Question

A discount membership general merchandise store has been educating customers about its business model of a membership fee based on the volume of products they buy. The store has been focused on reducing cost through the development of its supply chain and inventory systems. What would you add to the company's strategy as the industry moves from the shakeout phase to the mature phase?

Answer 1

Answer: Monitoring of prices of similar products at other similar stores and matching prices in order to maximize profitability.

Explanation: Shakeout phase is the phase before the maturity phase of the industry life cycle. Shakeout phase is the stage where increase in revenue, cash flows and profitability of the business slows down as the industry approaches maturity.

At this stage, company’s struggle to stay afloat and have to employ strategies such as matching prices with other similar business to avoid price war. Reduction of cost through development of supply chain is another strategy company’s rely on at this critical phase.