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Business Strategy Framework

University: Bucks New University

  • Unit No: 19
  • Level: High school
  • Pages: 22 / Words 5427
  • Paper Type: Assignment
  • Course Code: N/A
  • Downloads: 174
Question :

This sample will let you know about:

  • Discuss about the McKinsey's 7s model of River Island.
  • Discuss about the PESTLE analysis of River Island.
Answer :
Organization Selected : River Island.

INTRODUCTION

Business strategy is the framework which is plan by the companies to achieve their vision, objective, mission, competing successfully and optimizing performance with their business models. Business strategies involves marketing, sales strategies, information technology strategies, HRM strategies and sustainable strategies.

This report will Take River Island company for this case study (The history within River Island. 2013). It is highly street fashion brand and their headquarter is in London UK.

Vision- To be the best high street fashion brand.

Mission- To aim sustainable development of the company and ensure strong competitive advantages through its product quality.

This report will analyse the impact of macro environmental on the River Island and their strategies and it will add PESTEL analysis to explain the micro environmental influence on this company (Lyneis, J. M., 2020). This report will analyse internal environment by using the appropriate framework. It will also apply the porters five analysis to explain the competitive forces on this company. This report will conclude all the forces of porter's five such as threats of new entry, Bargaining power of suppliers, bargaining power of the buyer, competitive rivalries and threats substitution. In the end of this report will apply the range of theories and model for the devise strategic plaining for the River Island company. Order assignment help from our experts!

MAIN BODY

P1- Impact of macro environment on the companies and their strategies

There are some macro environmental factors which impact on the companies strategies and their profitability. It is important for the River Island company to analyse those factors and make new strategies for the company (Chen, Eshleman and Soileau., 2017). The Best Framework to analyse the macro environmental is PESTEL analyses which covers all the factors such as Political factor, economical factor, social, technological, environmental and legal. This framework will be helpful for them to analyse all the factors affect on their business strategies.

PESTLE analysis of River Island

Political factors

Political factors such as change in the government polices such as Taxes on the product which increase their product price. It affect on the company's profitability and their growth. the stability in the politics is no longer secure which keeps this company curious on growth and big investment. It also affect on the companies strategies and it is important for the company to make new strategies, so they can overcome from this issue. Political factor always an big factor for the River Island company because they are operating their business on the global level and every government have their own tax structure which affect the profitability o this company.

Economical factors

Economic factors such as change in the product demand can affect on the companies strategies (RIVER ISLAND SWOT AND PESTLE. 2016). Demand of the products change with the time when three is any situation in the country like inflation and deflation in the economy of the country where River Island is operating their business and this can affect the strategies of the River Island company (Gupta, Gupta and Gupta., 2019). They have to make new strategies to develop their products which can satisfy the demand and needs of their customers. It is important for them to develop their product and marketing strategies to take competitive advantages.

Social Factors

Customer value is another important factor for the River Island company, People like to wear new trending clothes and follow new fashion. It is important for the company to add value for the customers by providing products in the affordable prices (Helfaya and Moussa., 2017). This can be possible through creating good relationship with the suppliers, the River Island should improve their relation with their customers so they can add some value for the customers in their products.

Vision- To be the best high street fashion brand.

Mission- To aim sustainable development of the company and ensure strong competitive advantages through its product quality.

Technology help this company to take competitive advantages in the market (The Fascinating History of River Island. 2020). River Island company has implemented new technology machines in their workplace to increase their productivity and their profitability. When company bring new technology in their workplace than leaders and mangers of the company have to make new strategies to provide training to the employees and make them learn how to use new technology to produce better result for this company (Eskerod, and Larsen., 2018). It is important for VRIO analysis them to implement new technology trends in the company so company can show their presence in the market and gain competitive advantages in the market. They are also having online shopping site where customers can order their product and their delivery team will deliver their product at their home.

Environmental

Environmental factors also affect on the companies strategies because with the change in the season people wear clothes according to the different seasonal conditions. In winter people wear warm cloths and rainy reasons people wear raincoat etc (Auliandri And et.al., 2019). leaders of the River Island company take decision for the company during the seasonal change and make new strategies to sell their product to the customers. They have to bring different clothes and new design for the customers, so they can attract customers by satisfying their needs.

