Business Expansion Strategy and Market Analysis

The assignment involves analyzing the dynamic of the upcoming market in Portugal and determining whether it's a profitable choice for business expansion. Using the PESTLE analytical tool, it assesses various market forces and concludes that Portugal is an ideal location for businesses to venture into, taking advantage of its economic growth potential.

Business Report

Table of Contents
INTRODUCTION...........................................................................................................................1
MAIN BODY...................................................................................................................................1
1. Introduction to business..........................................................................................................1
2. Discussion about allocated business environment..................................................................3
3. Application of an appropriate analytical model......................................................................4
4. Data and charts to support business in Portugal......................................................................6
CONCLUSION................................................................................................................................7
REFERENCES................................................................................................................................8

INTRODUCTION
Business is referred to an economic activity which helps in attaining profitable financial
outcomes (Anderson and et. al., 2016). In a business organisation there are numerous people
working to attain shared goals and objectives. The major goals which can be possessed by an
institution are increment in profitability and market expansion. This assignment focuses on
Argos Ltd. It is a subsidiary of Sainsbury's which is an leading retailer in the United Kingdom.
Argus specialises in dealing in personal and household products in the markets of United
Kingdom. This assignment aims to understand strategies for growth which have been deployed
by this institution. A new market is identified and further analysis is to be conducted so that
feasibility of venturing into that region with the offerings of this enterprise.
MAIN BODY
1. Introduction to business
Argos is an retailer which has been acquired by Sainsbury's for an whopping 1.4 billion
euros. Since then business have been reformed to a greater extent. The major changes which
have been ascertained since acquisition are relocation to of business to popular location and
opting for a new digital platform. This brand is known to be one of the first retailer which offers
services of delivering product to the home on the same day. This retailer is known to carry out its
trade activities through online and offline mediums. The efforts of this organisation are aimed to
become United Kingdom's largest retailer in terms of food and non-food offerings.
At present this catalogue retailer carries out its operation through 837 stores excluding
three flagship stores known by the name of Habitat stores. These stats are related to offline
channels where as this business also provides platform to avail services through online mediums.
The major sectors which are covered under catalogue of this organisation relates to food,
clothing, general merchandise and electronic goods. The parent organisation for Argos,
Sainsbury's employs around 195,000 people and sells approximately 90,000 products catering all
over the United Kingdom and Ireland. This organisation have been known to adopt sustainable
measures of carrying out of operations and was successful in recycling its 94% of the total waste
generated.
Mission statement of Argos
The mission of company states purpose for which this business have been formed. The
mission statement also helps in defining scope of operation and products which are offered to the
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target consumers (Brustbauer, 2016). Argos works under leadership and management of
sainsbury's, therefore conforms to their vision and mission statement.
The mission statement is “To be prime choice of consumers when it comes to availing
food and non-food products, the efforts are aimed to deliver best of quality services and
commodities of people at competitive prices through making collective efforts in a rapid
manner.”
Vision
Vision of a company defines path which people have to take so that future of business
can be similar to the desired. It clearly states what a business wishes to achieve in the near future
and provides guidelines to manager while making decisions. The vision statement, “To becomes
most trusted retailer in the country, through delivering to consumers what they need.”
Business strategy
The strategy of business defines action plan through which business wishes to achieve
organisational goals and objectives (Goleman, 2017). The requirements of customers are
identified so that they can be served in the best possible manner. This is the major aspects which
is emphasized by management of this retail organisation. It has been identified that success and
failures of a business relies upon perception of a business upon following enterprise. There are
numerous skills and knowledge development programme initiated by the management so that
vision of business could be fulfilled.
Segmentation and targeting
This organisation have deployed all crucial variables which segmenting people on
