Comparing between whole food and Costco.
Assume that you are a strategy consultant hired by a firm to conduct a strategic analysis for your target firm. The homework requires that you answer the questions analytically and systematically.
Please answer the following questions. Make sure to include references for any sources of information or data that you use that is not your own.
1. (15 points; 2 slides) In the Industrial Organization (I/O) view of the firm, performance is due largely to the industry in which a company competes. In the Resource-Based View (RBV) of the firm, company performance is driven by its individual strategy, and unique resources and capabilities. The entire point of this question is to figure out which is the most likely explanation for your company’s performance.
a. Calculate and compare your company’s financial performance to that of a competitor. Be sure to clearly indicate Advantage, Disadvantage or Parity between the two companies. A good rule of thumb would be to consider Parity to be a variation of 10% or less between your company and the competitor (to find this out, take the number for your company, divide it by that of a competitor; if the ratio comes out to be 0.90 to 1.10, then it’s parity). Please compare based on:
i. Inventory Turnover
ii. Fixed Asset Turnover
iii. SGA Expenses/Sales
iv. COGS/Sales
v. Development Costs/Sales
vi. Fixed Assets/Sales
vii. Receivables Turnover
viii. Profit Margin
b. Using only your answer from (a) above, explain whether you think your company’s performance is driven by the industry in which it competes (the I/O perspective) or by its unique strategy, resources and capabilities (the RBV perspective)? NOTE: you MUST explain your reasoning here. The point isn’t to flip a coin and guess; it’s to do critical analysis and come to a conclusion based on that analysis. Please note that it is impossible to answer Part B without talking about Part A in detail.