Legal

If UK Government change tax structure then it can also affect on the profitability of the company . During the change in the government polices leaders of the River Island company also have to make new strategies to follow those police, and they also have to change in their organizational structures (Pati, and Bandyopadhyay., 2017). It is important for the River Island company to follow the governmental rules, so they can make good relationship with the government and take advantages of the government composition polices.

M1- Micro environment to inform strategic management decision

Strategic decision-making are decisions made by the companies superiors according to the companies mission and their vision. Superiors of the River Island company should analyse the macro environment factors such as political factors, economic factors, social factors, technological factors, environmental and legal factors so company can take competitive advantages in the market (Du Plessis., 2017). Changes on these factors can affect the profitability of River Island company and it can affect on the strategic management of the company. They can take competitive advantages through analysing this factors properly and make proper strategies to run their business smoothly. PESTLE analysis can be used to identify those factors and it helps to identify external factors which affect on the business.

Stakeholder analysis

Stakeholder analysis is the process of identify these people before the project begin: grouping them according to their levels of participation, influence in the project. Stakeholders of the company have huge impact of the company which makes important for the company to give them importance more than anything. Here are stake holder of the River Island

Employees

Employees are important for the River Island who run day to day activities in the workplace and make River Island company successful (Hernández and Garcia., 2018). Employees have who work in the manufacturing area have to cover raw material into the fished goods and some of the employees have to provide services to the customers at offline shop of River island. They help company to achive their objectives by doing their work according to the companies strategy. Get Assignment Examples.Talk to our Experts!

Leader

leaders of this company lead employees to make vision of the company into reality. Leader of the River Island company encourage employees to achieve goals and objective of the company so company can be successful in their business. Leaders make strategy and take decision for te company without leaders company can not achieve their goals.

Managers

Manager of the company manage very activity in the workplace and provide right direction to employees. They manager every department of the River Island company and give proper direction to the employees related to their task. Manager of the River Island company make strategy for the company and take decisions according to it.

Investors

Investor of the River Island invest, and they get revenue from the company. They invest in the company and company use their money to run their day to day activities. It is important for the company to show the strategy of the company so they can gain their trust and they will invest on the River Island.

P2 Analysis of internal environment of the company

There are two models which help helps to analyse the internal environment and capability of the River Island company (Pati, and Bandyopadhyay., 2017). It will also help company to understand their strength and weakness in the market, so they can take competitive advantages. These models are VRIO/ VRIN and McKinsey's 7s models.

VRIO analysis of River Island company

VEIO analysis is an analytical technique brilliant for the evaluation of companies resource and it also helps them to take competitive advantages in the market. This tools are an acronym from the initials of the names of the evaluation, values, dimensions, rareness, limitability , organization. This has huge impact on the companies strategy and helps to create opportunities for the company in the future.

Valuable

Company is selling unique design street fashion clothes to the customers and process of the clothes are affordable which provides value to their customers. They are having many customers in worldwide because it is attracting young generation, and they are providing varieties of the clothes and their design is unique (Yudiono, Wilopo and Iqbal., 2019). According to the VRIO analysis of River Island company searches and development at River Island company is not valuable resource. It is because development and researches are costlier than the benefits it provides the innovation of the company. Researches and the development are disadvantages for the River Island. It is important for the superiors of the company to make proper suitable strategies for the company, so they can overcome from this disadvantage.

Rare

design of some fashion products are rare, and they do not found in other clothing company like some of the products in male category have unique design and different as compare to the other bg brands. It is valuable resource for the company because they are attracting young generation recently have also launch their new shirts for the age group of 18 to 24 In male which has unique and new design with options to choose colour. And also the Employees of this company are rare resources because they are having skills to sell their products and they are from long time. Company provide the training to develop their skills and motivate them.

Imitable

the employees of the River Island are not costly to imitate. This is because other firms can provide training to their employees to improve their skills and knowledge in this industry and other companies can hire employees of the River Island by offering better salary (Auliandri And et.al., 2019). They can also encourage employees to give their opinion on the companies strategy, so they give their contribution in the company's success.This is also important for the company to gain their trust because if they will recruit new employees then will need training which can take time and money both.

Organisation

Resource of the company are used strategically to invest in the right market and the right places. Distribution network of this company is not properly maintained so it is a disadvantage for the River Island company (Das., 2016). Other companies are overtaking this company because of this reason. They need to make proper strategy in their are some of the markets like chine and Indian where company can create their own strength by investing in those markets.