various grounds. The geographical aspect is very well covered by being present at all popular
places in the country. The offering of this enterprise ensures that people belonging to different
economic status, income, family cycle, education and religions are able to fulfil their demands
through this retail organisation. This segmentation which have been mentioned above emerged to
be very fruitful for this organisation as they are able to understand demands of different segment
and have made efforts to fulfil the same. The company have targeted women specifically who
ensures that all requirements of households are being fulfilled in the ideal manner (Henry, Foss
and Ahl, 2016).
Argos's USP
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The Unique selling proposition for the retailer is the convenience and comfort through
which consumers can avail services and offerings of the company. This is a unique feature as
shopping for groceries and merchandise is always perceived as headache.
2. Discussion about allocated business environment
The environment which is being expansion plan is carried out is Portugal. Prior to the 78
billion euros agreement with Troika, Portuguese market have returned on growth tracks. In the
year 2016, Portugal experienced a little slowdown due to the decline in investment and exports
(Sekaran and Bougie, 2016). But there was a rise in growth rate in the year 2017 which makes it
one of preferable destination for expansion of business for Argos. Portugal in a member of
European union which states that there are minimal trade barriers and assures that there is an free
flow of trade. The efforts of the government of Portugal are aimed in securing maximum foreign
investment and provides a decent political environment to operate. The nations is diverting
resources and efforts in untouched sectors such as tourism, technology, industrial components
and agricultural goods. The last recorded data states that consumers in the region have availed
goods worth $939 million from US in 2015, this defines bigger size of market of the country and
scope lies for a catalogue retailer. The relation between US and Portugal are good and are
diverted into marking bilateral agreements.
Challenges
The major challenge which is to be countered by this business when looking to expand in
Portugal is that it is still suffering from economic crises to a great extend. This situation have
brought a major slowdown in the economy and ultimately on the buying power of consumers.
However, there is an anticipated increase in the economic circumstance in the country in near
future. There is an increased involvement of the United States in the country and presence of
other retailers will pose a threat to this brand while expanding in the Portugal market.
Opportunities
There are numerous opportunities which makes Portugal a tempting destination for the
expansion of business. The United Kingdom has been identified as the four major investor in
Portuguese region. Portugal have been preferred as an ideal destination for English speaking
people (Westhead and Solesvik, 2016). The reason which encourages expansion to Portugal are
its strategic location and infrastructure which acts as an major attraction. The development of
airports, educational systems and healthcare services have definitely impacted life of people in
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the positive manner. The major advantages of venturing into this market is that it is politically
stable and larger market which will assists in booming of sales of various segment (Shahriar,
Schwarz and Newman, 2016). It would be helpful for Argos to identify most popular destination
and venture by opening up of supermarket so that better understood with the market could be
developed before venturing deeper into the market.
3. Application of an appropriate analytical model
An analytical model is referred to as an mathematical model which helps in explaining and
making predictions relation to future endeavours of business. It is used to study different
components of the environment so that better understanding could be developed. In this scenario,
PESTLE analytical tool is employed by business organisations used in strategic planning for
future endeavours. The major factors which are considered under this analytical tools are as
follows:
Political Factors: This factor focuses on government and trade policies formed by the
concerned environment. Portugal carries a democratic parliamentary policy which means that
member of the parliament are formed with the consent and vote of general public. As mentioned
before, Republic or Portugal offers a stable environment to carry out operations. Country is
known to have a stable relationship with European Union as well which means there is an
opportunities to carry out free trading and movement of people (Wales, 2016). However there is
an dark side to this factor as well, there is a decline in trust of internation market in the country.
The hardships relating to economy have resulted in mild tumbling of the government. Keeping in
the mind the relationship between UK and Portugal it can be said that it is a decent place to carry
out expansion programme.
Economic Factors: The Portugal operates with currency goes by the name of Euro. This
sector focuses on economic growth, exchanges rates and inflation in a country. These factors are
extremely crucial for a enhancing profitability of a business in that region. The most
