Subject : Strategy and the global competitive environment.

Assignment : Assignment 1
Student name : Mallawa Arachchige Don Sameera Vimarshan
Student ID : 1946535
Unit code : BSS058-6
Word count : 2472
Submission deadline : 26.06.2020
 TABLE OF CONTENT
INTRODUCTION .......................................................................................................................... 1
4 scenarios for future of retail industry ....................................................................................... 1
Identified key scenarios .............................................................................................................. 2
Pestle Analysis ......................................................................................................................... 2-4
Porter five Force ...................................................................................................................... 4-6
SWOT analysis ........................................................................................................................... 7
Ansoff Matrix.............................................................................................................................. 8
CONCLUSION ..............................................................................Error! Bookmark not defined.
REFERENCES ............................................................................................................................. 10
APPENDICES ......................................................................................................................... 11-13
INTRODUCTION
Organisation make various strategies and plan in advanced in order to face different
challenges of global competitive market so that it can sustain and grow its business operation.
Companies while operating internationally have to understand views, ideas of each individual that
live in society in order to provided products and services as per their requirements so that overall
objectives of firm can be achieved. According to Balage, S. 2020, Daily Financial Times
newspaper published article analysing key driving forces of future retail industry. This report is
about Marks and Spencer that operates in retail industry providing personal, home care and
clothing products to its large number of customers to earn maximum amount of profitability. It has
discussed analysis external environment that affects operation of retail industry in future by use of
several model such as Pestle, porter five forces, swot and Ansoff Matrix are used to formulated
effective strategies that can be used by the entities who operate in retail industry to gain
competitive advantages in future.

4 scenarios for future of retail industry

There are four scenarios that need to be considered by companies that operate in retail
industry such as digital transformation (smart sourcing), sustainability or optimum utilisation of
resources (long live), ethical work practice (decent) and uncertain political conditions (Brexit) so
that customer’s requirements can be meet. Companies that operate in retail industry have to ensure
that it makes specific changes in its organisational structure, operation and technology to grow and
sustain its business in future circumstances. Brexit one of the uncertain policies of UK government
that have reduce sales volume of enterprise that operates in retail industry, GBP 394 billion in
2019 (423 billion in 2018 according to Retail Economics magazine. It is evident that how the
political factor (Brexit) had led to completely change the value of the total retail industry.
Therefore, various models are used to justify four recent scenarios for future of organisation in
retail sectors.

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IDENTIFIED KEY SCENARIOS

1. Digital transformation 2 Optimum utilisations of

resources
• Innovation
• Social networking • Consumer spending
• Artificial intelligence habit
• Cost of living

3. Ethical work practice 4. Uncertain political

conditions
• Product pricing
policy • Government policy
• Green shopper • Industry regulations
concept
• Misrepresentation
Pestle Analysis

External environment of business includes various factors such as political situation,

economic condition, needs and preference of individual or legal factors that impact or influence
on strategies of organisation (Kim and Kim, 2016). Business leaders have to effective analysis all
such factors so that firm can easily expand its business operation and attain its specific objectives.
Therefore, Pestle analysis in respect of retail sector can be illustrated as follows:

Political factors: There are numerous changes in policies of government that have adversely
impact on operation and profitability of the industry. Brexit is one of the recent policies that have
made by UK government which have adversely impacted overall sales volume and profitability as
before company can easily import and export good to member of EU. But now it has to pay extra
tariff and taxes for export that have increased overall cost so less number may prefer products due
to high cost. According to a new UNCTAD study, the tariff impact is knocking up to US$ 32
billion. At the same time industry can get benefit from free trade regulation, if they have entered,
thus it can easily enter new market to earn more profitability and customers satisfaction.

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Economic factors: It is another factor that need to be considered by organizations while
formulating different strategies in order to retain its market position. UK is facing recession since
people have voted for existence from EU as most of the trade of country is done with EU so it have
resulted in economic slowdown for temporary basis. Due to less availability of employment
opportunities and decreased in disposable income of people the industry sales have gone down as
people are less likely to spend money on products (Al-Khasawneh, 2020). Necessary steps to be
taken to train employees to make optimum utilisation of available resources so that needs of
individual can be satisfied and they can be motivated to make purchased.

