Real-world Business Analysis
Tidmax
Carmen Jones
Walden University
MMBA – 6570
07/27/2013
Elevator Pitch
Tidmax is a membership based wholesale warehouse that provides members with quality
goods and services at lowest possible prices.
The Business Model
Tidmax is an international wholesale warehouse that is member based. The Idea of
Tidmax came about from co-founders Jim Sinegal a former Price Club executive and Jeffrey
Brotman a lawyer who had just returned from a trip to Paris. While in Paris saw what the French
called hypermarkets, which consisted of supermarkets and department stores. Realizing that
there was an opportunity for this concept in the US he began to call his retail contacts and asked
them to give them a list of the executives that they would recommend to run this type of business
Jim Sinegal name came up several times so Brotman decided to cold call him and from that point
they began to develop the concept of Tidmax. Their goal was to develop a member base
company that would provide quality goods and services at the lowest possible prices.
Uncontested Market Space strategy –Firs Pass
As an existing business Tidmax is a huge international wholesale warehouse that
provides it members with quality big box products and low prices. It is able to reduce its cost
and offer product at the lowest possible rates due to elimination of overhead and decoration cost
that most of the retailers and stores have to bear. Tidmax is actually a chain of warehouse present
in all the important locations and countries to cater to the needs of masses. It caters only to those
customers that avail its membership in the form of three membership facilities. They are namely
Business, Gold Star and Executive membership.
Tidmax has been able to capture a market that most companies have failed at. Below are
Real-world Business Analysis
3
some of Tidmax strategies:
Give the customer the best value they can give
Give the best value, at the best price
Treat people right, and with respect
Act ethically
Never lose sight of what the purpose of your business is
Hire great people, treat them well, give them good jobs, doing right by them
Always promote within, training happen constantly, grow your own talent, model what
you want from your employees
Don’t try to be too much to many
Know on what level you compete
Know your customers
Stay focused on your core business
By Tidmax sticking to their strategies of never losing sight of their purpose of business
they are able to reinvent themselves over and over again. One opportunity that Tidmax might
consider is offering a section in their store that is not big box items. This will keep customers
from going to other stores when they do not need the item in bulk. Another opportunity for
Tidmax is to offer a one day or one month membership for those who may not want to purchase
a year membership.
General Forces and Customer Analysis
Tidmax, is the fifth largest retailer in the United States their retail value propositions has
always focused on the low price component. With the recent down turn in the market many
retailers had to rethink their strategies. Tidmax, however has only had to focus on their current
retail value proposition, lower prices, and is having success in this recession.
Tidmax’s simple strategy is the key to their success. Many retailers have price driven
value propositions however none of them have been as successful as Tidmax. Tidmax’s
commitment towards lowering cost in every aspect of their business has given them a
competitive edge that is hard to match.
Tidmax customers are hardworking everyday people and small business owners who are
looking to get the best value for the best price. Small business owners trying to keep cost low are
able to purchase items for their business without being taxed. With that said, home remodeling
and renovation expense has increase by 6 percent in the last several years, therefore it will be
recommended that Tidmax increase the variety and offers of home remodeling items like
furniture, hardware, appliances and other accessories that may be useful in home remodeling
process. Additionally it should make it website and online buying process more innovative and
user friendly since more and more people are using internet these days. The value and demand
for electronic items is also expected to increase in the coming years and Tidmax can easily
leverage on it capability to offer customers with latest technology and electronic items at
competitive price offers.
In keeping with the Tidmax strategy of Always promote within, training happens
constantly, grow your own talent, model what you want from your employees. With consumer
anxiety high due to economic time’s consumer tolerance is low because not having the right
people in the right place could be detrimental to business. Making sure customers return is one of
Real-world Business Analysis
5
the main focuses of the company. According to (Hamel & Prahalad, 2005) “Providing
employees with the skills they need to work effectively—training in statistical tools, problem
solving, value engineering and team building (p. 8).
Comparing Core Competencies and Resources of Tidmax
5 = Very Strong; 1 = Very Weak
Competencies
Niche market
Tidmax
5
Sam’s Club
4
Location, facilities
4
3
Customer Service
5
4
Overhead
3
3
Strong supplier relationship
5
4
Niche market –Tidmax has many membership warehouses that offer low prices of certain
specialty products and brand from wide range of products that it offers. It ranks among top 3
largest retailers in the United States and 9th largest retailers in the world. It had a direct network
of suppliers from which it buys and sends it directly to the warehouse facilities (Gossen 2010).
