Primark Business Strategy Analysis- Assignment Desk

A Sample Report On Business Strategy

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TABLE OF CONTENTS Table of Contents.........................................................................................2 INTRODUCTION.............................................................................................4 TASK 1...........................................................................................................4 a) Steps of strategic planning process.......................................................4 b) Produce a 2-page informational promotional brochure about the role of strategy and issues involved in Strategic Planning....................................6 c) The utility and application of BCG (Boston Consultancy Group) as a strategy planning technique for managers................................................9 TASK 2.........................................................................................................11 a) How SWOT analysis help in carry out the organizational audit .......................................... 11 • Primark is also a part of ethical trading initiatives (ETI) that mainly focuses on the rights of their staff and workers. ............................................................................................... 12 b) Carry out environmental audit for Primark using PESTEL framework ............................... 12 c) Significance of stakeholder analysis by using MENDELOW matrix .................................. 14 TASK 3...........................................................................................................16 a) Difference between vertical and horizontal integration when used by managers as a substantive growth strategies .................................................................................................... 16 b) Selecting an appropriate future strategy for the client company .......................................... 17 TASK 4...........................................................................................................18 a) Three roles and responsibilities and three business activities that are necessary for implementation of strategy and highlight which human, financial and material resources are indispensable during strategy implementation.......................................................................... 18 b) Gantt chart as proposed time line for agreed strategy targets ............................................... 19 REFERENCES.................................................................................................21

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Illustration Index Illustration 1: Strategic planning process .........................................................................................5 Illustration 2: Mintzberg 5 P's strategy ............................................................................................7 Illustration 3: SWOT analysis ........................................................................................................12 Illustration 4: PESTLE Analysis ....................................................................................................14 Illustration 5: MENDLOW Matrix ................................................................................................16

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INTRODUCTION In the contemporary scenario, it is effective for the business organization to devise proper business strategy that would help them in gaining competitive edge in the external environment and within the industry (Antony, 2006). However, it is also required to seek the position within the competitive environment which assists the enterprise in generating sustainable competencies to survive with the competitors. For the present scenario the chosen organization is Primark which is one of the renowned fashion retailers in the UK market. The company focuses on devising effective business strategy by measuring their internal as well as external environment so that they can succeed in the competitive market. The present will also focuses on analyzing company vision, core competencies etc. so that they can focus on strategic planning process.

However, the report also emphasizes on formulating the strategy and even understanding various approaches for selecting and implementing an appropriate strategy.

TASK 1 a) Steps of strategic planning process

In the present competitive scenario it is not beneficial for the large organization to engage in the methods like budget orientated planning and forecast based planning (Azar, 2011). The enterprise must focus on strategic planning process that mainly focuses on defining the mission or objectives, assessing internal as well as external environment so that they can easily devise the •

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strategy and implement it. Working as a strategy consultant in the business consultancy firms, they are responsible for measuring their client's vision, mission as well as core competencies that would assist them in enabling strategic planning process (Burke and Schreiber, 2004). The different steps of strategic planning process include:

Mission & Objectives- The first step in the strategic planning process include describing the core mission and vision of the company (Burlton, 2010). Mission as well as vision is defined as unchanging values of the firm. They are also termed as visionary goals and objective of firm that direct the company in grabbing future opportunities. For instance, the Vision of Primark Company is to supply superior quality fashionable and affordable prices products to their customers by focusing on new promotional techniques. However, the Mission of Primark clothing is to provide products at the low costs as compared to their rival companies which will further help in staying at the competitive position.

Environmental scanning- Another step in strategic planning process includes scanning the internal and external environment under which Primark company operates their operations. For this, consultant focuses on analyzing SWOT of the company (Butler, 2012). However, they can also measure the external environment by using PESTLE framework that will assist them in measuring different factors that directly or indirectly affect the business in formulating the strategy.

Strategy Formulation- After analyzing both the environment, environment strategy consultant of consultancy firm will focus on devising the strategy. Consultant must focus on matching Primark strength with the opportunities which have been identified (Cinquini and Tenucci, 2010).

