International Business of Mountain Equipment - Case Study Example

International Business: Mountain Equipment Co-op Case Study This paper is an analysis of the case study about the co-op Mountain Equipment. Furthermore, it looks into the various elements the co-op used to increase value of the product for the final customer. In short, it looks at the strategy of the co-op and the innovative management techniques it used to implement its strategy. Q1: How does the Mountain Equipment Co-op use value chain analysis to increase both its membership and its revenues Mountain Equipment Co-op has excelled in the past few years in both its membership tally and revenue. The main reason for the co-op's success is careful value chain analysis. Value chain analysis is to analyze all the factors that add value to the product and make the product a worth for the final customer (n.d.). Customers are not just people outside a corporation. It can be the people at the upper crust of an organization, or the employees. In fact, Mountain Equipment Co-op's customers are also the members (part-owners) of the co-op. Since the market for the co-op's products is unique, it needs to ensure quality, which increase value of the product for the customer. Therefore, the co-op uses extreme care to select its range of products to be manufactured. It wants the suppliers to provide products that are both functional and durable. Furthermore, the co-op offers a lifetime guarantee of its products to make the customers feel that the maintenance of the equipment is the duty of Mountain Equipment Co-op. This increases value for the customer because the customer no longer has to worry about the cost of repair of the equipment. Furthermore, the co-op also offers its members to trade their equipment online or through attending a seasonal trade session (n.d.). Moreover, the co-op values human rights and business practices in the light of ethics. It continuously strives to protect human rights by inspecting factories where its products are manufactured. Inspection involves working conditions, worker benefits, and worker pay. Since the customers really value fair business, the co-op utilizes this opportunity to satisfy its members by giving a portion of their sales revenue to human rights groups. The co-op also uses an environmentally safe heating and air-conditioning system at its Ottawa outlet, indicating the co-op growing concerns about the environment. Moreover, the co-op continues to provide exceptional service to its customers through training. As mentioned before, this is a unique market and new outdoor freaks might not know how to use the equipment. This is an added value for the product because the customer knows that training would be provided to utilize the product to its fullest. The co-op is also using support activities to increase its member tally and revenue. For example, the co-op is constantly monitoring latest technology in the industry to develop the most advanced products, high quality products, and environmentally safe products. The most important value activity which the co-op uses is the power of its members to have a say in the co-op's operations and running. The co-op has 2.5 million members who are part-owners of the company, and have a say at the company's meeting. This activity attracts potential members and customers, and they can run the co-op according to what satisfies their needs. Q2: What is the co-op's generic strategy Describe it. Mountain Equipment Co-op generic strategy is the cost strategy. Mountain Equipment Co-op aims to achieve growth through a series of cost cutting measures and cost reductions. Firstly, Mountain Equipment Co-op has a loyal customer base, and they use this strong factor to bargain for reasonable prices from suppliers. Due to the high bargaining power of the co-op, suppliers have to give in. Furthermore, the mountain co-op has a small workforce. It strives to keep a small workforce through the concept of self-service at its outlets. This way, even the limited number of employees is happy because the co-op doesn't burden them with a lot of work. The customers can choose for the products for themselves, and the employees just need to provide them with assistance, in terms of price, advice, and product information. Also, in order to limit its workforce, the co-op uses an international mail-order system. This way, orders from all over the world are taken care of by few people, instead of the co-op establishing regional centers to control operations. Along with cost savings for the co-op, it is also beneficial for the Canadian economy because the co-op is hiring few local workers, rather than employing many foreign workers throughout the world. Moreover, Mountain Equipment Co-op has build brand loyalty through affordable and high quality products. This also allows the co-op to save on marketing efforts. Most customers automatically become permanent customers. Since the co-op is serving a market which is unique, and not colossus, it relies on the most powerful form of advertising, that is; word of mouth advertising. The co-op's service and products speak for themselves, and increase loyalty as customers communicate their purchase and satisfaction to friends and family. Q3: How does MEC measure its performance What are two criteria it uses to evaluate how well it is doing Just like any other organization, Mountain Equipment Co-op uses several measures to evaluate its performance. According to the case presented, the co-op uses market share and price as criteria to evaluate its performance. Mountain Equipment Co-op has acquired a 65% market share since its advent. The co-op is not a very large company, but given their management and commitment to quality, it is no surprise that they control more than half of the outdoor equipment market in Canada. The co-op places stringent requirements on their suppliers, thus ensuring that its products are defect proof and durable. The second criterion used by the co-op is the price difference with competitors' products. According to the case presented, products of Mountain Equipment Co-op have the lowest price of its Canadian and North American competitors. This alone signifies the performance of the co-op. In some 30 years, the co-op has established a culture of cost cutting and quality, and has stuck to it. Mountain Equipment Co-op has used excellent cost cutting measures which have served the needs of its customers, and neither have they compromised quality, service, and hence, customers. Its advertising form is economical, and at the same time very powerful. All in all, the co-op is doing a wonderful job and is serving as an example for small entrepreneurs. However, competition is increasing and in order to continue its success, the co-op would have to maintain the current strategy and look for ways to further improve their operations. References 1. (n.d.). Value Chain Analysis-Achieving Excellence in the Things that Really Matter. Accessed from:< http://www.mindtools.com/pages/article/newTMC_10.htm> 2. (n.d.). MEC Membership Benefits. Accessed from: Read More