BMIS235–03 Group #2, Row 1Isabel Barichievich

Sidni ButlerEli Ryder

Matthew StrubJoe Wagner

Final Project

The Tool Store: Tool-LandWhere you can get the very best TOOLS

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Table of Contents

Scenario 3

Objectives 3

Porter’s Five-Forces 4

Four Competitive Strategies 5

Value Chain Model 7

IS Solutions and Suggestions 9

Managerial and Organizational Impact 12

Conclusion 13

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Scenario

Jimmy Green, a recent Gonzaga business school graduate, has returned home to help his

family’s struggling hardware store, Tool-Land. Tool-Land is a hardware store that sells

everything from simple gardening shovels to electric power tools. The store also has a building

materials section in an outside lot next door to the main facility. Tool-Land has a reputation for

having average customer service and serves a mild portion of the local market with its sole brick-

and-mortar store. Jimmy Green’s father still possesses an outdated purchasing and inventory

system of paper files and manual visualization as to when to purchase new products. Regularly,

the store over-purchases its power tool inventory, causing products to decline in value as they sit

on backroom shelves. Additionally, materials audits consistently reveal inventory discrepancies

that create shortages of the building materials customers request most.

Objectives

Jimmy Green believes that because of the unpredictable nature of rising and falling

residential construction market, he must correctly and efficiently obtain the materials inventory

which will be key for providing customers with their material needs, while limiting unused

materials from accumulating in storage. Improving IT to keep track of inventory in-flows and

out-flows will help to reduce empty shelves as well as limit tools collecting dust in the back of

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the store. Along with improving the efficiency of the back-end systems of the company, Jimmy

wants to make the business more approachable to the customers. He plans on doing this by

rebranding the business while revamping the employee training program, as well as creating a

website and expanding his business online.

Porter’s Five-Forces

There are five underlying forces that determine the success of a business. These forces

are known as the Porter’s Five Forces Model. With this model, a business should take into

account the bargaining power of customers, the threat of substitutes, the bargaining power of

suppliers, the threat of new entrants, and other rivals the same market. In this section, we will

compare these five forces and their effect on the small business Tool-Land to determine which

forces should be focused on.

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Considering the tools and home improvement market, there are two forces in which Tool-

Land should focus their resources on. Those being the bargaining power of the customers and the

rivalries that are found in the market. In the case of bargaining power of the customer's, Tool-

Land must consider the differing prices of other stores, and try to match the lowest price

available. Unfortunately, by price-matching Tool-Land will risk not making a profit off certain

sales. Tool-Land must bring customers in with competitive prices, but at the same time, make

sure they are not losing any money on the sales. Secondly, Tool-Land must worry about rivals

found in the tool and home improvement market. Mainly focusing on businesses such as Home

Depot and Lowes is crucial because they make up a substantial portion of the tools industry.

Home Depot and Lowes act as a hub for all consumer’s home improvement needs, while

providing them at affordable prices. These stores are a main reason customers take their business

away from the local home improvement store. Tool-Land will have to find ways to draw

customers back into their store. One mean may be providing services like Home Depot and

Lowes, and another may be to differentiate themselves further to become a truly unique one stop

location in the market.

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Four Competitive Strategies

Competitive strategies stand as a foundation of a company’s business practices.

Distinguishing itself as unique and/or affordable is a requirement for a firm if it intends to stand

out from its competitors and sustain its business well into the future. Because of this, firms must

decide where to focus its resources in order to reach the maximum customer base and maintain

healthy profits. The decision to change a competitive strategy focus may incur expensive

changes, but could be the required decision to survive in the cut-throat environment of free

market business.

Tool-Land’s possible competitive strategies are either concentrating on cost or

differentiation. If Tool-Land wants to change its strategy toward lowering cost, it can either

focus on lowering costs for specific tools within the store or apply a low cost to all of the

products within the store. To do this, the company should determine which products are eligible

for cheaper pricing, which will ideally draw-in more customers. However, the store should

closely watch whether or not the lower prices attract customers. If lower prices do not increase

demand for products, then the store is losing money with no benefit. The selling of these items

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will depend highly upon the advertising of the new, lower prices. If Tool-Land wants to

differentiate itself, it should focus on providing a specific tool brand that is unique, high quality,

and unavailable anywhere else. Tool-Land could take an industry-wide approach to

differentiation by providing a personal experience for the customers as soon as they step in the

door. By combining unique products with personal service, the store stands in a situation to have

a higher amount of foot-traffic through the door. Although, if the store focuses upon these two

attributes and they are poorly executed or generally unliked, then the store is concentrating its

resources in the wrong area, effectively costing money.

