ACME Home Improvements Inc.: A Competitive Analysis
1991 Words8 Pages
Over the last five years, the home improvement industry has grown and become more competitive in the United States. ACME Home Improvements Inc., a well-known do-it-yourself, home improvement company is looking to expand the company abroad. The company currently has approximately 125 store locations on the east coast. With a goal to increase company profits and fight against the economic downturn, ACME Home Improvements to expand their business to Mexico.
When expanding a company abroad there are several factors to consider. In order to be successful, companies must formulate a strategy to gain a competitive advantage and how to maintain it’s competitive advantage. By utilizing the strategic management process, ACME Home Improvement will be…show more content… Management is responsible for creating a customer strategy that focuses on market environment, competitors, supplier markets and the economy. Michael Porter’s the “five forces model” is a framework that can be used by organizations to help build their profit potential, understand their industry environment and analyze their competition. The five forces are threat of entry, power of suppliers, power of buyers, threat of substitutes and rivalry among competitors (Hitt et al, 2015).
Porter explains that the outline of the five forces varies based on the industry. For example in the home improvement industry offers a large variety of items for purchase. Therefore, the rivalry among competitors can vary based on the actual items needed by the consumer. ACME’s direct competition is Home Depot, Lowe’s and Ace Hardware, which makes the threat of new entry a low force. However, due to the wide variety of items sold in their stores there are also several indirect competitors, such as Walmart and Sears or online websites like eBay and Amazon. The existence of these online websites and other big box stores makes the buying power of customers very strong. Customers are able to compare prices, which could put pressure on ACME Home Improvements to lower…show more content… ACME should develop a strategic plan with specific performance measures. This will help determine which candidates are best for the job. There are legal considerations that need to be addressed when preparing to hire employees. In Mexico, it is required for foreign organizations secure approval in advance from the Department of Foreign Affairs. The organization must also demonstrate that it complies with Mexican law and likewise are recorded in the Public Commercial Registry (www.lexmundi.com). Furthermore, ACME should be conscious of Federal laws that require observance of obligatory holidays in Mexico. This is something to consider when establishing operating hours