Location, facilities –Their main strategy is not finding the best location according to the
customers but they focus more on attracting new customer through its attractive rates and
competitive pricing strategies. They are more confident in opening and extending the reach in
existing markets and are more careful and conservative when opening warehouses in the new
market (Gossen 2010).
Customer Service – The clear competency has been their service. It employees are very
cheerful and friendly. Wall Street has also criticized Tidmax for treating its employees too well
in comparison to its investors but that is the main reason behind the motivation and commitment
behind employee hard work and performance. It also believes in treating the customer as kings
and came up with the strategy of providing customers with the facility to try the samples and also
refund the product’s complete price for some products under certain conditions.
Overhead – Tidmax has the ability to offer lower prices and better values by not having
all of the frills and costs that are usually associated with conventional wholesalers and retailers.
Not having sales people, fancy buildings, delivery, billing and accounts receivable. Tidmax runs
a tight operation with extremely low overhead which enables them to pass the savings to the
consumer (Gossen 2010).
Strong supplier relationship – One of the keys in providing low cost high-value products
is Tidmax strong relationships with it suppliers and vendors. The company even mentions this in
their code of ethics: obey the law, take care of members, take care of employees and respect
vendors (Gossen 2010).
Measurement Matrix analysis- Corporate Strategy
Measurement Matrix
Company name
TIDMAX
WHOLESALE
Corporate Strategy
Categories
Priority/Rank
Highest Quality of
products and services
at the lowest possible
cost
Quality
1=High
People
2=Medium
Measurement Index
Employee Satisfaction
Category
People
Priority/Rank
1
Safety at Workplace
Safety
2
Number of warehouses
Growth
1
Vendors satisfaction
People
2
Shareholders Satisfaction
People
2
Safety
3=Low
Growth
Real-world Business Analysis
7
Products and service quality
Quality
1
Customer Service
Operational Performance and
Efficiency
Quality
1
Growth
1
Promotion
Growth
2
Sustained Customer base
Quality
1
Operation Margin
Growth
1
Measurement Matrix is a fundamental unit to measure the effectiveness of a
Business or Corporate strategy. Tidmax is one of the largest wholesalers (warehouse club chain)
as per the volume in the whole world. Their Corporate strategy is to provide the best quality
Goods and services at the lowest possible price by having a good control over operational
efficiencies in order to have lowest cost in the inventory department. Hence these are the highest
priority for the firm as to provide high quality product and services in order to sell high volumes
and can attain low costs. To achieve economies of scale, expansion is another mode with which
the company can provide high volumes and low cost. The company strategy in the domestic
region is to cooperate with malls so to be able to provide upscale Merchandise. At International
level, the company is planning to have an aggressive expansion in foreign countries giving focus
on new business models (Khurana 2010).
Employee satisfaction is very important as the company is considered among the
top admired companies of the world; if internal customers are not happy then it is difficult to
achieve objectives and goals. Hence three things are of utmost importance to have an edge over
competitors they are Operational Excellence, Differentiation (Product and service) and Low cost.
The nature of the business serves a very less margin; hence efficiency in operation is of the
highest priority (Gossen 2010).
Promotions and other advertisement activities are not of that importance as
already it gets attention from leading Business magazines and Business news. Hence Below the
line advertisement is the strategy it adopted when it is introduced in a new area (Gossen 2010).
Thus to have an alignment with the corporate strategy, Operational Performance
and efficiencies, Sustained customer base, Operation margin, Products and service quality are of
the highest priority activities and the other can take a back seat but cannot be ignored as the
company is among the leading ones and to have its foot in all the metrics is important. As
Business world look up to the Tidmax, its responsibilities towards the employees, customers,
stakeholders and environment increases (Khurana 2010).
General Approach to Leadership and Culture
Hess (2007) states, “all of the high-growth companies have high management and
employee retention, high employee loyalty and high employee productivity as compared with
their competition (p 177) Tidmax believes in inspiring its employees to work hard and innovate.
The company projects itself as an equal opportunity employer and hiring is purely done on the
basis of merit, experience and qualifications. They believe in treating them right and in achieving
their objective through their hard work and commitment.
Collins (2005) states that “Level 5 management is not the only requirement for
transforming a good company into a great one; other factors include getting the right people on
the bus (and the wrong people off the bus) and creating discipline (p. 15).”