Social factors: There are various factors that influence decision making of customers such as
social culture, technological or psychological that have to be understand by organizations of the
industry so that they can expand its business operation. Most of the younger generation in UK and
worldwide like to shop products and services through online so company have increased its
presence in social sites and virtual market to meet customers’ requirements, according to US
Department of Commerce online retail has increased by 14.9% in 2019 compared to previous year.
At the same time people have become more and more concerned about their health and safety so
organizations have to launch value addition to its product such as organic food products ranges so
that they can be motivated to select them as compared to other competitors in market.

Technological changes: Most of the organisations in the industry are using innovative
technologies and digital medium to build strong relationship with customers so that it can grow its
business for long period of time. Organization must provide all crucial information, images of
products and services in which company deals so that they can take accurate decision within
limited time frame. Moreover, they have to plan strategies that it needs to make its website
attractive and offer 24 hours services to customers so that their requirements can be fulfilled
beyond their expectancy. As per recent statistics produced by online industry giant, Amazon,
shows that the average customer waiting time for the order has reduced from 5.6 days to 4.3 days.

Environmental Factors: Government and people are highly concerned about increasing harmful
impact of various companies or industry on environment that have caused threat to availability of
natural resources for future generation (Puspitasari and Jie, 2020). Some of the managers have
planned to make effective utilisation of resources and bring economic of scale by guiding and
supportive employees at the same time making use of innovative technologies so that best outcome

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can be gained. Investment in CSR activities have increased cost as well as brand image, customers
loyalty so it has positively and negatively impacted on organisation.

Legal factors: There are some legal laws, rules that are made by government so that no harm can
be caused to consumer or employees that are working in the organisation. There was a situation
where Marks and Spencer were not able to follow health and safety laws at it stores that have
resulted in harmful effects on employees. Thus, company had to pay fine of 500,000 pounds for
each offence that have reduced brand image and market position of firm. Therefore, industry has
to ensures that all laws are followed while framing strategies for smooth operation of business.

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Porter five Force

It is one of the powerful tools that are used by enterprise to know about level of
competition in specific industry so that effective strategies can be formulated for achievement of
objectives (Grant, 2016). Porter’s five forces includes power of consumers, power of suppliers,
level of competition, threats of substitute products and threat of new entrance within organisation.
Therefore, by analysing all such factors market positioning of an organization can be easily
understand in retail industry.

Rivalry among existing competitors: There are various competitors in retail industry such as
Tesco, ASDA and ALDI that operates in UK to provide various products and services to number
of individual. ALDI is one of the heavy discount provide to customers so it have forced Marks and
Spencer to reduce its cost of products and services to retained customers satisfaction. Therefore, it
can be stated that competition level in retail industry is high so company by maintain its quality of
products and services have gain differentiate positioning in retail industry.

Power of consumer: It can be stated that UK have number of customers with different needs and
preference so they forced Marks and Spencer to manufacture products as per their requirement for
growth of enterprise. Therefore, bargaining power of consumer is high as there are large
organisation with number of products and services that operates its function to fulfil their
requirements and achievement of goals (Lewis and et.al. 2017). Manager of Marks and Spencer
by ensuring that it deals in highly branded and quality products is able to charge competitive
pricing from people.

Power of supplier: There are various small supplier of retail industry which offers similar
qualities of products and services at reasonable rates in order to earn specific amount of profit
margin. Manager by making purchase of products and services in bulk amount is able to enforce
supplier to provide several discounts so that it can make purchased. Thus, it can be stated that
effective strategies, strong brand image and relationship with various supplier have contributed in
reducing their power and availability of resource at minimum rates so that more benefits can be
render to customers.

Threats of new entrance: It is another element of porter five forces which stated that number of
firm can enter into retail industry thus increasing level of competition. Lot of capital or fund is
required by new enterprise to enter into retail sectors as there are large firm such as Tesco, Marks

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and Spencer with huge market share in the industry. Organizations have focused on customer
loyalty and satisfaction, so it has created barriers for new entrance to enter into retail industry. So
threat of new entrance is low to medium in retail industry.

Threat of substitute products: Many small firms have tries to imitate or copies products and
services as of Marks and Spencer to influence customers. Such as design of cloth, products such
as shampoo, furniture so company have copyright and patents its technology and products so that
no other firm can copy and gain competitive advantages. Thus, it can be stated that threat of
substitute products is medium.

