiency by metrics such as sales per square foot which are extremely high. The company buys in bulk by truckloads keeping per unit price lower than other grocery stores. The sourcing is also directly from the manufacturers eliminating middlemen. They have minimal marketing which can lead us to infer that the cost incurred on this segment is negligible apart from the Fearless Flyer. In the current scenario, the company has a sound competitive strategy and is able to stand out in its increasingly competitive industry but...