Organizational Performance and External Environment

The provided content does not have a clear theme or topic. It appears to be a collection of articles and resources related to business and organizational performance, including the importance of the external environment, Tesco's SWOT analysis, and an article about Britain's 'big four' supermarkets. Additionally, it includes action steps for determining employee training needs, organizing renovation of existing stores, introducing new promotional activities, and other strategic initiatives. The content may be related to a business analysis course or a strategic management module.

[06 MAR 2017] A Business
Analysis
SSM607 Strategic
Business Environment

Table of Contents
Page
1. Introduction
2. External Analysis and Environmental Scanning
2.1 Pestel
2.2. Porters 5 Forces.
3. Internal Audit
3.1. Current strategies
3.2. Customer Demographics
3.3. Employee Comment
3.4 Competitor Analysis
4. Strategic Choices for business development
5. Project Plan for strategy implementation.
6. Conclusion.
2

I. Introduction
In order to grow the business the company needs to be aware of its external environment
and recognise not only its own strengths, weaknesses, opportunities and threats, but those
of its competitors. This helps to formulate future organisational strategy to continue to grow
the business in face of the rate of change of the business environment driven by
technology, deregulation and market turbulence.
This research is based on Nisa,the UK’s leading member-owned organisation, providing
benefits to independent retailers in food and drink markets. Their goal is to support
entrepreneurs with buying power, marketing and distribution services to meet customer
needs and to provide consumers with excellent independently run local stores to shop in.
It is one of the top leading retail chains of UK where it has offered wide range of products
and services to the customer at affordable prices.
The aim of this research is to examine the macro and micro environment that affects the
performance of Nisa, its current situation and the position of the business in the market
and propose future strategies which could be adopted.
2. External analysis and environmental scanning.
Nisa is a well-established unit which is significantly operating within country market
to attain potential growth and development. Nisa retail limited is a brand and buying group
of individual retailers and wholesalers in the UK. It has developed a significant
supermarket chain in the country to enhance demand and sales for products and services
offered. The strategic business performance of the company is effective.
2.1. Pestel Analysis
Nisa can be influenced by the government for reduction in taxes and expansion of the
permission. This is why these organization support government financially. Activities of
trade unions and home market in international markets are important political factors that
affect the Nisa retail chain (RUMLT, 2010).
Most of the political factors have negative implication on Nisa's bottom line. These factors
3