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SWOT analysis

It is another model that is used to identify strength and weakness of organisation so various
strategies can be planned by manager for growth and sustainability of firm in competitive market
(Routledge. Hakobyan, 2019). Swot analysis of retail industry helps in understanding strength and
capabilities of firm that are used to get better result of available opportunities so that specific goals
can be attained. Therefore, Swot analysis of firm can be illustrated as follows:

Strength: Who ever in the industry has strong presence in Ecommerce that provide opportunities
to company to induce people living in UK as well as across worldwide to make purchased for
satisfaction of their own requirements. Company have ensured that customers are provided better
experienced so that it can build strong brand image and survive in market for long period of time.

Weakness: There are frequent recalls which have adversely impacted on customer’s satisfaction
and brand loyalty of Marks and Spencer. At the same time company has mainly realised upon UK
market for its growth that hinder expansion of business in new countries (Kilduff, 2019). It has
been noticed that marks and Spencer is not able to manage its various stores across worldwide that
have led to closure and cut of job for many individual.

Opportunity: There are various opportunities for organizations such as due to strong brand image,
high awareness among customers about products and services firm can easily enter into new
market segment to earn more profitability. It can also expand its operation in ecommerce in order
to gain maximum customers satisfaction and enhance its sales volume or market share.

Threats: Political instability and continuous changes in preference and requirements of customers
has been one of the most important threats for organisation (Orr, 2018). Brexit is such as uncertain
event that have reduce overall import and export of firm and possess threat on its further operation.
Increasing in number of competitors in retail industry can be another threat for existing players so
business have to effectively understand external environment for sustainability of firm.

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Ansoff Matrix

This model is also used by enterprise to frame different strategies in order to survive and
sustain its operation in retail industry (Jia and Wang, 2019). There are four types of strategies
which are suggested in Ansoff Matrix which is used by manager to increase sales volume and
profitability of organisation. Various strategies for growth and success of firm are :

Market penetration: This is simplest and no risky strategy that can be adopted by firm that wants
to influence existing customer to make purchased of existing products and services. Organizations
in initial stage of business with limited resources have attracted various individual to select existing
products for better satisfaction of their needs. Thus, it has contributed in sustainability of
organisation in retail industry.

Product development: Company have introduced various products and services as per expansion
in its market share and customers satisfaction. Organizations who has range of products and
services from clothing, personal care to financial services so that requirements of diverse
individual can be fulfilled (Teece, Peteraf and Leih, 2016). It has recently launch organic products
range for people of UK so that they can be attracted to make purchased for fulfilment of their
requirements.

Market development: As organization can gain market share it have planned to enter into various
market segment so that objective of firm can be meet. Company have entered into different
countries with existing products and services and now planning to enter into another territory
because there are large numbers of customers so that firm can easily earn maximum profit margin.
This type of strategy is little bit risky as company is unaware about market trends and customer
preference so managers have to decide that before making investment overall market research will
be conducted for better operation of business.

Diversification: It is last and most risky strategy in which organization plans to enter into new
market with new products and services. Business have to plan to launch organic products while
entering into different global market as most of the people across worldwide are more concerned
about their health and safety. Therefore, company by using its qualitative and organic food range
is able to diversify business and gain competitive advantages.

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CONCLUSION
The only certain thing in the uncertain world is change. No exceptions, this will apply to
retail industry as well. Stores are not just to store, anymore. Retails are not dead, and nor are the
stores. Considering abovementioned all facts, numbers and instances, the digital transformation
plays a vital role in future retail industry. This can make a dramatic change in the whole supply
chain in this sector, according to Business Wire London, the global digital transformation in the
retail sector is expected to post an incremental growth of US$ 129.64 billion during 2020-2024.
Hence, I would like to recommend above scenario 1, digital transformation (smart sourcing), as
most plausible scenario.

