Free «Retail Industry» Essay Sample

Retail Industry

Introduction

The retail industry is an industry characterized by numerous competitors, free markets and aspects of new entrants’ substituting the existing players. The key drivers that determine the success of any player in the retail industry are explained by Porter’s five forces that also reveal the features of a retail industry. Moreover, the graduate MBA job role of retail manager involves the responsibility of managing the retail industry (Porter, 2012).

This paper will give a comparative analysis of generic and specific skills required for Wal-Mart, Best Buy and Mc Donald’s companies, which operate in the retail industry. By so doing, the paper will focus on the job role of a retail manager that is directly related to an MBA graduate. Additionally, this paper will give a comparative analysis of three qualitative interviews with employers to identify the key features and challenges within the retail industry, especially in retail management.

A Comparative Analysis of Generic and Specific Skills Required for Wal-Mart, Best Buy, and McDonald’s

The three companies were chosen for a comparative analysis of generic and specific skills in the retail industry due to the reputation they have earned globally. For instance, Wal-Mart has been voted as the biggest employer in the private sector with highest sales and annual revenue in the United States of America. Its reputation, especially the way it deals with its employees is high. The company has also maintained a high level of integrity and professionalism that acts as an example to other companies. McDonald’s comes second in the market in terms of the number of employees. Best Buy has been selling high-quality products in the electronic sector and has remained a model company for many in the retail industry. Best Buy has been awarded several times by national and international magazines like Fortune, Forbes, and other media houses fob being a model and market leader in the retail industry. These are the reasons why these three companies in the retail industry have been chosen (Porter, 2011).

The three companies are leaders in the retail industry. As for an aspiring retail manager, the three companies are relevant to this career path since after earning an MBA, one is best placed to occupy a managerial position in any of the companies. Wal-Mart, for instance, has introduced Wal-Mart 101 course that is tailored to train employees on best retail practices specifically geared towards its retail chains. Moreover, these companies operate several subsidiaries and branches, thus creating an excellent opportunity for retail managers fresh from MBA training to take over the role in retail management.

The evidence being used in analyzing the generic and specific skills is the nature of products of each company. For instance, Best Buy deals with electronic goods and thus focuses on domestic customers for its sales. The generic skills may be similar to other companies, but specific skills must be those related to the profession and line of operation within the electronic sector. McDonald’s also deals with an entirely different product line of branded fast food restaurants and thus targets a different clientele. The specific skills needed for McDonald’s will, therefore, be those skills aimed at improving the quality of foods and ensuring legality and professionalism in the food sector (Porter, 2012).

 

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The same is the case with Wal-Mart. Although its generic skills may be similar to the services of the other two companies, specific skills that relate to its automated database and customer motivation and relation have been the principal evidence for its analysis. Any business entity will need a proper combination of generic and specific skills to enable it to render its duties and provide goods and services effectively to its customers. Generic skills are the skills that are not professionally related to the daily operation of any business entity. On the other hand, specific skills are those skills that touch on the functioning of the company directly.

Generic skills are required to provide efficient operation procedures but do not relate to the technical aspect of the company. Specific skills will include the generation and comprehension of all professional guidelines and concepts of a given business transaction.
The skills required by each company will be determined by a proper understanding of the nature of the market and the kind of products and services the company is deals with, the market share the company has gained and the overall customers’ relation the company would like to keep (Ryan, 2009).

Generic Skills

The generic skills associated with Wal-Mart, for example computer skills, are aimed at equipping the employees with the necessary knowledge to work with the database. The employees have to be computer literate to ensure that they can retrieve data from the company’s database and provide timely services to their customers. In addition, the employees of Wal-Mart have a high level of ethical behavior that defines their integrity and ability in the retail industry. These ethical standards must be observed by every employee to ensure that the public image of Wal-Mart is maintained at a very high level. Oral communication skills are essential skills that each employee of Wal-Mart must specifically have. This is a critical aspect of employee/ customer relations, especially in the situation of stiff competition.

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The same is the case with Best Buy that nearly fired its senior manager for failing to observe strict ethical skills required in the business. Computer literacy skills are also a requirement in Best Buy given the nature of high-end products it deals with. In
order to provide excellent warranty and in-store installation, Best Buy will need good communication and interpersonal skills to relate to its employees. All these generic skills will help Best Buy remain competitive in the electronic market, thus ensuring its success. Marketing skills have also become a compulsory generic skill for Best Buy given the fact that it deals with consumer goods that need direct customer relations (Hill & Jones, 2010).