Strategy implementation- After formulating the strategy, consultant would focus on implementing the framed strategy within Primark firm so that they can easily accomplish the goals and objectives. While, implementing the strategy consultant must focus on proper budgets and procedure to implement the strategy within the organization (Edwards and Ellison, 2009). •

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Evaluation and control- The last step of planning process enables that, consultant while implementing strategy for the client company must review and monitor the successful implementation of the strategy. b) Produce a 2-page informational promotional brochure about the role of strategy and issues involved in Strategic Planning

The role of strategy includes: The main role of strategy is to enable proper framework of the operational plan of Primark so that they may attain competitive edge over their rival companies (Figge and et. al., 2002).

Strategy also plays an essential role in enhancing the effectiveness of organization by accomplishing their objectives and goals.

Mintzberg five P's strategies are:

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Plan- This focuses on Primark strategy as plan is to deliver quality and superior quality product to their customers.

Ploy- Strategy may also act as the plotting against their competitors so that Primark can attain competitive edge over their rival companies like Zara, H&M etc (Hahn, Kolk and Winn, 2010).

Pattern- It may be termed as the pattern and ploy to enhance the firm’s position by delivering product that act as value for money.

Position- Manager may also focus on strategy as position assists the Primark to explore their activities to attain higher position in the market.

Perspective- Last type of strategy include perspective under which strategy rely heavily upon their culture and behavior of their customers (Ward and Lewandowska, 2008).

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Issues Involved in strategic planning: Lack of leadership: When a plan is made in Primark Corporation and if the leader will not support that plan then it will fail. Proper guidance from the senior authority helps employee to work effectively and efficiently (Liu and Wang, 2010).

Cultural context: Primark has to generate a familiar culture for employees. A good culture will help the employee to work properly.

Two problems in strategic planning include:

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Needs of the customers: When formulating the strategic plans for Primark, the most crucial component is to consider the needs and the prospect of market customers that is what type of clothing apparels they require (Rajala and et. al., 2012).

The customers are the one who purchases fashionable and stylish apparels of Primark.

Portfolio analysis: When formulating the strategic plans for Primark, another problem arises is of analyzing the portfolio of Primark. They must measure the business portfolio on the ground of their market portion and the financial investment.

Two different planning technique used by Primark: Strategic Plan: Strategic plans should be created at Primark. These plans should include organizational goals and opportunities which they must achieve to succeed in the market (Allen and Raynor, 2004).

Program evaluation and review technique (PERT): It can be considered as a route map for a specific task at Primark. It determines the critical activities on which different activities depends.

c) The utility and application of BCG (Boston Consultancy Group) as a strategy planning technique for managers There are several types of strategy planning techniques for the manager of Primark group, these techniques help in processing strategic business plan. All the techniques like BCG; SPACE matrix etc. would support the company in analysing their market share with the market growth (Chaiprasit and Swierczek, 2011). However, it also assists the manager in determining place of Primark among their rivalries in the fashion industry. BCG (Boston Consultancy Group) growth matrix helps the reputed brand in distributing and allocating diverse resources effectively so that, brand can concentrates on generating their market share. With the help of growth share matrix, Primark can also determine total cash generated and consumed by the company (Kennerley and neely, 2003). •

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Cash cows: Cash cows category emphasis on making more cash than the total amount used by the company. However, Primark would spend less in market as low investment in the fashionable industry would get wasted as the fashion industry keeps on changing which results in changing taste and preferences of market customers. Therefore, by attaining low growth in the market Primark will not able to invest huge amount in the market (Arnold, 2004).

For instance; Primark must focus on introducing the low price range of their fashionable products to target the audience.

Dogs: In this matrix, Primark hardly generates cash to grasp or hold its market share in the UK market. At this stage or matrix, Primark possess low market share and low development rate which results in neither generating nor consuming any cash (Moon, 2010).