McKinsey's 7s model of River Island

McKinsey's 7s model is mainly used to analyse companies design and their structure by looking at this 7 elements – system, strategy, style shared value, staff and skills in order to find the effectiveness aligned and allow companies to achieve their set objectives and their business goals.

Strategy

River Island company is using competitive pricing strategies to take competitive advantages in the market. This is important for them because level of the competition in fashion industry is very high and this strategy is helping them to take competitive advantages. They are also proving differentiation in their product, design of their product are unique, and they are having their own designing team who provide new and unique design of their product which is helping them to gain competitive advantages.

Structure

Structure of the River Island is very simple so it is easy for the companies superiors to manage their employees and solve their problem they are using divisional,matrix which create flow of communication . Employees can directly talk with the companies superiors and discuss their problem. This is an strength of the company

System

Companies quality management system run on the daily basis. Company focus to design new product and maintain their quality, so they can provide quality products to the customers and gain competitive advantages (Ariyani and Daryanto., 2018). It has huge impact on the company and they are able to achieve customers loyalty according to their companies strategy.

shared values

Mangers of the River Island company provide equal wages and security to their employees to share their value to them their focus is to increase the efficiency of their employees. They also provide rewards to their employees when they give their best in the task.

Skills

In each group activities there are some skilful employees who monitor other's work and help each other to get work done and achieve the goals of the business.

Style

Leaders of the River Island company are using democratic leadership style in which employees can take participation in the companies decision-making. Leaders of the company give higher responsibilities to the employees, so they can take higher position in the future (O'Hara And et.al., 2017). This is helping them to motivate their employee and employees are giving their best to achieve goals and objectives of the company.

Staff

Managers of the company provide training and development to their staff so they can get chance to increase their efficiency and help company to take competitive advantages in the market. Every single employees of the River Island are getting equal change to increase their skills and develop new skills. Leaders of the company can use democratic leadership which can have huge impact on the companies strategy.

M2- Internal environment to asses strength and weakness

River Island have strong workforce which helps them to achieve competitive advantages in the market. Managers of the company provide them proper training, so they can achieve goals and objectives. Company is also use competitive marketing strategies to provide products in affordable price rage. Some of their products are premium and customers are not able to but those products which is weakness of this company, and they are also depended on the UK market mostly. This is important for the company to make strategies to overcome from this weakness.

P3- Porter's five forces model and include competitive forces of the company

Porter's five forces

Threats of new entrants

Requirement of the capital in this industry is very high so it's makes difficult for the new entrants to set up their business in clothing industry. Capital expenditure is also very high because of the very high researches and development cost (Ge, and Li., 2019). This all factors create threats for the new entrants. This has positive impact on the companies strategy because they have to make proper strategy for the financing of the company.To overcome from this problem River Island company can use the collaboration strategies in which they can collaborate with the other brand.

Bargaining power of suppliers

Numbers of the suppliers in which River Island company operates their business has law compared to the buyers. It means the (supplier) of River Island company have very less control on the prices and it makes the bargaining power of the suppler a weak force. This has impact on the River Island company and they can buy raw material in low prices.Company have to make the good relationship with their supplier to take competitive advantages in the new market.

Bargaining power of Buyers

Bargaining power of the customers are very high because there are many other brands in this industry who are selling all type of clothes to the customers (Auliandri And et.al., 2019). They are having options to choose other brands as well so bargaining power of the buyer is very high This impact on the company profitability customers have choice to go with the other brand who give the product in low price range. To stay in the competition they have to bargain with the customers and provide them products in, low prices.Company can use the competitive pricing strategy to provide satisfaction to customers, and they can also gain the loyalty of the customers.

Threats of substitute products

There are very few substitute products are available in the clothing industry but company is proving new designs in their clothes which is helping River Island company to make profit and achieve high growth in the market (Nguyen, 2017). It is important for the operational team of the company to develop their product, so they can take competitive advantages. This has huge impact on the company and company because they need high research to develop their product and create differentiation. River Island company is bringing new product design in the market which will help them to overcome from this threat.

Rivalry among Existing forms

There are very few competitors have huge market shares in the UK company can take competitive advantages in this industry because they are having good financial resource and skilful employees who are providing them competitive advantages in the clothing industry. Impact from the rivalry is very low on the River Island company so they can take competitive advantages in the market because of few competitors in the market.

