Modern era is highly competitive and complex. To sustain in such corporate market firms have to make appropriate strategies which can support in achieving the goal of the business unit. Strategic management is the combination of several decisions which can assist to managers in enhancing the overall profitability of the organization. A good decision is based on the complete analysis of the conditions and situations revolving around. Present report is based on card factory which is a leading brand of UK and provides attractive gift cards to consumers. Assignment will cover the SWOT and PESTLE analyse of Card factory so that it can identify its growth in Chinese market. Mission and vision of cited firm will be illustrated in this study. In addition to this, it will provide recommendations so that corporation can easily enter into Chinese makret and can gain huge profit.
About the company
Card factory is an example of strategically managed company in UK. It is a well known dealer of greeting cards and gifts. Expansion of its business from a single store to a chain of outlets justifies that the owners strategically planned the business operations of the company by using tools that help- in knowing the whereabouts of the company.
1. PESTLE Analysis
PESTEL is an imperative tool used for the analysis of any business plan and strategy. Businesses are affected by their internal and external environment. PESTEL is used for analysing the external or macro environmental factors constituted by political, economical, social, technical, environmental and legal (Yüksel, 2012). For maintaining its brand name it has to analyse its business strategies accordingly.
Political factors : The governmental factors that intervene in the functioning of the company's operations are categorised here. Card Factory can get affected by the political decisions and policies formulated by the government. This impact can be in the form of revenues or consumer rights, trade restrictions or various tax policies, etc.
Economical factors : The trends or changes proposed by the government that can effect the economical policies or profit margins of Card Factory constitute the economical factors. Government's control over interest rates, export and import policies are major game changers for the company (Yüksel, 2012).
Social factors : Shared beliefs and attitudes of the consumers towards any product produced by the firm in the market are collective social factors. Company has to focus on offering such products which are of low cost in accordance with the demands and beliefs of the consumer (Williams and Hopper, 2015).
Technological factors: Company can achieve huge profits if it has great access over the digital market. Digital marketing via social media portals and websites with launching of technologically advance and convenient products can be a plus point (Slack, 2015). Card Factory can introduce digital or e-cards and portals for online ordering of gifts.
Environmental factors : Organic products as is made of natural ingredients so Card Factory can concentrate on natural hygienic products and scrapping and innovation can be made so that the nature doesn't get exploited by the company. Violation can cause threat to the company (Slack, 2015).
Legal factors : Government makes changes time to time in regulations, so firm is required to modify its operations accordingly to run business smoothly. Law impacts on the industry, so for Card factory it is very essential to make immediate modification in existing operations so that it can easily get settled in the new Chinese market.
2. Porter's five forces analysis
This is a tool that reconstructs structure of the company according to the five forces or five industrial variables (Hill, Jones and Schilling, 2014). Card Factory's strategy analysis according to this tool is as follows:
- Threat from new competition: With minimum legal barriers it becomes very easy for new entrants to compete with the company. So, it has to manage and keep a redundancy check on the activities of new competitors as it is quite easy for them to slowly acquire the potential customers of the company with uniqueness and innovation in their product (Hollensen, 2015).
- Bargaining freedom of customers: For Card Factoryto meet its business goal and objectives it has to look forward for giving least advantage to the buyers over bargaining. The more the bargaining the less is the profit. If the consumers are given the freedom to manage the prices of gifts and greetings company will face heavy losses. They won't be able to recover the production and marketing costs of the products (Rubach, 2013).
- Bargaining power of suppliers: Being established since 20 years, Card factory has an advantage of public relations than that of the new comers. They can buy resources at the minimum costs possible. For maximising profit the company has to bargain over the purchasing of the raw material necessary for building the cards and gifts (Peltier, 2016.).
- Threat of substitution: With such a huge world there are chances that two or more firms produce the same product. This can pose a threat for Card Factory, that is its products can get substituted by other company's product at better price or quality. This calls for a check on the pricing, promotion, quality and innovation of company's products (Paliwoda and Thomas, 2013).