For instance; under this stage it must eliminate some part of their assets and inflow the cash by enabling divestment and liquidation retrenchment strategy. This will result in holding the market share within the UK market.

Question marks: In question phase, Primark would broadly grow by investing high amount of cash but as the company has low market share this would not result in generating any cash. Thus, Primark should increase their market share by divesting quickly. For example, under this stage

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Primark company may expand their activities by entering into the new marketplace. However, through investing the amount in increasing the market share it will outcome in generating cash.

Stars: In stars category, company generally have high market share with high market growth. In the contemporary scenario, Primark has managed themselves under star category of BCG matrix by increasing their market share by opening their stores in US and ensuring continuous growth with recording profit of ÂŁ298 million in the year 2014 (How can the BCG Matrix be applied to a high street retail business, 2015).

For example,

Primark has managed themselves under star category of BCG matrix by

increasing their market share by opening their stores in US and ensuring continuous growth with recording profit of ÂŁ298 million in the year 2014.

TASK 2 a) How SWOT analysis help in carry out the organizational audit As an experienced strategy consultant of the consultancy firm, it is required to carry out an organizational audit by analyzing their strength, weakness, threats and opportunities of the client that will assist them in formulating the new strategy (Antony, 2006). SWOT technique help in determining the distinctive competencies and assets of the firm that act as strength for Primark Company. However, it also determines weaknesses as well threats of the company so that manager can overcome them while formulating the strategy.

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Strength •

Primark has 161 stores around the world with 125 stores located only in the UK.

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Company also offers superior quality stylish products in the affordable prices. Company provides diverse range of apparels to all age people (Azar, 2011).

Primark is also a part of ethical trading initiatives (ETI) that mainly focuses on the rights of their staff and workers.

Weaknesses •

Low advertising expenditure as compare to their rival companies.

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Inadequate working condition.

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Being a part of ETI, it has been witnessed that the company is engaged in child labor practices for producing the goods.

Opportunities

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Expansion in the international market.

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People are focusing on using high quality products.

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Producing low price products for target niche segment customers (Burke and Schreiber, 2004).

Threats •

High competition with the international brands like Zara and H&M

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Increasing level of promotion also act as major threat for Primark.

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Many competitors offer similar products at low costs also act as threat for Primark.

b) Carry out environmental audit for Primark using PESTEL framework

With the help of using PESTEL framework, consultancy firm can easily measure the external factors that exist within the retail industry so that they can carry out environmental audit for their client company so that they can easily formulate the strategy (Burlton, 2010). The PESTEL framework includes:

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Political Factor: Primark company has its stores around the world in different countries which follows the rules and regulations to sustain in different economy. For instance, to open store in the US market, Primark need to follow their government policies and tax rate. Thus, increase or decrease tax rates within the US economy will affect the pricing of Primark products

Economical factor mainly include interests rates, taxation charges, economic growth, inflation rates etc. all these factors primarily affects Primark retailer to expand their business activities in different countries. For example, if UK economy is constantly growing then it may result in enabling high purchasing power of the customers that result in purchasing high price quality products of Primark

Social factors mainly include modification in taste and preferences of customers, change in sociology and cultural change etc. however, continuous change in the trends and fashion of customers will heavily impact the manufacturing process of Primark. For instance, young people tend to purchase stylish apparels along with the change in fashion thus, it will affect the production process of Primark.

Technological Factor In the contemporary scenario, technology is upgrading which directly benefit Primark company in decreasing the monetary value which is associated with the advertising and publicity of their clothing products. By adopting technology, Primark group can easily make an online horizontal surface to promote their products among various customers residing in the international market

Environmental factor must focus on minimizing the activities that commit environmental issues. Though to protect the environment or surrounding in which Primark operates, the organization should focus on introducing paper bags.

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Legal factor enables that Primark company to focus on complying with the different legal laws and legislation that are framed by the government. For instance, they must focus on consumer protection laws that will preserve the rights of consumers who purchase their products

c) Significance of stakeholder analysis by using MENDELOW matrix

The significance of stakeholder analysis while formulating the new strategy is that: It helps the Primark manager in accumulating the information in respect with the most coercive stakeholders within or outside the Primark that will affect the overall operations of the company (Allen and Raynor, 2004).