determine fiscal policy, trade tariffs that affect the business environment to a large scale.
The cost of labour is one of the major economic factors which are greatly impact on Nisa
business. Nisa revenue can be also affected by a set of external economic factors.
Economic performance of the Nisa is directly affected. Economic factors like inflation rates,
interest rate, foreign exchange rate and growth rate all those factors are affected to Nisa
business ratio (FERRELL AND HARTLINE, 2010).
This factor is determined company will be affected by the purchasing power of consumers.
Moreover, some times change in supply or demand is also effect on Nisa super market
chain. Fluctuation in the super market is also affect the Nisa business. Inflation is decrease
productivity in business. Main problem of economic is there are different type of people live
in this environment some who can buy product and some who cannot able to buy product.
That economic condition will be effect on Nisa product line business (HENRIQUES AND
RICHARDSON, 2013).
Rapid change in fashion had created a great impact on Nisa business, because people
changed their lifestyles and social culture. On the basis of social issues Nisa develop its
product lines and expansion in the product mix decisions. Demographic change is like
frequency in customer preference, attitude, buying power. Product awareness is also
creating a great impact on business; because of some people don't have enough
knowledge of product (HYDE, 2014).
New inventions and developments is affect business of Nisa. Change in information
technology that may affect the operations of the industry and market favourably or
unfavourably.
Nisa develop technologies for meet high profit. Nisa develop an online shopping that has
to become a success in market. Current competitor market has advance technologies, and
develop lot more creativity and innovations in their product line range, that is the main
issue to create influence in Nisa. According to all this Nisa determine the innovation in
required tools to conduct the projects effectively and timely. Nisa develop their
infrastructures and communication system (JONES AND RATNATUNGA, 2012).
Legal factors include current and impending legislation that may affect the organization.
Tax policies, employment laws, Competition regulations those are the factors affect the
business environment of Nisa. In this factor lack of health and safety rules for employees
is affect the business environment (MARTIN, 2013).
The key Environmental issues of Nisa are limited goods quality. Nisa in collaboration with
global action plan trained and gave employees to young individuals in order to help
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reinforce positive environment it would be friendly. Nisa has made collaboration with
Global action plan and gave employment opportunities to young people with the aim of
creating the positive environment at the workplace. Along with this, company has taken
action in the direction of reducing carbon footprint of operational activities. Apart from this,
recycling techniques have used by the organization to recycle of waste that generated
during agriculture activities (MANOVA, 2013). Further, Nisa has replaced its plastic bags
with environmental friendly products to minimize its harmful effects (PARNELL, 2010.).
2.2. Porters 5 Forces.
The micro analysis of Nisa will be effectively carried out by applying Porter five force
models in the question which will help in attaining a clear picture about the organizational
performance and development aspects within the economy (KOOS, 2011).
Threat of new entry: Nisa is the local of supermarket in UK. This retailer has developed a
significant brand image and market share in the economy. Retail industry is developing at
a significant rate. However threat of new entry for Nisa is high because it has less
developed competition level in the market. In addition the organization captures less
market share in UK which is difficult to attain from the new entrant (ETRO, 2011).
Threat of substitute: Retail industry of UK represents a perfectly competitive market.
Consumers seek effective services and high range of product. Nisa is the small business
unit in the economy. Threat of substitute however is very high for Nisa. This reflects high
level of competition in the market because offering similar products and services for the
consumers such as Booker Group plc
Spar (UK) Limited etc are offering similar products and services for the consumers
(COLCIAGO and ETRO, 2010).
Buyer’s power: The power of buyers is significantly high. Nisa is a well-established
supermarket chain which offers multi-variety of products and services at a considerable
cost. Due to perfectly competitive market the price sensitivity in the market is very high
which creates an effective impact on business growth and development. It is a mutual
organization in which collective buying power of large group of members to negotiate deals
with suppliers. Thus buyers can easily shift towards discounts or low cost offers in the
market (FEENSTRA, 2015).
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Supplier’s power: The negotiation power of the suppliers for Nisa is significantly low as
the products and services offered by the business unit are readily available. The
uniqueness of products and services is low which helped in minimizing the bargaining
power of the suppliers. It has been analysed that the impact of price is high in the market.
However due to large availability of suppliers the company has the feasibility to easily shift
to the suppliers supplying at the lower cost.
Competitive rivalry: The retail food and grocery industry is highly competitive. The rate of
competition within the market is highly intensive. Companies such as Booker Group plc
and Spar (UK) Limited etc. have established a significant market share within the market
the level of competition thus raises to a very high level. The industry offers homogenous
product and service range hence promotion and cost leadership factors are the major
aspects of development for the business unit. It helps the company in enhancing growth
and development in the market thus creating a significant competitiveness in the country
(EATON, KORTUM AND KRAMARZ, 2011).
Risk analysis
Risk Likelihood Imact Score (Likelihood
x Impact)
Action to be
taken and its
responsibility
Competition from
new entrants
High High 6 Proper market
reserach by the
marketing
managers and top
management.
Proper finacial
reporting
Medium High 6 Finance
department will be
responsible. Need
to monitor all
activities of
finacial statemets
cloesly to check
all the enties have
been done as per
the standards
fixed.
Change in fashion
and trends
Medium Medium 4 Production,
marketing and
R&D
departmenmt wil
be responsible to
make necessary
changes. Proper
6

