Commissary Case Analysis



Commissary Case Analysis

Ruby A. Amey

Southwestern College of Professional Studies

Knowledge Based Leadership

LEAD 565

Mr. Jim Morrison

June 17, 2012

Commissary Case Analysis

The commissary was established for the active duty military soldiers, retirees, reservists, and national guardsmen and their dependent family members. The commissary store is a grocery store. We sell groceries, meats, and can foods for less- price than the civilian markets. This is saving the soldiers’ family a 30% savings that it would cost in the civilian grocery stores. For example instead of paying $2.88 for a carton of eggs, we pay $1.98. The commissary department storehouses started to sale to military personnel beginning in 1825, having soldiers pay at- cost prices. (DeCA .Com, 2012)

History, Development and Growth

“The commissary benefit is not a recent innovation. Sales of goods from commissary department storehouses to military personnel began in 1825, when Army officers at specified posts could make purchases for their personal use, paying at-cost prices. By 1841, officers could also purchase items for members of their immediate families. The modern era of sales commissaries actually began in 1867, when enlisted men received the same at-cost purchasing privileges officers had already enjoyed for four decades. No geographic restrictions were placed upon these sales; the commissary warehouse at every Army post could become a sales location, whether they were located on the frontier or near a large city. From the start, commissaries were meant to take on-post retail functions out of the hands of civilian vendors and post traders and allow the Army to “care for its own.“ The stores provided wholesome food beyond what was supplied in the official rations, and the savings they provided supplemented military pay. The modern concept of commissary sales stores, which were established to benefit military personnel of all ranks by providing healthful foods “at cost,” reached its 144th anniversary on July 1, 2011” (DeCA .Com, 2012). The commissary was first opened by the Air Force Commissaries (AFCOMS) which later changed to Defense Commissary Agency (DeCA). The commissary went from being constructed by the Air Force to being directed by the United States Government. This is a non-profit organization that has a surcharge not taxes that covers building other commissaries at military bases. The growth of the company expanded due to the soldiers and their families growing from small bases to larger facilities that needed more groceries. This increased sales and the need for more shelf space for items.

Internal Strengths and Weaknesses

An internal strength of the commissary is adjusting for the changing demands of the various customers they serve on military installations. Customers of the commissary include agencies like the child development centers, local national guards and reserves, dining halls, and noncommissioned officer clubs. These installation organizations request food from the commissary to support their daily and seasonal operations. The commissary has to plan effectively how much food they order balancing the amount sold to their customers and other stock transferred to installation agencies. The cost and profits of sales and stock transfers have to balance within the budget allowance that is given by the government in the cost and sales revenue statement.

Internal Weakness

The commissary lacks convenience, for example, it does not have a variety of products outside of groceries like Wal-Mart. Expanding their product line to include hardware and clothing will bring more military and retirees to shop more often. Wal-Mart has a variety where customers can stop at one store and not have to make another stop anywhere else. For example, a customer who needs their oil changed can drop their car off at their automotive department for an oil change. While their car is getting serviced can shop for clothes, televisions, and food. Another example is, “Customers can bring their DVDs into their local Wal-Mart and pay $2 to have access to each title via 's cloud service, powered by the UltraViolet platform” (UPI News Track, 2012, p. 1).

External Environment of the Commissary

The commissary is designed only for military families. Local communities outside of each installation cannot shop in the commissary unless authorized by way of military service or affiliation. Other stores that often compete with the commissary for military business are stores like Wal-Mart, Target, Kmart, HyVee, and other grocery stores. Commissaries are located all around the world and depending on the location and culture they cater to the German, Korean, and local culture. They do this by offering local items in the store and the commissary bakery. Sometimes the commissary volunteers to help out organizations such as Girl Scouts, Boy Scouts, March of Dimes, Cancer Society, and United Way.

SWOT Analysis

Strengths

The commissary has many product lines, have low cost products, maintains lower prices longer when competitors are raising prices, have managers who maintain good leadership skills and abilities. The commissaries are also able to maintain suppliers who are loyal to the government. The commissary has a diverse workforce. The commissary has locations around the world. They require managers to be educated, speak different languages, understand many cultures, and provide training other employees in the workforce. Competitors see our strengths as being lower prices, larger line of products, loyal suppliers that support last minute deliveries, and employees with better training. (Hill, & Jones, 2010)