Bowman's strategy clock

There are 8 positions of the Bowman's strategy clock -

Low price and low added value

In this strategy River Island company have to keep the price of their product very low as compare to the other competitors. It helps to take competitive advantages.

Low price

The companies following this strategy of the Bowman’s Strategy Clock often produce large quantities of the products plus their products are valued in the target market. The various and possible price wars are fought between the competitive brands in this position which is impacting on their strategy which makes important for the River Island to look for this issue and make good relationship with the supplier to add more value in their product (Haight and et.al., 2019).

Hybrid

This strategy can help River Island company to add some value in their products and offer those products on the regular basis.

Differentiation

This strategy is important for the company to take competitive advantages. They have to make their product different from the other products .

Focused differentiation

In this strategy River Island company will focus to make high quality products, and they will sell them in the high prices. In this strategy company focus on the customers who are enabled to buy luxury products from them (Sitinjak, Pramawijaya and Gunawan, 2018). This strategy will allow them to increase their probability in the market and they can show their presence in the market.

Risky high margins

In this strategy companies increase their prices higher and it is risky strategy because customers of the River Island will look for the other companies quality product which they can get in similar prices.

Monopoly pricing

In this strategy companies offer specific types of products they are the only ones offering the specific type of product in the market (Crapis and et.al., 2017). And as a result, there is no fear of the competition, and they are the only one determining the price of the product.

Loss of market share

In this strategy companies sell their products in fewer prices just to stay relevant and competitive in the market and the mind of the customers. This strategy is mainly used by the brands who have less market shares in the target market.

Recommendation

River Island company should use Bowman's strategy clock strategy This is effective for the company and they can use it to analyze the competition in the market an where they are standing so they can improve their strategies through the Bowman's strategy clock model and take competitive advantages in the market where they are operating their business and achieve higher growth.

M3- strategies to take competitive advantages

It is important for the company to use new strategies which can help them to achieve competitive advantages in the market (Haight and et.al., 2019).. They should look to improvement in their product quality and managers should implement new equipments on the workplace, so they can improve this process. Pricing strategies can help them to achieve high market growth in the global market. They should use value based pricing strategies in which company set the process of the product according to the customers are willing to pay for the particular product. One of the effective way to take competitive advantages in the market is discount on the product. Companies can take competitive advantages through discount and sales , it will attract customers to but product from the River Island, and they will able to make new customers.

P4 Strategic Management Plan

Vision- To be the best high street fashion brand.

Mission- To aim sustainable development of the company and ensure strong competitive advantages through its product quality.

Objectives

  • ·To increase market share 10% by end of the year.
  • ·To increase its product line by adding five innovative designs with supreme quality before closing of current financial year.
  • ·To increase its competitive capability. (Measurement: Increase in market share to the immediate competitors of River Island)

Strategies

(Based on Suitability, Acceptability and Feasibility)

Porters Generic Strategies

Illustration 1 Porter's Generic Strategies.

Porter's Generic Competitive Strategies (ways of competing), 2016.

Cost Leadership- In this firm becomes the lowest cost producer in the industry. This Leadership is not suitable for River Island because it is a high street fashion brand.

Differentiation- This refers to strategy in which firm seeks to be unique in products what it offers which are valued by customers (David, and David., 2016). River Island can adopt this strategy and provide its products with innovative designs which cannot be availed by its competitors.

Cost Focus- In this firm seeks a lower cost advantage in just one or small number of market. This strategy depends on the market position of the River Island.

Differentiation Focus- In this firm focus its product differentiation in target and small number of market. This strategy can be applied by River Island.

As River Island provides products of supreme quality it is not possible for company to lead in cost but River Island can adopt strategy of differentiation. In this company needs to create and develop innovative products to differentiate from its competitors products. In relation with differentiation for the purpose of market testing they can also start this as differentiation focus and later after indentifying its success measures and analyse if there is any drawback in the strategy.

Ansoff Metrix

This Metric provide strategies which can be used by companies when they want to expand their business. River Island has objectives to increase market share which they can do by expansion of their business. The strategies they can use for these are-

Market Development- When River Island seeks to expand its business in new market but do not change its products (Schawel and Billing, 2018). This strategy is most suitable for that. In this it has to introduce its existing product in new geographical areas.

