Business Strategy

Business strategy is a long term plan designed to achieve particular goals or objectives. Strategy is a management plan for strengthening a company."M.I.S. is essential to survival; no aspect can function correctly without it." (C.E.O Leon Young) Empire Auto Parts has chosen differentiation as their competitive strategy. Empire focuses on competitive edge by implementing M.I.S., offering high quality products, quality customer service and availability. Some M.I.S systems implemented by E.A.P include inventory scanner technology, G.P.S. order tracking, and employee training.

Empire’s business processes include materials ordering process and sales process. Empire purchases parts from a vendor which then delivers goods to its warehouse where they become part of inventory. After an order is placed by a customer, goods are then loaded onto a delivery truck where a driver then delivers the parts to the customer. These processes flow well because Empire is focused on being detail-oriented in order to ensure the best service. Operating each process efficiently has resulted in positive margins.

One way in which Empire uses M.I.S. to better their company is through inventory scanning. Inventory shelf items contain "pickle numbers". A pickle number is the receiving label an item has before it is "picked" off the shelf. Items are picked and scanned when a part is ordered. The moment the item is taken off the shelf it is bar-coded and the order is locked in. This simplifies the process of sending orders out by saving time, confirming parts sent out, alerting items on back order and keeping track of the exact quantity of items. Once items leave the warehouse, customers can track the location of their order. Each delivery truck contains a G.P.S. system which allows tracking at all times. Customers do not have to worry about not knowing when their orders will arrive. With GPS order tracking, they can find out exactly where it is and have an idea when it will arrive.

Empire has one of the best customer service staffs in the industry committed to providing customers with the most efficient service possible. Quality customer services are strongly emphasized at Empire. Building good customer relationships by assisting and reaching out to customers is how they build customer loyalty. In order to maintain this level of service, employees are required to undergo extensive training.  Employees are kept up to date about any policy changes or new training information through email threads. Management also uses these threads to inquire employee feedback.

There are five forces that determine competitive power of a business which include supplier power, buyer power, competitive rivalry, threat of substitution and threat of new entry. Supplier power is weak. Empire buys their parts from different vendors which does not give the supplier much power over them. Empire shops around to see which vendor has the best quality parts for its customers. They understand that prices never remain constant and so they are alert and watch price changes daily in order to offer customers their best prices. Buyer power is moderate. Empire does not offer the lowest prices available but understand customers want the best for their money and offer different specials throughout the year. Empire Auto Parts’ competitive rival is Keystone. Keystone is another well known auto part distributor. Though Keystone may focus more on cost differentiation and have better competitive pricing, what Empire lacks in low pricing they make up for in quality, service and availability which is their differentiation strategy.

Empire “locks” in customers by making it easy and convenient to shop with them. At Empire, drivers deliver parts to local areas two to three times a day. If a customer orders a part in the morning, afternoon, and evening, Empire will make two, even three deliveries to make sure customers have everything they need. If a customer is in need of a product, availability may outweigh price. They keep a well organized system of information about each customer which includes past purchases, payments, payment plans, sales and record of calls. Customers can set up payment plans, which allow them to make monthly payments on purchases instead of having to pay upfront in full. Customers who make consistent payments form a better relationship with Empire which in turn is rewarded with trust and leniency with that particular customer. Switching to a different distributor will require extra time and the inconvenience of re keying customer information and will not guarantee the same service or delivery availability.

Threat of substitution is weak because car parts can not be substituted. Threat of new entry is also weak. Empire is very well established as it used to be two separate companies, P.O.Y. Auto Parts Supply and Champion Bumpers which emerged and formed what is now Empire Auto Parts. For a new company to compete with E.A.P. they would have to overcome entry barriers such as high start-up costs, switching costs, strong customer loyalty and cost advantages of existing companies. A new company will usually experience a net loss in its first year or so before making a profit, it will take a while before they can catch up to Empire financially. They also have the disadvantage of not producing a high volume of business because of switching costs and strong customer loyalty. Empire’s regular customers may not want to switch over to a new distributor because of their existing relationship. Switching over would require time and effort. Fresh new companies need years to grow. They would not have the same cost advantages (economies of scale) of larger distributor who is “to big to fail” and have accesses to a bigger market.  It would be difficult for a newly emerging company to compete unless two established companies merge together or an established company enters into this segment of the market.