H-E-B Own Brands
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Describe the relevant market boundaries (environmental influences) for H-E-B based on a PESTLE analysis. This is the macro environment not the micro or company factors and Part II) you are to apply them in order to identify the relevant market boundaries (or what factor causes a customer to prefer one competitor over the other)
The Political Market Boundaries for H-E-B are focused more on the regulations of businesses and the spending power available by the consumer. The Economic Market Boundaries for H-E-B are the long and short term prospects of the economy in the area in which H-E-B tend to operate their businesses. H-E-B Social Market Boundaries as it pertains to mostly their Mexico stores, what are the attitudes to foreign products and services, does language impact the diffusion of products or services, what is the perception of H-E-B to the populous and consumer therein. The Technology Market Boundaries include the ability to produce their Own Brands products, what type of logistics do H-E-B have and is it cost effective, what type of computer system does H-E-B use; such as Point of Sales (Point of Sales) and Self-Check out, is their store up to date with that of Wal-Mart® or Albertsons®. As it pertains to Legal Market boundaries, are they following the obligations of selling space to vendors? Are they careful to not to copy of other patented products with their Own Brands? Environmental Market Boundaries are the type of produce can be grown locally and purchased from local farmers. H-E-B stores, distribution centers, and production plants running green or environmentally friendly.
HEB offers many different products- create an SBU analysis for HEB based on product line See table C. Where would you increase invests, maintain current investments, divest of current investments (or get rid of businesses)
I would add to the Grocery, Meat and Seafood, Deli, Produce and Bakery. I would limit the Health and Beauty and General Merchandise SKUs. Based on Charles Butt statement (Page 4):
We are also keenly interested in those aspects of our business that allow us to differentiate ourselves. These include wide selection, outstanding baked goods, produce, flowers, meats and seafood. Customer-focused service and our growing Own Brand assortment are also vital elements.
According to the case study, H-E-B does not do well in Health and Beauty or General Merchandise but they have 35,000 SKUs, use a portion of 22% of store space, and only account to 15% of overall sales. If H-E-B can lower the SKUs and amount of store space of these departments, they can increase the selling space of Grocery, Meat and Seafood, produce, bakery, and deli. This according to Charles Butt statement is what differentiates them from the competition.
Department
% of Sales
# of SKUs
% of Store Space
Grocery
30000
Meat and Seafood
Health and Beauty/ Merchandise
Pharmacy
Produce
Bakery
Perform a SWOT (strength, weakness, opportunity, and threats) analysis for the firm and from the SWOT create a VRIO table see mini-lectures for example
Strength
H-E-B has three different segments
H-E-B has its own brand produced by its own manufacturing plants
Weaknesses
The demographic location is limited
Company is privately own, not investors to use capital
Opportunities
Company has room to expand beyond Mexico, Texas, and Louisiana
Threats
National Brand products vs. Private Labels
Well established competitors (Wal-Mart, Albertsons)
Self-Saturation is some current markets
Value
Rarity
Imitate
Organization
Competitive
Economic
Disadvantage
Below
<---->
Parity
Normal
Temporary Competitive Advantage
Above Normal
Sustained Competitive Advantage
Above Normal
Product Positioning Maps are an important way to access the firms competitive position. You may also use an analysis similar to the one found in exhibit 8.2, 8.6 or 8.7 of Mullins and Walker. If there is insufficient information in the case you may use the internet to gather additional information or do this assessment generically.
In looking at the whole environment assess the key factors using a Porters Five force analysis (see Chapter 3 Mullins & Walker)
Supplier Power
Threats of forward Integration
Supplier Concentration
Importance of Value to Supplier
Presence of substitute
Threats of Substitutes
Switching Costs
Buyer Substitution
Price-performance trade off substitution
Buyer Power
Buyers Incentives
Substitutes Available
Product Different ion
Price