Tool-Land should pursue industry-wide differentiation in order to separate itself from its

competitors. In doing so, the company will create a culture of quality in store customer service,

efficient check-out processes, and an easy-to-use website interface. These practices rival the

entire industry due to the general lack of capital small, local hardware stores usually allocate to

information systems, company improvement, and company adaptation. Although Tool-Land will

still be selling similar products as its competitors, the experiences customers should be greatly

improved. The customer-experience improvement will theoretically encourage customers to

return even if they are paying similar to slightly-higher prices compared to Tool-Land’s local and

national competitors.

Value Chain Model

The Value Chain is a system that helps a company guide a product from conception to

delivery. There are two types of activities, primary and supporting. The primary activities are

those that run the basic operations within a company. The typical primary activities include

inbound logistics, operations, outbound logistics, marketing & sales, and service. The supporting

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activities are not always apparent within a company but are the backbone to any operation. The

supporting activities include firm infrastructure, human resources, technology, and procurement.

They are the “behind-the-scenes” activities that are constantly running in the background.

Tool-Land’s primary activities within the value chain consist of inbound logistics,

operations, marketing, outbound logistics and customer service. Tool-Land obtains their

inventory by purchasing through a local supplier. The operations of the store include purchasing,

displaying, and selling products. Minimal action has occurred in their marketing area, primarily

because they have relied on the support from existing loyal customers. Outbound logistics

function relatively well. The main concern is ordering too many of certain products, causing

them to sit on the shelves for an excessive amount of time. When items are sold, customers

interact directly with employees who ensure they found everything they needed. Due to the

business’ size, recruiting employees who are experts on all products and who have the

knowledge of home improvement has been a struggle. Thus, the company is said to have

mediocre customer service. Thankfully, the return process for products is relatively simple for

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customers, because they have a “Satisfaction Guaranteed” policy, for up to 30 days of using the

product.

In addition to Tool-Land’s primary activities, it has four core supporting sectors that

support their business operations. The firm’s infrastructure is comprised of family members, the

family shares ownership and participates directly with the firm daily. The HR department is one

of the firm’s supporting activities that is overseen by Jimmy Green. The owner is considering

hiring an HR representative to help keep staff for more substantial periods of time. Due to the

firm’s small operating platform, the technology used is outdated and simple. Tool-Land is in dire

need for new cash registers, computer systems, automatic doors, and other accessories that will

assist customers in meeting all their needs. Regardless of the company’s “old fashioned”

technology systems, the company has managed to stay involved in product advancement. They

acquire and sell the latest models of tools from suppliers in the local and nationwide market.

They even have a specialty line of materials and tools that were produced by independent

craftsmen.

IS Solutions and Suggestions

The best option for improving Tool-Land is to harness the industry-wide differentiation

strategy and update the IS in the store. To do this, a large investment in technology infrastructure

is required. Tool-Land should begin selling products online on a national basis. A website will

keep their inventory circulating, since more individuals outside the area will be able to seek their

expertise. So long as the website is easy for consumers to use and enough money is put into

promoting the company’s online presence, IS cost will be worthwhile. The potential benefits of

reaching more customers will offset any initial IS expenses over the long run due to the

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increasing customer use of searching for businesses online. Having a website will drive more

local customers to our store when customer look for local tool stores, greatly increase our sales.

The increasing use of mobile devices and the use of these devices to learn about and find

our store, it is essential for Tool-Land to have a mobile responsive website. This website will

include a homepage, as well as pages describing our company, products, special offers, cart, and

a page containing all our contact info. It is our goal to create an easy to use and streamlined

experience for our customers online. It is our goal to keep this website professional looking and

that starts at the home page. On the top of this webpage, we will provide links to the other pages

of our website. The focus of our homepage will be to show professional photos of our business

and highest selling tools. These photos will be shown on rotation, giving the customer an idea of

the services we provide. On the bottom of this page, we will provide quick access to our

company address and our weekly hours. On our company about us page we will have a history of

Mr. Green originally opening the store and a picture of the Green family. We will also state our

revamped employee training program and how our employees provide the very best home

improvement support. Next, the product page will have a detailed list of all of the products we

have to offer as, separated by department. These products will have their price, specifications,

our recommended uses with the product, and an “add to cart” button. This will button will be

connected to the customer’s personal cart page, easily accessible to the user. The special offer

page will show seasonal and weekly deals that show images of the on-sale product and the

percent saving. This page will help to remove overstocked or non selling products as well as

drum up excitement for customers searching for deals. Finally we will have a contact info page

that gives contact information of the store and the number of a help employee specialist.