Diversification- This strategy includes introduction of new product to new market. In this River Island needs to develop new product and find new market for that and introduce new product in that market. This strategy contains highest risk as company has to start everything from ground as market and product both are new.

Market Penetration- In this River Island needs to penetrate its existing market to so that it can attract more customers for its existing market (Loredana, 2016). In this marketing activities needs to be improved and increased. River Island will need to improve and increase its promotional activities so that it can increase its visibility and attract more customers from the existing market.

Product Development- This strategy can be used by River Island this includes developing new product rather modifying existing product (Nickols., 2016). This will attract new customers from existing market. And also it can attract new customers with new product as this will have additional features to cater additional needs of the customers. This is most suitable for River Island so that it can increase its market share.

Tactics

( Marketing Mix)

Marketing Mix of River Island

Product- River Island offers products with a touch of glamorous River Island, and they translates designers runway in their own unique design which makes it possible for customers to follow the trend (Ismail and et.al., 2018). In this new strategy River Island along with providing designer and runway collection also need to include designers actual collection, which have not been shown at any runway to attract customers who like exclusive products.

Price- River Island starts with higher price and then lower the price over time. River Island follow strategy of sales which attracts more customers. In its new strategy company can adopt this same strategy but later it can add discounts instead of just lowering the price as discounts are more likely to attract customers than just lowering the price of the price.

Place- Stores of River Island are placed in centre of shopping area and in mall. Products of River Island are also available online. The new strategy of the River Island will also follow the same strategy.

Promotion- River Island promote itself through its own social media like Instagram, Facebook. River Island also promote itself through bloggers to attract new customers who are interested in fashion (Abril and Rodriguez-Cánovas, 2016). In its new strategy River Island can promote itself through one of the modern marketing technique which is known as creating personal experience for the customers and later attract them to buy products.

Implementation/Control

(Resource Allocation and Control Measures)

To control the strategic Plan KPI needs to be established which are-

Profit- This is most important indicator of the strategic plan's success if this is not as expected than River Island should take corrective measures. Behind every objective of the company profit increasing is one of implied objective and through this strategy company wants to increase its market share through which it will be able to increase its profit (Nickols., 2016). Changes and increase in profit and ratio of profit will enable River Island to measure its strategies.

Cost of Goods Sold- this refers to what is the cost of goods sold which needs to low and depends on production and productivity of the River Island. If this is higher than firm have to increase price or may reduce its profit margin.In this company needs to ensure and recheck its production methods so that it can reduce the cost of the product.

Percentage of Product Defect- the higher the percentage of products which are defected than River Island may need to take corrective actions for the plan and for its production activities which can reduce product defect (Smith and Van Der Heijden, 2017). Higher percentage of product defect increase the cost of the product and ultimately this increase price of the product. This is not an ideal situation for any company.

Evaluation

In this the objectives which have been decided earlier are compared with what have been achieved by the firm. This becomes easy when objectives are specified and in quantitative form. River Island decided to increase their market share by 10% need to evaluate this with its current sales and with its past sales to know whether it has achieved its objectives or not.

D1- critique and interpret information and data applying environmental and competitive advantages

Strategies plaining enable River Island to take competitive advantages. strategic plaining helps this company to define their strategies , or direction and making decision on allocating their resource to pursue these strategies. It may also extend to control mechanisms for guiding the implementation of the strategy. This helps to know companies mission and their vision (Zhu and Gao., 2019). This also includes the marketing mix of the company and it is distributed in 4 parts – price, promotion, place and product of the company. It also helps to know strategy used by the company to take competitive advantages in the market. Ask for Academic Writing Service from our experts!

CONCLUSION

This report has been analysed business strategies in this case study . This report has been covered River Island company which is highly street fashion brand and their headquarter is in London UK. This report has been analysed the impact of macro environmental on the River Island and their strategies and it has been added PESTEL analysis to explain the micro environmental influence on this company. This report has been concluded internal environment by using the appropriate framework. It also has been applied the porters five analysis to explain the competitive forces on this company. This report has been concluded all the forces of porter's five such as threats of new entry, Bargaining power of suppliers, bargaining power of the buyer, competitive rivalries and threats substitution. In the end of this report has been applied the range of theories and model for the devise strategic plaining for the River Island company.

Read more - Resources and Strategies

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