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REFERENCES
Books and Journals

Al-Khasawneh, R.O.H., 2020. Cost-Driving Strategy Under the Use of E-Business to Achieve a
Competitive Advantage in a Digital Economy Environment. International Journal of
Economics and Finance, 12(1), pp.1-70.
Grant, R.M., 2016. Contemporary strategy analysis: Text and cases edition. John Wiley & Sons.
Jia, X. and Wang, M., 2019. The Impact of Green Supply Chain Management Practices on
Competitive Advantages and Firm Performance. In Environmental Sustainability in
Asian Logistics and Supply Chains (pp. 121-134). Springer, Singapore.
Keegan, W.J., 2017. Global marketing management. Pearson India.
Kilduff, G. J., 2019. Interfirm relational rivalry: Implications for competitive strategy. Academy
of Management Review, 44(4). pp.775-799.
Kim, S. H. and Kim, D.G., 2016. CEO's Discovery Competency for New Business Opportunity,
Competitive Strategy, and Firm's Performance. Asia-Pacific Journal of Business
Venturing and Entrepreneurship, 11(3). pp.121-130.
Lewis, H., Gertsakis, J., Grant, T., Morelli, N. and Sweatman, A., 2017. Design+ environment: a
global guide to designing greener goods.
Orr, S., 2018. Maintaining a viable competitive position in the e-commerce space through
advanced supply chain management strategy adoption.
Puspitasari, I. and Jie, F., 2020. Making the information technology-business alignment works: a
framework of IT-based competitive strategy. International Journal of Business
Information Systems, 34(1), pp.59-82.
Routledge. Hakobyan, N 2019. The implementation of Corporate Social and Environmental
Responsibility practices into competitive strategy of the company. Маркетинг і
менеджмент інновацій, (2), pp.42-51.
Sansone, C., Hilletofth, P. and Eriksson, D., 2017. Critical operations capabilities for competitive
manufacturing: a systematic review. Industrial Management & Data Systems.
Teece, D., Peteraf, M. and Leih, S., 2016. Dynamic capabilities and organizational agility: Risk,
uncertainty, and strategy in the innovation economy. California Management
Review, 58(4). pp.13-35.
VAHDATI, H., NEJAD, S. H. and SHAHSIAH, N., 2018. Generic Competitive Strategies toward
Achieving Sustainable and Dynamic Competitive Advantage. Revista
ESPACIOS, 39(13).

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APPENDICES
Acronyms

1. UK - United Kingdom
2. EU - European Union
3. GBP - Great Britain Pound
4. US$ - United States Dollar
5. CSR - Corporate social responsibility
6. UNCTAD - United Nations Conference on Trade and Development
7. ASDA - Associated Dairies
8. ALDI - Albrecht Discount

The Five Forces framework

Source: Adapted from Competitive Strategy: Techniques for Analyzing Industries and
Competitors The Free Press by Michael E. Porter, copyright © 1980, 1998 by The Free Press.
All rights reserved.

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Pestle analysis

External factors to Key driving factors within

consider retail industry
POLITICAL • Government policy • Tax and other financial
• Political stability legislation
• Tax and other • Global trade
financial legislation agreements and or
• Industry regulations restrictions
• Global trade
agreements and or
restrictions
ECONOMIC • Exchange rates • Economic growth /
• Globalisation decline Inflation
• Economic growth / • Labour costs
decline Inflation • Consumer spending
• Interest rates habits
• Cost of living
• Labour costs
• Consumer spending
habits
SOCIAL • Population • Consumer buying
demographics habits
• Consumer buying • Consumer trends /tastes
habits • Lifestyle factors
• Lifestyle factors
• Fashions
• Consumer trends
/tastes
• Career attitudes
• Work-life balance
TECHNOLOGY • Security • Automation
• Automation • Innovation
• Innovation • Social networking
• Disruptive • Artificial Intelligence
technologies
• Social networking
• Upgrades
• Robotics
• Artificial
Intelligence

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LEGAL • Health and safety
regulations
• Local labour law
• Employment law
• Common law
• Intellectual property
law
ENVIRONMENTAL • Ethical sourcing
• Environmental
restrictions imposed
by in-country
governments
• Sustainable
resources
• CSR (Corporate
social responsibility)
• Transportation
• Procurement
• Supply chain
management
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• Local labour law
• Employment law
• Health and safety
• Intellectual property
law
• Environmental
restrictions imposed by
in-country govern-
ments
• CSR (Corporate social
responsibility)
• Supply chain
management