However, with the help of MENDWLOW model, Primark manager must analyze the interest and power of different stakeholders. Another significance of stakeholder analysis is that while formulating strategy it will assist in deciding the requirement and preferences of the target customers so that they can render stylish and classy apparels to their customers.

For analyzing the key stakeholders, MENDELOW has proposed a matrix (Chaiprasit and Swierczek, 2011). This matrix assists the strategy consultant in analyzing the stakeholders and their level of interest and power within the organization while formulating the strategy.

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Some Examples.

Matrix A – Minimum efforts Customers- They are the key stakeholder of Primark for whom organization renders variety of grocery and fashionable products. They render minimum efforts within the organization.

Matrix B – keep informed Shareholders- They are the one who invest their capital within the firm by purchasing their shares. They need to be informed regarding financial performance of the company.

Matrix C – Keep satisfied Governmental agencies- They are other stakeholder that need to be satisfied as they are the one who monitors the action the company.

Matrix – D Key Player •

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Owners- they are the key players that direct and run the Primark operations so that customers ca get quality products according to their requirement.

Trade Union- They are termed as the association that may influence or affect the behavior of other employees within the premises.

Employees- Another stakeholder that are also known as key player include employees that mainly renders services within the Primark. They are directly in contact with the customers that influences them to purchase their products.

TASK 3 a) Difference between vertical and horizontal integration when used by managers as a substantive growth strategies

For attaining the substantive growth strategy, Primark manager must focus on two different substantive growth strategies that is vertical and horizontal integration. Both the strategies are distinct from each other which are under horizontal integration. Primark brand gets merged up with similar company producing identical fashionable products (Kennerley and neely, 2003). However, in the vertical integration Primark focuses on acquiring another firm that are on the different stage on the same production. For instance, Primark acquire the firm from whom they purchase the raw material to manufacture fashionable apparels. Other example is acquiring the company or authorised stores who sell Primark products to the customers. Difference between both the strategies includes:

Horizontal Integration

Vertical Integration

Under this, Primark acquire or merge up with Under this, Primark acquire the firm that exists the firm whose products are identically same.

at different stage in production of clothing apparels.

This growth strategy focuses on increasing the Vertical integration focuses on strengthening overall size of the business operation. •

the supply chain (Arnold, 2004).

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The

consequences

of

using

horizontal The consequences of vertical integration results

integration are to eliminate the competition in reducing the wastage and cost associated from the fashion retail market and enhance the with the production market share.

Primark mainly adopt horizontal integration While, vertical integration strategy is being strategy to exercise their control in the market used to control the fashion industry.

(Moon, 2010).

Conclusively, it can be stated that in the future Primark may focus on the horizontal integration as this will assist the Primark in increasing the size of company. However, Primark may acquire the firm from whom they purchase the raw material to manufacture fashionable apparels. Thus, it will result in lowering or reducing the cost of production that directly affect the prices of products. b) Selecting an appropriate future strategy for the client company

In the contemporary scenario, for raising the profit boundary of Primark and creating huge sales of stylish and fashionable clothing apparels for men and women, strategic consultant of consultancy firm must select an appropriate future strategy.

They must focus on adopting future market entry strategy that is Merger and Acquisition (M&A) for their client company. However, the market entry strategy that is M&A will be practicable or viable for Primark Company. By adopting this future strategy, Primark can easily increase their market share and also assists in enhancing their brand name among different countries (How can the BCG Matrix be applied to a high street retail business, 2015).

For instance, to enter in the developing markets, they must merge or acquire the competitors within the marketplace i.e. Primark can acquire local brand to enter in the market.

