A Study On Retail Business Competitive Advantage Based On Value Chain Theory

Since the reform and opening-up policy, the retail trade in our country hasachieved a significant progress on both quantitative and qualitative levels in terms ofthe business scale, the trans-regional management, the efficiency, etc. However, itsmarket concentration rate is not high and the competitors in the market are confined tothose medium and small retailers of similar scale. The rate of return on assets of thewhole retail trade is lower than the average level and it is on the decrease. With theeconomic globalization and financial crisis, some enterprises with rigid businessmodel, which lack scientific developing model and elaborate management system havecome into trouble. Under such circumstances, the key priority for retailers indeveloping countries, especially those medium and small enterprises to consider ishow to integrate into the global economy, turn crises into opportunities, and seek theirown deficiencies to enhance their competitiveness.The value chain serves as an effective method to analyze and discover thecompetitive advantages of enterprises. With the value chain as a basis, this paperadopts the theories of competitive advantage, the SWOT analysis model and fiveforces analysis model to provide an in-depth and systematic research on thecompetitive advantage of the retail trade in our country (with Luoyang Rongwei TradeCo., Ltd. as an example). The comparative study, the theoretical and empirical studies,and the longitudinal and cross-sectional studies are all included.From system viewpoint,this paper founds Luoyang Rongwei Trade Co., Ltd.competitive advantage system which based on value chain theory,includes extenalenvironmental system,industrial value chain system and internal value chainsystem.This paper analyzes factors for affecting the external environment of LuoyangRongwei Trade Co., Ltd. competitive advangtage and analyzes the influences of macroeconmic situation and enviromental factors of the industry. After structuringLuoyang Rongwei Trade Co., Ltd. internal value chain, the paper analyzesfundamental value activities and auxiliary value activities of Luoyang Rongwei TradeCo., Ltd.. For its value chain and the last customer value chain of lower reaches，longitudinal relation is analyzed, Luoyang Rongwei Trade Co., Ltd. raises overalloperation efficiency and creation through changing way and the content of value chaininside and external connection and being helpful for it，is higher to worth. Thecomparative analysis of the lateral association of the value chain between thoserepresentative household electrical appliance enterprises is valuable for LuoyangRongwei Trade Company to discover its competitive strengths and weaknesses.Ultimately, strategies to enhance its competitive advantage are proposed fromthe perspective of sustainable development strategy and value chain management.Interms of the internal value chain management, based on different competingenvironments and competitors, the implementation of business should be optimizedcustomer-orientedly and the enterprise information management system and humanresources management system should be established according to the key factorswhich influence the core competitiveness. As for the external value chain, the focusshould be shifted towards reinforcing sales channels and external relationship so thatthe company will run smoothly and efficiently. The research results has provided someimplication for Luoyang Rongwei Trade Co., Ltd. to enhance its competitiveadvantage through the implementation of value chain management and it is also hopedto offer particular help for other retailers.