Competitive Advantage Through Cost Leadership Strategy In Naivas Supermarket, AirAsia, And Southwest Airlines

Cost Leadership

An ERP or Enterprise Resource Planning Information Technology system is a multi-module application based on replacement that assists enterprises to cope with the necessary divisions of the business. At the time when ERP systems are frequently the favored management, a substantial group of the legacy systems they succeeded presented a lot of significant value from their outstanding, modified modules (Shao, Feng and Hu 2016). Taken as an example, after implementing SAP, Dow Corning found that its employee quantity increased.  Modules of their traditional systems offered additional worth in comparison with the ERP that displaced it. In its idealized form, ERP or Enterprise Resource Planning systems organize entire enterprise structures into single attempt extensive management (Kilic, Zaim and Delen 2014). It is specialist by having a contemplated database that entire enterprise useful regions have access.

Enterprise Resource Planning systems may extract the advantages that organizations had before the implementation of the ERP system. The industries called this the Common System Paradox. Several professionals have furthermore differentiated this challenge. Emphasizes that made the enterprises exceptional and complicated to imitate might be compressed because of making use of a vanilla system (Hiebl, Gartner and Duller 2017). The study includes the strategy called cost leadership. The selected organizations for exploiting the cost leadership competitive advantages are Naivas Supermarket, AirAsia and Southwest Airlines.

In terms of cost leadership, an organization boards to conclude clearly the effortlessness producer in its associated industry. The sources of Cost Preferred Standpoint are altered and relied upon the configuration of the enterprise. They possibly will integrate the expedition regarding economies of level, particular access to the basic substances, elite innovation and diverse parts (Goetsch and Davis 2014). If an enterprise can achieve and sustain general cost management, then it can become enhanced in comparison with anticipated rival in its industry. It also depends on the charges it prefers to the consumer.

The retail chain industry is experiencing a principal basic move. For some, survival of the retail chain business relies on upon their capacity to grow new plans of action to empower them adjust to the continually evolving condition. The motivation behind procedure as indicated by adventure the one of a kind favorable circumstances of the association in confronting the difficulties of the earth (Muasa 2014). The fruitful organizations make their vital need to fabricate their center skills and long haul upper hands.

The expanding worldwide nature of rivalry requires that the firm use the greater part of its profitable assets keeping in mind the end goal to survive and succeed. In this manner, Naivas as a retail anchor needs to distinguish and expand on the cost drivers and key achievement calculates that is maintainable and will set it above different markets in the business as rivalry heightens (Magu 2014). In this manner, Naivas as retail fasten requirements to recognize and expand on the cost drivers and key achievement figures that are economical and will set it above different general stores in the business as rivalry escalates. The review found that Naivas grocery store had to a huge develop connected the cost initiative procedure on its operations by characterizing its low and center wage showcase specialty, yet more should be done to improve the effectiveness of the cost administration plan of action. The review additionally settled that the retail chain business condition is modestly changing and is portrayed by predominant exclusive firms which advise the sort of aggressive procedures embraced (Mutisya 2015). It was found that for cost administration technique to be viable, high interest in innovation, client center, offering an extensive variety of items, enhancing representative confidence, compelling administration and great relations with providers were all key achievement calculates realizing the methodology to guarantee a feasible upper hand.

Naivas Supermarket

The review likewise settled as basic for senior directors to experience intermittent preparing and situation exposures to be up to speed with dynamic industry natural components. The review suggested additionally research could be done on cost initiative and separation techniques in the retail chain business owing parallel systems frequently received (Buul and Omundi 2017). In addition, there is have to investigate on the difficulties of applying cost initiative in a controlled market economy. To understand the potential that center skills make, an organization should likewise have the creative ability to imagine markets that don’t yet exist and the capacity to stake them out in front of rivalry. Organizations end up plainly effective when they forces some preferred standpoint with respect to their rivals (Mutisya 2015).

The Low Cost Carriers of AirAsia had changed the customaries of airline that air transportation is a costly and lavish industry. The basic objective of LCC is increasing enormous market and giving the flight management to a more widespread market (King 2013). In terms of any case, Low Cost Carrier is cultivating at present. However, it attains a little challenges in the market. AirAsia pertain the LCC or Low Cost Carrier strategy in the Airlines Industry that may be featured as following:

1. AirAsia’s airplanes flying as much as could rationally be anticipated, the most important flight initiate in the morning, early and the most current flight end in night, late (Roy 2014). The quick turnover is very important. AirAsia make sure the time on the floor are tremendously limited.
2. The basic of Low Cost Carrier business is regarding the process of flying passengers from A to B. The supplementary services are versioned as excessiveness or disturbs, of which cost capital (King 2013). No free of charge beverage and food on-board. Passengers can purchase drink and food on-board at reasonable charge from the flight assistant either wise through the ticket booking process purchase can be made online. There is no assigned seating instead emtire seating are free of charge. However, passengers are eager to provide additional charge for seat determination.
3. The complication of the business process will be less regarding passengers and business. Passengers will not require stressing over collecting ticket before the flight takes off and this approach is provided to be cost-productive regarding AirAsia.
4. Allocation expenditures are something that full service carrier leaps at the possibility to ignore. Almost all of the FSC rely on upon sales office or travel agents to sell tickets (Guo 2015). AirAsia holds the distribution channel as basic as could be anticipated under the conditions and may be concealed the entire mass of the passenger’s profile. Take as an example, AirAsia forces the most difficult Europe a journey through Master card deals and web.
5. The solution to the LCC Business Model is lowering the charges of the flights in comparison with the standard flight management. AirAsia concerns cost management process on its business processes. It makes use of employees with low incomes. The key hub is in Low Cost Carrier Terminal in Malaysia. In addition to that, in whatever additional supplementary flight terminal diagonally over states that authorized AirAsia, attains low flight terminal costs. AirAsia makes use of uniform flights that authorize negligible attempt in terms of support, standby teams, cockpit preparing and learning cost (King 2013). High resource effectiveness as well the solution to the achievement is attained at the time of applying the ease proposal method. The boarding process is remarkably efficient considering short floor delays causing from fundamental boarding types.

Figure 1: Source of Advantage In Terms Of LCC in AirAsia

(Source: Guo 2015)

Southwest is recognized to be the founder of Low Cost Travel in terms of the airline industry. The enterprise is the biggest Low Cost Domestic Airline. In addition to that, Southwest Airlines has the second biggest share of the market by revenue consumer miles. The  forty two years productive record of operations is enough to reveal the achievement of the organization’s strategy. The organization makes use of a point-to-point model as contrasted toward the spoke and middle model of legacy carriers such as American (AAL) and United (UAL) (Kee 2015). This assists the enterprise enlarging additional famous movement on the superior sections of its domestic routes, as it is capable of offering lesser average airplane time. This assists in enhancing the usage of flights and lower for each seat costs. The enterprise is continuously adding Boeing 737-800s to its armada, which have a seating limit of 175 travelers (Min and Min 2015).

The enterprise has been advancing its fleet and utilizing a more youthful and more fuel-proficient fleet of planes that helps it reducing charges on maintenance charges. Southwest has the biggest Boeing (BA) armada on the planet, and this extensive fixation can lessen its preparation and upkeep costs. For 2Q15, the organization has included ten new airplane and arrangements to keep up its armada at 700 units for whatever is left of the year (Budd et al. 2014).

The solid execution in Southwest’s main concern was conceivable due to reserve funds in fuel costs. The fuel costs for the quarter remained at $2.02 per gallon, incorporating $0.8 per gallon in negative money settlements from fuel subordinate contracts, when contrasted with $3.02 per gallon in the comparing quarter a year ago (Budd et al. 2014). The organization spared more than $550 million in fuel costs, which is a 29% year-over-year lessening. This helped Southwest counterbalance the lower income. Add up to balanced working costs diminished to $3.96 billion, a 5.5% year-over-year decrease (Min and Min 2015).

Conclusion:

The above case studies have completely made the cost leadership strategy understandable.  Two of the organizations are from same industry and one is from retail. The diversities of the industries have helped in attaining great insights of the strategy. In spite of an agreement in administration writing that IT, for example, endeavor frameworks, can give a wellspring of upper hand, oppositely contradicted assessments remain. One group trusts that organizations put resources into IT to enhance their execution in various practical ranges and that IT has a specific potential for endeavors to accomplish an upper hand. The other group takes the position that the IT dissemination handle has turned out to be advanced to the point that it as of now speaks to a product that is accessible to all, to such an extent that it more likely than not lost its adequacy as a vital instrument of separation. However, even with these restricting perspectives about IT as a wellspring of upper hand generally minimal observational confirmation is accessible to guide directors’ IT speculation choices.

References

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Buul, O.B. and Omundi, R., 2017. AN ANALYSIS OF COMPETITIVE STRATEGIES AND PERFORMANCE OF SMALL AND MEDIUM ENTERPRISES IN KENYA: A CASE OF NAIROBI CENTRAL BUSINESS DISTRICT. Journal of Business and Strategic Management, 2(2), pp.72-94.

Goetsch, D.L. and Davis, S.B., 2014. Quality management for organizational excellence. Upper Saddle River, NJ: pearson.

Guo, Q., 2015. Exploring the Impact Factors for Developing Low Cost Carriers: Cases of Japan and China.

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Magu, M.W., 2014. Factors influencing marketing strategies adopted by Nakumatt supermarket retail chain in nairobi (Doctoral dissertation, University of Nairobi).

Min, H. and Min, H., 2015. Benchmarking the service quality of airlines in the United States: an exploratory analysis. Benchmarking: An International Journal, 22(5), pp.734-751.

Muasa, S.M., 2014. Cost leadership strategy and sustainable competitive advantage of Naivas supermarket limited in Kenya (Doctoral dissertation, University of Nairobi).

Mutisya, H.K., 2015. Technology as a competitive advantage in Supermarket operations in Nairobi County (Doctoral dissertation, University of Nairobi).

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