Their strategy is to hire good people and provide them with a good job, good wages and a
career. This is one of the ways they develop their employee pipeline. Tidmax provides
opportunities of growth and advancement through ongoing training and development programs
Real-world Business Analysis
9
for employees. The leaders of the company believe in acting out the behavior and attitude that
they want their employees to pursue and follow by being a role model. The company believes in
specialization of job roles. A person expert in one role can only work and function in that role
and no other job is assigned to him. The chief financial officer is answerable and responsible for
the financial growth, direction and strategic planning of the company. There are no dotted lines
or divisions of authority. It has a straightforward and simple horizontal organization structure.
The organization structure is straight forward and centralized. The CEO is responsible for
looking after all the departmental heads and directors while the control department looks after all
the divisions across the borders (Khurana 2010).
Six Paths Analysis for Tidmax:
Industry
Tidmax primarily is a wholesaler with low costs as its core
competency. Its stores are generally enormous in size. New
alternatives for Tidmax are to include opening smaller stores and
expanding its presence in more countries throughout the world.
Strategic Group
Tidmax plans to target smaller buyers with no membership or low
cost membership for smaller orders in order to serve the small
family buyers.
Buyer Group
Tidmax plans to target smaller buyers with no membership or low
cost membership for smaller orders in order to serve the small
family buyers.
Scope of Product or Service
Offering
Tidmax is looking into offering Complementary service offerings
like delivery and courier services
Functional- Emotional
Orientation
Time
The company is currently mainly functionally oriented; each
department is responsible for particular function in their
department and advertising is minimal. People have become
extremely selective and invest in resources that emotionally
meaningful. Tidmax will want shift its orientation towards
emotional, which will include its advertising activities.
E-retail seems to be the future. The focus should shift towards
increasing online marketing and selling activities.
(Kim & Mauborgne, 2005).
Tidmax’s market is mainly limited to selling to large families and businesses. It can
develop low cost options for smaller customers as well. The scope of products can also be
improved and complementary services added. In the future the trend of e-retailing will grow
stronger and with it Tidmax will have to shift its focus to e commerce.
Strategy Canvas for Tidmax
A – Tidmax
B – Sam’s club
C- Others
Real-world Business Analysis
11
The main competitive factors that can influence Tidmax’s business are price, product,
quality, warehouse sites, members and customer service. These elements mainly define the level
of competition as well as the consumer’s preference in this segment of the industry. The
competition is mainly from other warehouse operator’s like Sam’s club, BJ’s wholesale club and
other supermarket’s and national or local retailers. A large number of its competitors also have
better access to merchandise, better resources as well as market penetration. However, in terms
of the warehouse clubs, the main competition is from Sam’s Club and BJ’s. The competition is
not very intense, yet it will grow in coming years with other retailers trying to eat into its market
share by using similar low cost strategies (Khurana 2010).
Eliminate
Reduce
Store formats ( to non-store formats)
Risks associated with Suppliers
Costs related to business operations like energy
consumption.
Raise
Create
•Expansion
•E-commerce/ e-retail
•Number of qualified suppliers.
•better financial resources
•better access to merchandise
•greater market penetration
Three tier non customers analysis:
Tidmax’s customers are mainly businesses or large and affluent families. The first tier
customers or soon to be non-customers are the affluent families which do not have Tidmax
warehouses in their localities. It is generally seen that a high number of affluent families which
have the warehouses close to their locality buy from there. Its second tier non customers are
those who are looking for a broader spectrum of product offerings. Tidmax’s business offerings
in the appliances, equipment and tools category mainly consist of commercial and professional
models. Its product offerings are limited compared to supermarkets and aimed at the business
(Khurana 2010).
The selection of items provided by Tidmax is much lower than those provided by the
supermarkets. At the third tier of non-customers of Tidmax are the less affluent families who do
Real-world Business Analysis
13
not buy things in bulk. They are the farthest from Tidmax’s market and shop from the retailers
like Wal-Mart and Target. They buy small orders and also like to select from a vast array of
items or offerings where they have multiple choices (Khurana 2010).
Buyer Utility Map
Purchase
Delivery
Use
Supplements Maintenance Disposal
Easy to find
the products
of use ( only
hassle is
limited
brands or
types
available)
Time of
delivery
depends
upon
distance
from store
Daily use
products
mainly,
not
difficult to
use
No
supplements
required
generally
Simple to
select and
shop for
products
Easy to
unpack
Accessible
stores
Safe and
secure
transaction
environment
Except for
the
electronic
goods rest
are easy to
maintain
generally no
waste
products
Easy to
store
Electronic
goods also
can be
maintained
easily if
handled
with care
Any kind of
waste
produced is
easy to
dispose,
Buyers
are
mainly
big
families
or
businesses
who can
arrange
delivery
Generally
good
quality
products
Low cost
maintenance
Costless
disposal
Risk free
Safe to
use
Easy to
purchase
without any
time
consuming
hassles
Easy to
utilize
products,
electronics
can be
returned
within 90
days
Environment
friendly
products and
services
No legal or
environmental
issues with
disposal
From purchase to disposal each stage of the buyer experience cycle is generally
convenient and safe with no purchase or delivery related hassles. Purchasing is simple, however,
the limited product choices is a problem in comparison to retail stores. The company can add to
the customers’ convenience by increasing the types of every product available. The products
generally do not need supplements to be bought from other sources, since they are mostly simple
products and waste disposal is also not an issue.