monitoring of
trends and
changes in taste is
required to
develop betterr
planning.
Scores for Likelihood and Impact: High = 3, Medium = 2, Low = 1
3. Internal Audit
3.1 Current Strategy
Nisa is a small UK retail and grocery market. The major competitors of the firm are Booker
Group plc, Spar (UK) Limited etc. In this context, to determine current situation of the
business including the position of the company in the market, Competitor Analysis method
has used. Assessment of cited firm to find it position in the marketplace is as follows:
Nisa has gained popularity in the market because of its convenience stores as well as
shifts in customer tastes towards many of the food items. Due to this, market of
convenience store has optimally fragmented.
Strength: In the UK, Nisa has one of the retail organizations. It has gained overall 27.9%
market share of grocery sector. In this context, Booker Group plc Spar (UK) Limited Have
only 16.6% market share. This has supported the financial position of firm by generating
more revenue and profits. Along with this, cited organization has effectively utilized online
sales channel. It has major source of revenue generation. Further, in the direction of
increase customer retention, Nisa has used Clubcard tool. It has helped the organization
to attain the loyalty of end users. In addition to this, this has played an important role in
collecting important data related to consumer behaviour so that valuable products can be
offered to them (NISA SWOT ANALYSIS, 2016).
Weaknesses: In 2015, Nisa has faced the loss of GBP 6.4 billion and it has increased the
amount of debt to GBP 8.5 billion. Due to this, the overall leverage debt has raised to GBP
22 billion. This has directly affected the financial position of firm in oppose of its rivals.
Rather than this, the issues related to accounting mis-declaration have noticed in income
statement of Nisa. Further, there has a weak presence of the organization in other
overseas nations which are coming under developing stage (KIPTOO AND MWIRIGI,
2014).
Opportunities: There is an opportunity for Nisa to rebranding champion stores with the
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application of innovative digital media promotion and advertising platform. By acquisition of
small retail chains or tie-up with them, company can easily enter into emerging markets.
Along with this, cited organization has an opportunity to focus on boost non-food sales
(NJERU, STEPHEN AND WAMBUI, 2014).
Threats: By raising the cost of raw materials in both non-food and food items may create a
threat for Nisa on impact over profit margins. There is many other small retail
organizations are growing in the UK as well as other overseas areas. It has created threat
for the company to increase the level of competition and losing of market share due to
offer low prices goods by rivals (PARNELL, 2010).
3.2. Customer Demographics
The customer demographics refers to categorising the customer on the basis
of age, gender, income, their educational level etc. In present scenario, it is necessary to
make an analysis and categorise the customers on demographic basis which will make
addressing target consumers easier. Here, the stated organisation can take into
consideration various consumers on the basis of their income and gender level. Company
provides food and drinks at reasonable prices, therefore it can target customers who opt
for quality products at affordable price. Additionally, gender factor is also useful as the food
and drinks choices are different for male and females.
3.3. Employee Comment
The employees were also asked for their views on the strategies and plans
adopted by mentioned enterprise according to which they have given their perception in
positive manner. They have given positive views and said and have committed to give an
appropriate coordination in fulfilling various tasks. Nisa has identified its weakness where it
has discovered its weak presence in the overseas market which is necessary to be
developed. For this purpose, the employees are asked and their comments were taken to
know their view points. As per this, they have committed to give positive cooperation with
involvement in decision making process which may affect them.
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3.4. Competitor Analysis
Booker Group plc: Booker Group plc is a food wholesaler. The Company offers a range
of grocery, tobacco, alcoholic products and other products. It comprises Booker
Wholesale, Makro, Classic Drinks and Chef Direct, Londis and Booker India. The aim of
competitive strategy is maintaining the lowest prices for the goods. The Company allows
its independent retail customers to trade within country. This has to minimize waiting time
of service users in queue and has brought the changes in shopping habit of them
(KUBASEK, BRENNAN AND BROWNE, 2016). It operates approximately 3,200 Premier
branded stores in the United Kingdom, over 50 retail discount stores under the Family
Shopper brand, approximately 1,500 convenience stores under the Londis brand and over
120 convenience and mid-sized stores under the Budgens brand in Great Britain. The
Company operates approximately three regional distribution centres, Hatfield and Haydock
in England and Livingston in Scotland, and has a national distribution centre in
Wellingborough.
SPAR (UK) Limited: SPAR (UK) Limited operates a chain of food retail stores. It
offers food and drinks products, such as frozen food products, fruits and vegetables, meat
and fish, dairy and chilled products along with bakery products, alcohol and other drinks,
