Every company or businesses have their own position in the
industry they are situated in by referring to their profitability. Competitive
advantage is needed by those businesses if they intend to survive and attain a
higher firm’s profitability when compare to the industry’s average. There are
two basic type of competitive advantage that most company can possess and they
are low cost and differentiation. The companies can try to achieve these two
types of competitive advantage will need to carry out various activities.
Hence, these activities will lead companies to focus on three generic strategy
in order to achieve higher performance for the company. The three generic
strategy are cost leadership, differentiation and focus.
The company that we have chosen, MINISO has adopted the
generic strategy of cost leadership as they are becoming one of the biggest low-cost
retailer in the industry. MINISO has managed to expand into more than sixty
countries and opened more than 2000 stores within only a few years’ time by
using the cost leadership strategy. They did this by using low price good to
increase market share and managed to maintain a rational amount of profit on
each sale while reducing the cost involved.
First of all, the traditional distribution system
contributes a lot to the cost of retailing product as the system contain many
layers. However, the rise of e-commerce in recent years has provide a platform
for cheaper shopping experience. Many consumers start to switch to this new
platform as they no longer have to be bound to the limit of physical shopping
such as fixed price for products. This has affected the industry of retailing
but most existing retailers are unwilling to give up traditional distribution
system due to the huge amount of profit that bring by it.
In the case of MINISO, they received most of its initial
capital from one of its co-founder, a Chinese entrepreneur, Ye Guofu and these
capitals are used mainly used to improve their distribution system. Ye firmly
believes that physical retailing store can still succeed in the future if they
can break the traditional distribution system and provide products that have
price that truly match their value. In the end, MINISO have managed to sell its
product with low costs and high quality which help them to achievement the
strategy of cost leadership.
Secondly, a smooth and efficient logistic system has become a
necessity for businesses that operate in the retailing industry. As in the
current business environment, it is always about what the customers want and
how fast can they get it conveniently. In the retailing industry, it is not
easy to earn a customer’s loyalty and turn them into regular customers.
However, the businesses can easily lose a customer’s loyalty when they failed
to provide the items they want. Furthermore, if their competitors can provide
the same items to the customer, then the customer might have just become a
competitor’s loyal customer.
To prevent such things from happening, MINISO has implemented
a very high efficiency logistic system for their distribution network. Additionally,
the management of the company know that a high-efficiency modern logistic
system is a must if they want to achieve cost leadership. For MINISO,
warehousing is their most vital part of the supply chain and that is done by shipping
the products directly to the warehouse around the world right after they had
been produced. This helps the company to reduce unnecessary costs of midway
link and help them to have a longer period of competitive advantage of cost
Thirdly, due to the effect of globalization, it is really
easy for consumer to get access to different kinds of products that have
different price. Therefore, in order to thrive in the current retailing
industry, the businesses need to make sure that they always have a low-costs
base such as cheap labour, materials, locations and facilities. It is also
important for the company to prepare a way to cut their costs sustainably below
their competitors in order to make sure that they can always have the
competitive advantage of cost leadership.
MINISO already have access to a low-costs base when they
first established their company as China is well known for its low-cost labour
forces. It is a well-known fact that labour cost is one of the highest expenses
for most country and having access to a low-cost labour forces really help
MINISO to reduce the cost of their overall operation. China is also a country
that supply a huge variety of materials and their price is reasonable as well.
This helps MINISO to earn profit while maintaining a low production costs by
using material with reasonable price. Additionally, the China’s government have
built a lot of facilities like warehouse and harbour which can be easily access
and used by business at there. These facilities are required for MINISO to
achieve the strategy of cost leadership as they play an important part in the
logistic system. The readily access to these facilities by MINISO has
definitely help to manage and deliver their product with lower holding and
In conclusion, MINISO has adopted the cost leadership in the
generic strategies and this has help them to become one of the fastest growing
low-cost retailing store in recent years. By having access to a highly
efficient distribution system, logistic systems and a low-costs base, MINISO
has managed to achieve and sustain their competitive advantage of the leadership.