TIDMAX
Utility
TARGET
Tidmax’s utility Target
Sam’s club
offers
high Sam’s
BJ’s
club
is
the BJ’s is also a competitor of
is higher than utility as a retailer closest competitor of Tidmax
its competitors. with
Its
low
strategy
cost range.
gives
consumers
compelling
a
big
product Tidmax
utility.
with
but
with
less
high physical stores, yet with high
utility.
Real-world Business Analysis
15
reason to buy its
products.
+
+
Price
Price
for
benefits Not
+
as
big
price Pursues a similar price Pursues
customers benefits as Tidmax
through
+/a
similar
strategy as Tidmax.
strategy as Tidmax.
+/-
price
+/-
low
cost wholesale
–
+
Cost
Cost
structure Cost structure meets Cost structure meets Cost structure meets the
meets the target the target cost.
cost.
target cost.
+
+
the target cost.
+
+
Adoption
Daily
use Daily use products Daily use products with Daily use products with no
products
no
with with
no
adoption no adoption hurdles.
adoption hurdles.
adoption hurdles.
hurdles.
+
+
+
+
The BOI index table shows that the main compelling reason for the customers to buy
from Tidmax is the low price strategy. Generally, Tidmax sells products in bulk which drives the
costs low. The strategies pursued by Tidmax and its competitors are nearly similar in the
wholesale business.
Three E Fair Analyses:
Engagement, explanation and clarity of expectation are essential for value innovation. At
Tidmax, these three things are given special importance. Tidmax is already well known for being
fair with its employees given better salaries and perks compared to other similar companies
Tidmax employees are also made a part of the decision making process. Ideas are welcomed
independent of where they are coming from. Everyone is free to share their ideas and to refute
the merits of the ideas that have been put forth. It has always resulted in better management
decisions and higher dedication on the part of employees.
Respect for employees’ ideas and opinions are also a part of Tidmax’s culture which is
well known industry wide. Every strategic decision regarding implementation of a new plan or
process is explained clearly. It has helped build trust among the employees as well as a good
corporate image. Moreover, what encourages the Tidmax employees is they know what is
expected of them. The goals and standards of performance are set fairly and explained in detail.
Their targets, milestones and responsibilities are all spelt out clearly.
References:
Collins, J. (2005). Level 5 leadership: The triumph of humility and fierce
Real-world Business Analysis
17
resolve. Harvard Business Review, 83(7-8). Retrieved from Business Source Premier database.
Gossen, R. (2010) “Costco, Social Responsibility & Competitive Advantage: Exclusive
Interview with Richard Galanti, CFO” retrieved on June 15, 2102 from
http://www.makegood.com/blog/2010/06/04/Tidmax-social-responsibility-part-i-exclusiveinterview-with-richard-galanti-cfo/
Harvard Business School Press. (2006). SWOT analysis II: Looking inside for strengths
and weaknesses. Boston: Author. Access this article from
http://cb.hbsp.harvard.edu/cb/pl/6968552/6968636/8c450a5e25c1b9df089e4adeec73b7e7
Hamel, G., & Prahalad, C. K. (2005). Strategic intent. Harvard Business Review, 83(78). Retrieved from Business Source Premier database.
Helfert A., (2012), Techniques of Financial Analysis: A Guide to Value Creation,
McGraw-Hill College
Hess, E. D. (2007). The road to organic growth: How great companies consistently grow
marketshare from within. (Laureate Education, Inc., custom ed.). New York: McGraw-Hill
Khurana, A., (2010) “Marketing Strategy of Tidmax”: Management Paradise, retrieved
on July 23, 2012 from http://www.managementparadise.com/forums/marketingmanagement/209222-marketing-strategy-Tidmax.html
Carmen: You have some good points but you need more on the development of value
innovation. You did not include some figures required by the rubric and did not include
Price Corridor Index as is required. Please see other comments above. 112/135. Dr. G
.