and food cupboards. The company also offers health and beauty products, pet products,
and household products. It also sells products through other retailers. SPAR (UK) Limited
was founded in 1932 and is based in Harrow, United Kingdom. SPAR (UK) Limited
operates as a subsidiary of Spar Food Distributors Limited. Company has operated its
business in 1304 locations in the UK. There have two kinds of formats followed in stores:
supermarket and convenience outlets. Along with this, price reduction has an important
competitive strategy for the organization to charge a premium for grocery items. On the
other hand, with the aim of increase the engagement of end users, cited company has
made the experiments with its layouts such as expansion of general merchandise
categories, offering in-store banking services etc (HAMILTON AND WEBSTER, 2015).
From the above discussion, it has found the current position of Nisa has higher as
compare to its rivals. It means company has performed excellent in the marketplace and
get the opportunities related to development and growth of business in UK and other
overseas locations.
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4. Strategic Choices for future business development
The audit helps the organisation to better understand those issues which can easily
enhance good performance in areas of the business. On the basis of above discussed
SWOT analysis of Nisa, the suitable strategy for company to attain the choices of
development has “To grow the UK Core”. With the help of this, it will become easy for
company renovating existing stores and introduce new promotional activities. For this,
organization will need to increase number of staff members. This will directly support the
core values of making customers feel wanted and respected underpin this strategy (Vision,
values, and strategy. 2017)
In this context, strategic alternatives for growth for Nisa are as follows:
Restoring of performance: Organizational assessment of Nisa has shown that the first
priority of the company has to become one retail sector. With the passing of time, sales
figures have increased but with slow growth rate. This has stated that first area of
development for cited firm has boost-up sales of goods at high percentage. By doing this,
it will become easy for Nisa to restore the performance at higher level (The battle is only
just beginning for Britain’s 'big four' supermarkets. 2015)
Reshape the management structure: Nisa has focused over customer services and
amplify moral of the employees at high level. This is the most effective action in the
direction of bring reduction in overall costing of the products towards increasing market
share of both retail and grocery segment. Along with this, in the promotion activities,
company has taken a significant step. By seen all these initiatives and works, it has found
from organizational assessment of Nisa that company has to reshape its management
structure to attain the business objectives (FLANDER, 2014).
Reshaping the store portfolio: With the time, the outlet formats have changed.
Competitors of Nisa have focused over large store types rather than express format. So,
the changing in retail landscape and its functionality has created a development
opportunity for Nisa. This will make outlets more high tech, big in size, easy check in and
checkout process etc (HYDE, 2014).
On the basis of the above stated organizational assessment process of Nisa, it has
determined that there are three major options of development available in front of the
organization. These all will deliver growth opportunities to the organization in retail and
grocery sector in UK.
On the basis of the internal audit a suitable strategy for company to attain the
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choices of development has “To grow the UK Core”. With the help of this, it will become
easy for company renovating existing stores and introduce new promotional activities. For
this, organization will need to increase number of staff members. This will directly support
the core values of making customers feel wanted and respected underpin this strategy
(Vision, values, and strategy. 2017).
5 PROJECT PLANNING
In order to implement above discuss future strategy for Nisa, some actions,
resources and time scale will be needed. With this respect, a plan including supplies, time
frame and activities are as follows:
From the above planning table, it has found that major resources for implementing
the strategy of Nisa are human resource, technology and time. These all will affect
effective execution of tactic to attain choices of developments for organization
Stakeholder Their interest or
requirement
from the
project
What the project
needs from them
Perceived
attitudes
and/or risks
Actions to take
Customers Better and high
quality products
Monitoring the
quality by
iuncreasing the
personnels
None Quality planning
throgh TQM or
six sigma
techniques
Management
and employees
Improvements in
the operations in
overseas
country to
increase profits
Redesign the
outlets by
introducing new
technologies and
enlarge the
space of stores
Change in
technology and
political interfere
Set up of
renovating
existing stores
Defining Project responsibilities
Task and activities Personnels Duration with resources
required
Determining training and
development needs of
employees
Line managers and HR
manager
Time (i.e. max 3 hours per
day) and technology to
record the find requirements
Organize training Line managers and HR
manager
Time (i.e. max 3 hours per
day) and technology to give
training
11