Therefore, it will reduce the costs which are associated with the production and selling of fashionable and branded apparels in the developing countries. •

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TASK 4 a) Three roles and responsibilities and three business activities that are necessary for implementation of strategy and highlight which human, financial and material resources are indispensable during strategy implementation

Three roles and responsibilities for implementing the strategy-

Monitoring the strategy: The main responsibility of Primark manager is to supervise or observe the merger and acquisition strategy so that they can successfully acquire the firm. Monitoring the plan of action also help Primark Company in monitoring the mistake or the deviations that primarily exist while utilizing the strategy (Burke and Schreiber, 2004).

For example: Primark manager focuses on the merger and acquisition strategy for attaining the market share thus, while implementing the strategy they must monitor all the activities that need to be done while merging with another company. Thus, manager would monitor that all the documents related with the merger has been signed and approved or not.

Program of Activities: Activities of the company related with merger and acquisition can be programmed in a sequential manner so that, desired outcome can be accomplish easily.

For example: while implementing the strategy within the organization manager must focus on the activities that are lined up and are performed in the series so that it must result in successful implementation of the strategy.

Communication: Proper implementation of strategy also ensures that Primark manger must properly communicate the activities and strategy at different level of management so that, misconception of information must be minimized. Therefore, it is consider as the main responsibility of personnel at the time of implementing the strategy (Cinquini and Tenucci, 2010).

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For example: Primark manger while implementing the merger and acquisition strategy they must communicate to their employees so that employees may easily resist the change in the effective manner.

Additionally, there are different resources that are human, financial and material resources which are indispensable during strategy implementation. Firstly, human resources are considered as the crucial aspect of the company that carry out all the activities and project within Primark. (Edwards and Ellison, 2009). However, financial resources are also considered as indispensable resource of Primark Company because the firm is required to put working investments for manufacturing or producing the fashionable and stylish apparels so that they can succeed in the competitive marketplace.

b) Gantt chart as proposed time line for agreed strategy targets

Activi Task Name ties

Duration

Start

Finish

1

Market research

28 days

Mon 16-11-15

Wed 23-12-15

2

Determining market 18 days entry strategies

Mon 16-11-15

Wed 09-12-15

Thu 24-12-15

Wed 13-01-16

1,2

Thu 14-01-16

Fri 29-01-16

3

Mon 01-02-16

Mon 08-02-16

4

Tue 09-02-16

Thu 17-03-16

5,4

Fri 18-03-16

Fri 01-04-16

6,2

3 4 5 6 7

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Analyzing different 15 days strategies Selecting the 12 days appropriate strategy Legal proceeding to merge with the 6 days company Implementing the 28 days strategy Evaluation of 11 days strategy

Predecessors

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CONCLUSION Conclusively, it can be concluded that in the contemporary environment, framing effective business strategy is essential for Primark brand so that, they can easily accomplish the stated objectives of the company. The above report also measures strategic position of the acknowledged fashionable brand with the help of conducting organizational and environmental audit. However, the report also suggested that market entry and substantive growth are different alternative strategies which will support Primark group in the future situations.

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REFERENCES ⚫

Allen, D. and Raynor, E. M., 2004. Preparing for a new global business environment: divided and disorderly or integrated and harmonious?.Journal of Business Strategy.25 (5).pp.16 – 25.

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Antony, J., 2006. Six Sigma: a strategy for supporting innovation in pursuit of business excellence–invited paper. International Journal of Technology Management. 37(1-2). pp. 812.

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Arnold, M. 2004. The mirage of global markets: how globalizing companies can succeed as markets localize. 2nd ed. FT Prentice Hall.

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Azar, O. H., 2011. Business strategy and the social norm of tipping. Journal of Economic psychology. 32(3). pp. 515-525.

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Burke, M. D. and Schreiber, S. L., 2004. A Planning Strategy for Diversity‐Oriented Synthesis. Angewandte Chemie International Edition. 43(1). pp.46-58.

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Burlton, R., 2010. Delivering business strategy through process management. In Handbook on Business Process Management. 2. pp. 5-37.

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Butler, D., 2012. Business development: a guide to small business strategy. Routledge.

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