- Rivalry in industry: Sustainable competitive advantage and great level of marketing techniques can create rivals for the Card Factory. This rivalry in the retail industry is a measure for competitiveness in the market. With the increasing demands of people for buying new cards and innovative gifts , the company can out stand rivalry or competition by inculcating creative ideas (Lee, Lin and Cheng, 2013).
3. Opportunities and Threats in the Chinese markets:
According to the before performed PESTLE and Porter's five force analysis the opportunities and threats experienced by the company in Chinese markets are defined below:
- Opportunities: Card Factory is and emerging giant in the gifting industry. Although cards have been in fashion since decades and centuries but in different forms. The company has following opportunities in the Chinese markets:
- Scope of expansion with launch of e-commerce stores.
- Since Chinese market is the largest on globe and Card Factory has a history of steady growth, the retail stores can be easily launched in these markets.
- Chinese markets have very low cost labour (Iyoha, 2012).
- Improvement in the legal system is beneficial for the company.
- Threats: Despite of so many opportunities there are chances that Card factory might not run successfully in the Chinese markets. The foreign investing industries are majorly heavy industries. Card Factory can face a decline in its sales due to the slow down of China's contribution in the global economy. If the Chinese government changes its foreign trade policies and at any point causes trouble for multinationals, Card Factory has to pack up from the Chinese markets. Lack of competitive advantage due to low quality and low standard products is a threat for the company (Hollensen, 2015).
1. Resource analysis
Card factory being a chain of stores with greeting cards and gifts requires effective utilisation of resources for acquiring good market share and customer satisfaction. The following is the resource analysis of the company described in these categories:
a) Physical Resources: For entering into Chinese market, companyneeds physical resources such as physical outlets, telephone lines, computers, raw materials etc. If it has sufficient materials then it will be able to establish own self in Chinese market easily. The absence of resources in physical outlets can create an embarrassing situation for the company and will affect its international reputation.
b)Financial resources: There are many organizations which are working well in Chinese markets. Card factory needs funds and monitory resources so that it can enter into such complex environment easily. Sufficient financial resources will support firm to establish. It will support to market a product and to use attractive marketing techniques so that people take interest in the wide range of high quality products which are budget effective (Battisti and et.al., 2015). Apart from this, financial resources will be beneficial for conducting market research. By this way company will be able to identify the needs and expectations of Chinese people. Financial resources can either be acquired from company funds or government aids.
c)Human resources: Employees are base of an organization. Activities and skills of individual help to accomplish the objective of firm. For entering into Chinese market Card Factory will require talented persons who can handle operations in international market significantly. Though company has large number of skilled person in the workplace who are capable to manage business successfully. But it needs such human resources who can handle business operations and tackle other culture people effectively (Lee, Lin and Cheng, 2013). Labour force is required from the local Chinese markets who can bridge the communication gap.
d) Intellectual resources: Card Factory being a design oriented company needs innovation at each and every point of its strategy implementation. Hence, intellectual resources can be internet service operators as well as connections, digital marketing persons, creative thinkers and smart workers.
2. Competencies analysis of the company
Core competencies refer to a balance working of different or multiple resources and skills in the market place. Competence itself defines the ability and skills of the individuals working in the firm. Competency levels must always be high in any organisation so that efficient working is guaranteed. New skills and knowledge can be imbibed by training and development sessions of the employees (Hill, Jones and Schilling, 2014.). As Card factory is a creative industry and it focuses on manufacturing greeting cards and gifts according to the current market trends and demands of the customers, they have to focus on innovation with high skills. This can be increased only through competence. Core competencies is fulfilling three criteria that include :
- Access to wide variety of potential markets.
- Company must contribute a good amount to the benefits of the customers with the help of great product.
- Product must be unique and difficult to copy by the competitors.
Card Factory's core competencies include creative people and unique gift items that are not easily available at competitive stores.
b) Strategic capabilities
Strategic capabilities of Card Factory can be well understood with the fact that it has 800 stores across UK. This is not a small thing to ignore. Any company which is able to successfully deploy all its strategies with effortless functioning can achieve such great objective and that too in short span of time. These capabilities define that Card factory if required can implement great strategies in expanding its businesses over other countries also.