Set up of renovating existing
stores
Management Redesign the outlets by
introducing new technologies
and enlarge the space of
stores
Introduce new promotional
activities
Marketing manager and its
team members
Increase the presence over
social media and adopt
unique online advertisement
techniques
Milestone chart
Milestones Responsibility Time
Determination of training needs HR manager March 2017
Giving training to workers HR department April 2017
Renovation of present stores Management April 2017
New ideas for promotions Marketing manager April 2017
Milestone report
Deliverables due Due
date
R/A/G* Action to take to bring
deliverable or task back on
schedule
24 March 2017 25 March 2017 G Communicating effectively
14 April 2017 14 April 2017 G Making scedules for each
activity.
7 April 2017 10April 2017 R Devising project manager and
required number of employees
with proper monitoring of cost
and time.
21 April 2017 22 April 2017 A Arrnging meetings and take
suggestions from every
concerned team members.
12

Illustration 1: Network diagram
The above diagram of activities chart explains the various activities that will be undertaken
as per the project. According to this, each activity has been planned with their time
schedules of start and finish dates. For instance, the first activity of determining training
needs is projected to be start on 20th March 2017 and it will be completed till 24th march
2017. similarly, the plans for renovation of existing stores will be started on 27th March and
projected to end on 7th April 2017.
The netwok diagram shows the critical path that will be followed for all activities
according to which it is clear that the longest time will be taken for 3rd activity that is
renovation of existing stores.
13

14
Action Step
Person(s)
Responsibl
e
Date to
be
Complete
d
Resources
Required
Potential
Barriers or
Resistance
Collaborators
Determining
training and
developmen
t needs of
employees
Line
managers
and HR
manager
March
2017
Time (i.e.
max 3 hours
per day) and
technology
to record the
find
requirements
None Personnel of all
levels
Organizetrai
ning
Line
managers
and HR
manager
April
2017
Time (i.e.
max 3 hours
per day) and
technology
to give
training
None Personnel of all
levels
Set up of
renovating
existing
stores
Manageme
nt
April
2017
Redesign the
outlets by
introducing
new
technologies
and enlarge
the space of
stores
Change in
technology
and political
interfere
Personnel of all
levels
Introduce
new
promotional
activities
Marketing
manager
and its
team
members
April
2017
Increase the
presence
over social
media and
adopt unique
online
advertiseme
nt
techniques
Change in
technology
and resistance
of employees
to learn new
techniques of
promotion
Personnel of all
levels

Illustration 2: Gantt chart
The above Gantt chart is depicting the path which will be travelled for completing various
activities. As per this chart, it is also portraying the time duration that wil be taken for this
required in the process.
6. Conclusion
From the above stated report, it can be concluded that business environment has
an external environment in which an organization operate its trade. It has contained
several factors that cannot be controlled by the firm. These have made both positive and
negative impact over the companies. To deal with the external elements, enterprises have
developed several strategies with the aim of the attain business objectives. In the case of
Nisa, it has found from the study that external macro and micro environmental factors have
affected the business operations at international and national level. Competitor analysis
has defined that cited organization has attained the strong position in retail and grocery
market as compare to its rivals.
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