Similarly, McDonald’s fast food restaurant is not left behind in embracing the generic skills. High ethical standards are required to provide high-quality meals to its customers. The company might not need a computer literate employee whereas oral communication skills are necessary for the proper service delivery of food to customers. Professional skills and problem-solving skills are essential for the direct contact McDonald’s employees have with their clients on a daily basis.

Specific Skills

The specific skills required for Wal-Mart include the completion of Wal-Mart 101 retail course that was specially designed for its managers. The employees of Wal-Mart also need real knowledge of sorting and measurement skills to help them sort the company’s products. Moreover, reporting skills will be essential to coordinate work within the broad premise. McDonald’s will need specific skills, like catering skills, to provide high-end catering services to its customers; food safety and health measure are specific skills that any employee in McDonalds’s must possess. Finally, the functional skills related to handling food are also requirements for McDonald’s (Hill & Jones, 2010).

On the contrary, Best Buy employees are required to be equipped with electronic skills necessary for assembling their products. Moreover, the company will need to provide their employees with risk analysis skills to ensure proper analysis of warranty and other services offered by the company. The communication regulation skills are the part of the specific skills that must be required in Best Buy to ensure that it operates within the communication laws of the United State.

Comparative Analysis of 3 Qualitative Interviews with Employers

A comparative analysis of the challenges and key features of the three companies was done through a qualitative interview with one of the managers of the three retail companies. The responses given showed that the challenges to these companies were directly related to Porter’s Five Forces of the market and other key feature and drivers that had some influence on the success of the company.

Porter’s Five Forces

Porter‘s Five Forces is an analysis of a company’s profitability in the industry. The analysis focuses on the power of suppliers and buyers to influence the prices in the market. The availability, rivalry and threat of new entrants to the market may pose competition and threat of being substituted by other market players. By analyzing the effects of each of these forces on the retail industry, it will be possible to tell the market position of a company, its customer base and other features.

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Brief Overview of the Key Industry Features and Drivers

The features of the retail industry are described by Porter‘s five forces that analyze a company‘s profitability in the industry. These features include the power of suppliers to drive prices in the market. In most cases, the retail industry is characterized by free market where demand and supply are the main determinants of the price prevailing in the market. There is little government intervention and no regulations. Moreover, the buyers have a lot of power to influence the prices in the market given their number and critical role in the industry. Additionally, the retail industry is characterized by threats of new entrants to the industry given the fact that the industry faces the challenge of technological and innovation barriers to keep away new entrants.

Brief Company Profiles to Include Their Customer Base, Position In the Market &
Key Performance Indicators

Best Buy Company. Best Buy is a multinational electronic retailer with its head offices in Richfield, Minnesota. It has grown from a local audio store in the United States to a large retail electronic shop operating all over the world. It was rebranded to improve its image in the global market and has several subsidiaries operating under its name in various countries. In the year 2004, Best Buy was named as the company of the year by the Forbes magazine.

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Best Buy is the second largest retail store in America in terms of employment and revenue. It is the leading global electronic retail company with high customer clientele. Moreover, its key performance indicators include increased sales volume to one billion USD mark, purchase and acquisition of subsidiaries and retail chains all over the world. Others include appearing as “specialty retailer of the decade”, America’s most generous corporations” and the most admirable company globally. Mergers and investments in multinational companies are also performance indicators.

McDonald’s Company. McDonald’s is the largest fast food restaurant in the world offering services in more than one hundred countries worldwide. The company serves over 642 million customers and is the leading fast food restaurant in the world. It is run by a franchisee, an affiliate or the real corporation. Other features include convenient work places, variety of menu, geographical diversification, and continued systematical alignment. Its major revenue sources include rent, royalties, fees from franchise and sales. It is the second largest private employer after Wal-Mart.

Its franchises, strength of alignment and a large supplier base has made it the market leader in the food sector. Its performance indicators are the five pillars that include products, places, people, prices and promotions. These five pillars help build their values to the shareholders and customers, thus raising the company‘s profile in the fast food retail business.

