Environmental Scan
Shane Brown
University of Phoenix
02/24/2014
Environmental Scan
A smartly designed, well-executed business strategy is indispensable not only to an organization’s long-term success, but to its very survival. Simply having one does not give you a competitive advantage. It’s the depth, quality and flexibility of a business strategy that makes the difference. Michael Porter says that there are two strategies in achieving and maintaining a competitive edge, cost leadership and differentiation. In cost leadership, a firm sets out to become the low cost producer in its industry. The sources of cost advantage are varied and depend on the structure of the industry. They may include the pursuit of economies of scale, proprietary technology, preferential access to raw materials and other factors. A low cost producer must find and exploit all sources of cost advantage. If a firm can achieve and sustain overall cost leadership, then it will be an above average performer in its industry, provided it can command prices at or near the industry average. In a differentiation strategy a firm seeks to be unique in its industry along some dimensions that are widely valued by buyers. It selects one or more attributes that many buyers in an industry perceive as important, and uniquely positions itself to meet those needs. It is rewarded for its uniqueness with a premium price. I have researched and analyzed two companies in order to see what each company’s strategy is. The two companies researched are Benchmade Knives and Redbox movie rentals
Benchmade Knife Company, Inc. set-up shop in Clackamas, Oregon in 1990 (originally founded in California in 1988). The initial knives primarily consisted of Bali-Song® knives, using a combination of outside vendors and inside processing to build finished products. And like most companies, starting out meant scarce money and big plans, using second hand equipment and limited resources.
Soon, a natural born fortitude and an undying passion to make the best knives in the world led to significant growth. As the Benchmade product line grew so did our in-house capabilities. We began to acquire new machines and technologies including the first of several lasers, making Benchmade the first knife manufacturer to have such equipment in-house. Open minds and positive attitudes would lead to several more industry firsts over the course of the next several years. (Our History , 2013)
Benchmades strategy is, most arguably, differentiation. If you are planning on buying a benchmade you better be ready to fork out around 90.00$ for one of their cheaper lines of knives. As one might guess they are a relatively expensive knife manufacture. They get away with charging so much because they differentiate their selves by making some of the best quality knives on the market. They are a company that goes to extensive length to insure that they have some of the best blades in the cutlery industry. As Benchmade says (We strongly believe that if you’re going to put this much effort into designing a custom quality cutting tool, then it only makes sense to build it of the materials which complement its form and enhance its function. And in some instances it’s more than just selecting a certain material, it’s what we do to it to bring out the extra edge which sets us apart from everyone else. Bottom line, we would much rather overbuild a knife than risk the alternative). It is that mindset that knife enthusiast will pay so much for their product.
Benchmade measures their strategic effectiveness by repeat customers and what they call Benchmade testimonials. Benchmade testimonials is a blog that knife enthusiast utilize in order to talk about Benchmade products and their experience with them. The positive reviews and comments help strengthen the Benchmade name by directing new customers to buy their quality product.
Some of the external factors that will affect their strategy are the price of materials such