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In addition to the cost of transferring the store online, there will be a noteworthy cost

involved in training employees on how to use the new technological system. Though Tool-Land

must be conscious of spending; and training will only hinder the company’s operating net

income, the technological advancement will expose Tool-Land to new sources of revenue only

gainable with competent staff. Staff members should not only have thorough knowledge of the

company’s IT system, but they must also be fully versed on the products. Therefore, a separate

employee login on the website that keeps employees connected is essential. On this login page,

employees will be able to contact one another, view work schedules, and stay connected and

educated on store updates. This way employees are never late for shifts and the store can operate

smoothly. A “work” site will also improve employees awareness of changes in inventory, for

example, if a new machine is brought in. A general guide as to the uses of the new machine can

therefore become available so employees stay proficient in their tool knowledge. Though the

initial sacrifices may be large, the increased efficiency will greatly outweigh the costs. Investing

in IS not only saves money in the long-run, but it will also prepare the business for easier

adaptation to future events. With the implementation of industry-wide differentiation through the

introduction of a unique tool line, an efficient IS becomes ever more necessary. For as the

products evolve and become more specialized with time, so should the company, and so will the

customers.

In addition to updating the store’s differentiation strategy and IS, re-branding is a

valuable path to take in order to increase sales. As Tool-Land creates an online presence, the

store will announce a change of name. Tool-Land will now be recognized as The Hardware

Store, Easy Access for all your Tool needs. This rebranding is prompted by a need to

professionalize company as it begins nationalizing its presence.

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Managerial and Organizational Impact

Jimmy Green will need to approach this new project with the utmost attention to detail in

order to quickly, effectively, and economically implement the benefits of the new IS system.

Sticking to a low budget will be the goal, but Jimmy understands that an effective IS requires

building from the ground up. If he were to create a half-finished IS to stay on budget, the odds

are the system will be highly insufficient. In addition, money and oversight will need to be

allocated to the IS system to reap the saving benefits over the long term. Thus, the most

important managerial decision will be the hiring of an IS specialist to handpick and manage a

small and efficient team of IT employees. This specialist will be in charge of building the IS that

reorders when inventories are low as well as creating the new website and online store. Jimmy

Green, as the head of The Hardware Store, will remain in control of his business operations, only

now he will have assistance from an IS specialist to ensure the new system is used to it’s full

potential.

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A secondary managerial position Jimmy Green will need to focus on is the hiring of a

new effective and knowledgeable employee program manager who can lead the changes in

employee education to revamp store employees customer service. This will be important for our

the overall rebranding of the in store customer service. It will require slightly less intense

oversight than the implementation of the IS, but it is a very important aspect of the

differentiation of the Hardware store. By giving employees more training on the tools we are

selling and a larger knowledge base on home improvement projects, our on floor employees can

better serve our customers and help to make the Hardware Store the one stop location Jimmy

Green envisions.

The day-to-day activities of The Hardware Store will be more productive than before

because of the new IS system and employee training program. Though the organizational

impacts are termed “structured & less essential,” Jimmy Green finds there will be a noteworthy

enhancement of business success. The new business structure, or way decisions are made in

regards to organizing inventory rotations will be more organized. Jimmy Green will be able to

track the amount of time he has certain products on the shelves so that he can address the

products that are not selling as well. Once he identifies which products are sitting idly on the

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shelves, he will be able to organize a marketing strategy to remove the older inventory, and have

the information to buy less of that item in the future.

The enhanced knowledge of each employee on the floor will provide customers with a

larger array of home improvement knowledge. This will provide the customers the knowledge of

new and improved equipment that will help them to finish their home projects quicker and more

effectively. This will also allow the Hardware Store to reap the benefits of selling the more

expensive new models, bringing in higher levels of revenue.

Conclusion

Managing and maintaining a successful business is a complex task that requires strong

organizational and leadership abilities in order to stay pertinent in today’s economy. A business

that is unwilling to evolve with the changing times will face difficulties in staying relevant in

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their industry. Vernon Green, owner of Tool-Land, is a perfect example of this struggle. Tool-

Land was not embracing the technology of the modern world and was beginning to endure

noteworthy losses. Jimmy Green, son of Vernon and a recent Gonzaga grad, will now be taking

over the family business and hopes to revitalize the company.

Jimmy plans to bring the company into the modern age by implementing a more

advanced inventory system, creating an employee education site on the use of tools, and most

importantly, to create a website on which to sell products. Jimmy realizes that the hardware

market is mostly dominated by the likes of Home Depot and Lowes, therefore, Jimmy is trying to

implement an industry-wide competitive strategy. He knows he will be unable to beat the

convenience of the all-in-one store, thus forcing him to find ways to draw customers in through

differentiation. Jimmy believes the small, family run business will be able to compete against the

larger corporations if they maintain the intimate one-on-one relationship with their customers. In

addition, Jimmy recognized the company name, Tool-Land, as being juvenile and a

misrepresentation of what he wants the company to be. Therefore, along with making the

company present on the digital market, he rebranded: The Hardware Store: Easy Access for all

your Tool needs. The new name provides a more professional front for the store, and is a perfect

summation of the new business. Jimmy Green hopes to revitalize his father's business and bring

it into the modern age, all the while, creating a successful family business that his father can be

proud of.

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