3. Chinese market compatibility
Card Factory has major core competency as the number of retail stores. It has about 800 physical stores across UK and these have grown even much larger with the digitalisation of the consumers. When introducing its branches in the Chinese markets the company must focus on its authenticity and performance. It must focus on acquiring maximum profits from minimum resources. Core competency of the company must also be increased so that employee productivity is increased. When entering the Chinese markets the organisation has to train Chinese labour force so that they can deliver their services for the organisation (Cairns, 2014). These developments can be processed through training and workshops. Since, cards and gifts are something that will never exhaust in the market; company must develop creative competencies so that better products are made to fight the Chinese competition.
Chines market is a global market and already has many multinational brands situated in this market. Hence, Card Factory has to come out with strategies that are capable of fighting the competition as well as gaining a sustainable competitive advantage. This advantage can come to a company only if the product has following qualities:
- Difficult to replicate by competitors
- Authentic to the company
Suggested market entry modes: With flourishing Chinese markets and Card Factory planning strategies to enter this market the suggest market entry mode would be through Franchising or wholly owned subsidiaries. This gives the company an advantage of sole ownership as well as creates opportunities for building links with interested retailers in giving franchises of the company.
1.Current Strategic statements of the company:
a) Vision: Card factory concentrates on needs and demands of users, so its vision is to create daily life better for all. By providing products that are affordable and . It wants to offer quality goods and variety of things at affordable rates so that most of the people can buy products easily. Company's key focus is on producing wide range of quality cards and gifts (Welcome.2016).
b) Mission: Card factory's has effortless vision and established missions. Missions are always segregated into targets and goals depending upon the requirement of the particular goal. It has a mission of acquiring maximum market share in the gifting industry and focus on meeting customer demands with high end technology and development.
Its mission is to develop skills of employees so that they can be professionals. To develop them in such manner so that they can provide wide range of attractive gifting products to consumers and can service them better, is the basic reason behind developing of skills of workers.
c) Business level strategy: Customer centric strategies for making products and managing the stores effectively makes people curious about the business level strategies of Card Factory. The company focuses on achieving maximum customer share in the market by having a competitive advantage. This advantage is gained by non disclosure policies regarding the privacy of gifts and cards with the employees. Company has been focusing on effective management of its stores with good and organised functioning.
d) Corporate Values: Card Factory has been involved with customers of UK market since three decades. The company has become an inseparable part of their lives due to the quality of products. Corporate values incorporated at Card Factory include ethnicity. The company believes in maintaining its relations honesty and do not work with unfair means. It is guided with ethical philosophies that helped the company gain good relationships with its stake holders and share holders.
As the company plans to expand on the global level with the steeping stone as the Chinese markets. It has to focus on improving its methodologies and processes of marketing with new vision and mission. Changes or improvement in the vision and mission statements of Card factory is necessary because all the strategic management of the business revolves around these two factors. The company works in order to meet these visions and missions.
Improvised Vision: To meet the demands of consumers globally and international markets shares must be acquired with innovation and creativity.
This vision will help the company launch its retail stores not only in the Chinese and British markets but also across different continents. E-commerce websites and partnerships with leading brands can be used for achieving this vision.
Improvised Mission: Acquiring maximum profit from the Chinese markets for expanding business further in Asia.
This mission encourages the company to work a step ahead. Chinese market invasion has to be done to acquire this mission. With the help of this improvised version of mission the company can increase its stake holders and with maximum ownership of the retail stores it can earn huge profits (Battisti and et.al., 2015).
SWOT analysis of Card Factory for entering new markets
This report encloses the detailed strategic analysis based on three critical tools that is PESTEL, SWOT and Porter's five forces model in Card Factory. Company's detailed analysis enlightens over focusing on the possibilities and resources it has before entering the Chinese market. Report has discussed about the physical, financial and human resources. It is very important to have sufficient quality amount of these resources so that entering into Chines market can be successful. Skills persons can help in improving the quality of work of the company by this way it will be able to successfully gain profit in the new market as well. These investigations also define the pros and cons that strategic management and planning of business must be considered before taking any crucial steps. This report also contains recommendations that can be considered by the company when expanding in the global market.
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