Weakness

The thing that the commissary can improve on is expanding their product line. The commissary should sell clothes, shoes, stationary products, paper products, school supplies. Selling these products can benefit military families across the globe especially those stationed overseas with children who need school supplies at a lower price. The Post Exchange sells these products at higher cost to the military families. One resource the commissary lacks is good quality perishable items like milk. The milk from most commissaries last for only three days while the milk in Wal-Mart lasts for two weeks. (Hill, & Jones, 2010)

Opportunities

One opportunity is good advertisement. Military members know that all installations only have one to two commissaries. The local merchants are aware that the commissary is the only not for profit organization operating in their area. Commissaries have case lot sales of lower prices on select items that other grocery stores do not. A commissary can turn their diverse workforce into an opportunity by training them to become managers. (Hill, & Jones, 2010)

Threats

Legislators can stop the commissaries from operating as an independent agency and merge them with the Post Exchange charging higher prices for groceries. The current trend in our government is to save money. The economy has caused our deficit to rise while congress wants to save money by cutting organizations like the Commissary so that profits can be made. If the commissary is merged with the PX, the prices will rise. (Hill, & Jones, 2010)

Corporate Level Strategy of the Commissary

The commissary mission is, “Deliver a vital benefit of the military pay system that sells grocery items at cost while enhancing quality of life and readiness. The soldiers have limited incomes for shopping for groceries due to their low salaries. Our strategy in the commissary is to keep the cost down so that our customers can have an alternative from shopping off post. Goal 1. Provide the military community with a great shopping experience. Goal 2. Sustain a capable, diverse and engaged civilian workforce. Goal 3. Be a model organization through agility and governance” (DeCA .Com, 2012).

Business Level Strategies

The commissary has a competitive advantage through efficiency, quality of products from its suppliers, new technology such as hand held ordering devices, Dell computers, and electronic price tags. For example, the Dell computers allow quick entry of inventories. The hand held ordering devices communicate with our Dell computers software programs that orders directly from our suppliers. The time saved from recording the shortages on the shelves on printouts to later input into the ordering system is cut in half. Now, employees can manage their time more efficiently.

Commissary Structure and Control Systems

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The Commissary Chain of Command hierarchy consists of many dedicated employees. This matrix chart only consists of management only. There are too many employees to list after management. The structure does fall in line with the operations of the business. In the Grocery Department, as manager, I have to assess the daily tasks for the employees who are in my department. There are many different jobs to do in the course of the day. They are: The Frozen Food Manager, Sales Associates, Cashiers, Support Clerks, Product Coordinator, and Store Workers. The commissary is open six days a week. Each commissary picks which weekday their commissary is closed on (DeCA. Com, 2012). The commissary is ran by a civilian known as the commissary officer. The commissary officer has to understand how the day to day operations for every department is ran and what reports are needed for auditing, balancing, and the financial analysis of the business. The managers and other employees are rewarded. The commissary has incorporated good strategies that reward its management on performance evaluations that has the 360 degree assessment plan. At the end of a performance rating you are rated unacceptable, minimally acceptable, fully successful, excellent, or superior. Cash bonuses, merit promotions are two example of how the commissary rewards managers for high performance.

Recommendations

The commissary can urge congress not to eliminate this benefit to the soldiers. Soldiers need an alternative to shopping downtown where local merchants will charge higher taxes and core prices for the same products we sell. The commissary needs to expand their product line. In some cases the regional offices force their commissaries to stock a set of specific name brands off a mandatory product list. Employees need more competitive pay salaries that rival civilian grocery store salaries.

Conclusion

In conclusion, the commissary has a history of selling groceries to military personnel. The internal strengths of the commissary are adjusting for the changing demands of the various customers they serve on military installations. The weaknesses of the commissary are a lack of convenience of not having the right items. The external environment of the commissary is the grocery stores located off their given installations. For example, some locations have HyVee supermarkets in Kansas where King Soopers that have locations in Colorado. The SWOT of the commissary is simple and does not change frequently. Our corporate level strategy in the commissary is to keep the cost down so that our customers can have an alternative from shopping off post. The commissary business level strategy has a competitive advantage through efficiency, quality of products from its suppliers, new technology such as hand held ordering devices, Dell computers, and electronic price tags. The commissary structure has a hierarchy of managers that are in line with day to day operations and are controlled by the managers.

Reference

DeCA, Com, 2012. U.S. History of the Commissary. DeCA .USA . retrieved from: DeCA .com ,.

Hill, C.W.L., Jones, G.R. (2010). Strategic Management: An Integrated Approach, Ninth Edition. Houghton-Mifflin: Massachusetts

UPI NewsTrack. (2012). Walmart will store movies in the cloud. (2012, March 14). Retrieved from

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