Wal-Mart Company. Wal-Mart is the world’s largest retailer focusing on domestic consumption with the highest sale revenue and profits ever recorded in American retail industry. The company has several retail outlets and subsidiaries distributed across the globe. In addition, the company has continued to register high sale volume and revenue making it the most profitable private company in America. Wal-Mart has a large customer base all over the world serving over 1 billion customers globally. This is due to proper customer relation which increases its market clientele globally to 456 billion shillings in US dollars. In addition, Wal-Mart has well-defined subsidiaries that are either wholly owned or jointly owned by other organizations, making it the most profitable and reliable retailer in America.

Justification for Choosing These Employers

The employers were chosen because of their influence in the retail industry. Several media houses such as Fortune, Forbes and other local newspapers have recognized these companies as the model companies and thus the best companies to set the pace of retail business in America. The main players and contributors to the success of these people are the employers who were chosen.

Summary of the Range of Soft and Hard Skills Required in the Industry/Job Role

The retail industry requires both soft and hard skills to survive. Moreover, soft skills play a critical role in the industry since they are geared toward improving employee attitude and emotions. This helps create a joyful, playful and motivated employee team that is responsive and courteous. Social skills and interpersonal skills are thus the main soft skills in the retail industry. Other skills include leadership, solving problems, critical thinking and marketing. Hard skills, on the other hand, refer to the esthetics of the job relating to the retail industry. These skills are the technical skills that are specifically tailored towards each job in the retail industry. Professional training and education to acquire competent skills for that industry include taxation skills, auditing skills, reporting skills, research skills, and analysis and professional skills among other hard skills.

 
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Qualitative Interview Analysis

The interview conducted focused on the qualitative aspects of job roles within the retail industry. Employers drawn from the three companies were subjected to a qualitative interview with a major aim of identifying the features and challenges of the retail industry as far as the retail manager’s role was concerned. All the three employers interviewed agreed that Porter’s five factors were the main features and drivers of the retail industry. The retail managers identified all the five factors of Porter’s five factors as the main features and drivers of the retail industry as far as the role of the manager is concerned. The first feature identified by the employers was the power of a supplier who had the ability to drive prices in the market.

The three employers agreed that different suppliers provided unique services and products that made them have some control of the retail business. In addition, the three employers identified the scarcity of suppliers in the retail industry as the main driver of high prices in the market. This was escalated by the fact that the suppliers were indispensable from the retailers, given the nature of products they supplied. For instance, McDonald’s fast food restaurant could be successful due to its supplier base; the Wal-Mart company relied solely on suppliers to stoke its store. On the other hand, Best Buy was to rely on supplier for steady supply of electronic components.

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The other response was the power of the buyer in the retail industry. The retail managers interviewed suggested that the small number of buyers in the market with a large variety of choice made the buyers easily switch from one retail company to another. The retail managers also argued that the customers dealt with in the retail industry were specific thus very important for any company. This was the reason given by the retail managers as contributing to adverse cost should the buyer shift preference from one company to another, For instance, McDonald’s deals in fast food industry. Its customers are therefore very important and thus will determine its daily price of foods. Should customers shift preference, then McDonalds’s will face the cost of food waste and spoilage resulting from huge losses.

The same is the case with Wal-Mart and Best Buy. However, Best Buy dealing in electronics has a large clientele given the fact that it has diversified their markets to different products. Wal-Mart also provides a wide range of products in its chain of stores thus having a large clientele. This means that the customers of Wal-Mart and Best Buy have a minor role in determining the prices in the market.

The three retail managers also indicated the presence of stiff competition with rivals in the retail industry as a key feature. In the interview, the employers indicated that there was a significant number of competitors in the retail industry with equally attractive and cheap products. For instance, McDonald’s said in the interview that the existence of so many other rivals in the fast food business was a major threat to its ability to control the fast food restaurant business. The same sentiments were echoed by the employer from Best Buy who also responded that the existence of multiple electronic retail chains in the market rendered it toothless as far as control of the market was concerned.

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The third retail industry driver, as identified by the three employers during the interview, was the threat of being substituted in the retail business. The three employers revealed that their close interaction with the customers gave an opportunity to learn their skills and competency which the customers later used to make alternatives of what these companies provided. For instance, Best Buy revealed that through their in-store installation and after sale services, the customers were in a position to learn their technical skills and competence which they used to create alternative business ventures. The same was the case with McDonald’s McCafe brand that gave its customers an opportunity to learn the methods used by McDonald’s to prepare fast foods. This in turn gave the customers a platform to come up with alternative fast food brands that could later compete with McDonald’s restaurants (Ryan, 2009).