contributing sector in the economy are trade and services at 74.8%, industrial sector which stood
at 22.6% and agriculture at 2.6%. the present market have been suffering from economic let-
down. The present inflation rate in the country stood at 1.7%. However there are challenges as
well on economic grounds such as unequal distribution of wealth and rate of unemployment
which are to be thought upon by management of Argos before venturing in the country. It has
been identified that this nation is emerging out of poor economic circumstance therefore can be
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chosen market for expansion strategy by the company (Portugal - Economic forecast summary
(November 2017), 2017).
Social factors: The social factors revolves around calculating and understanding of belief
and attitudes of people. The main cause behind the same is that such belief and assumption
determines buying habits of these people. The demographic data of the country states that
majority of people in region comes in elder segment. The growth rate of population stood at -
1.3%. But the major drawback on the social grounds is that people tend to prefer less to stay in
the country and record states that 408 people migrate out of the country which is very high. It has
been identified that people in the country tend to prefer less of national products and are more
accustomed in using products imported from United states or Europe. This particular stance
determines level of profitability which can be attained by Argos when expanding their businesses
to Portugal.
Technological Factors: Technology can used as a measure through which goods are
either produced or are sold to the consumers in a digital manner. Change in technology impacts
the manner through which good are produced and sold to the buyers (Storey, 2016). The data
determines that there are approximately 12.312 billion mobile users in the country and carries
great access to the internet and broadband services. This further makes expansion programme
easier for companies as they can carry out promotional tactics in an effectiveness manner
through use of social media and search engine optimisation tools. Argos can not only expand
through opening up of retail outlet but can also initiate online services to prospective buyers after
a period of time.
Legal Factors: Legal factors focuses on legislation which are formulated by the
government relating to fair and ethical conduct of business operations. The major domains
which are covered are health and safety, equal opportunities, ethical conduct, consumer rights
and safety (Tukker and Tischner, 2017). It is essential to consider legal factors of Portugal as
they are not similar to that of host country. For instance: Corporation tax focuses on income and
gains or cost or loss of an enterprise. It is essential to adhere to labour laws formulated by
International labour code relating to working environment. Advertisement which are undertaken
by an organisation must not concern religions which are practised in the country. The above
mentioned legislation which are practicable and will not be cause and threat to expanding
business to the target region.
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Environmental Factors: Argos is known to be an organisation which takes concepts of
sustainability very seriously. As mentioned above, this organisation have recycled 94% of the
total waste generated by business. The sustainable measures which are practised by country will
be well appreciated in expanded destination i.e. Portugal.
4. Data and charts to support business in Portugal
The projections related to future economic growth defines that there will be a growth
expected approximately 2% in the coming financial year. The major cause of driver for this
growth will be export of domestic products. The consumption pattern will remain strong
irrespective of growth which will be attained. Rise of exports will be accompanied by increment
of imports which leads to forming balance of trade (Van Der Aalst, La Rosa, and Santoro,
2016). Not only economically, fiscal domain of the country is experiencing an expansion as well.
The latest developed fiscal policies will be growth friendly meaning that major vulnerabilities
and challenges relating to business environment will be countered in an ideal manner.
(Source:Declining Growth Potential, 2017
Interpretation: it can be interpreted from the above graph that actual GDP of the country
and is going against the potential GDP which has been forecasted for the future. Prior to the
economic shocks in the year 2010, the economy of the growing in a stable manner. For the
coming year it can be projected that actual and potential GDP of the country are close to each
other. This feature of the economy makes it one of the preferred destination to be chosen for
expansion strategy by Argos. The rising GDP of the country will definitely portrayed in the
financial outcomes which are received by this organisation through its operations in the Portugal.
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Illustration 1: Declining Growth Potential, 2017

(Source: Labour Market Growth, 2016)
Interpretation: It can be interpreted from the above graph that there is an tremendous
decline in the unemployment rate in the country. This can be termed as favourable sign for
economy of the country. Along with unemployment rate, there is a nominal rise in the wage of
the employed people. Ultimately there will be a rise in the purchasing power of the people which
will lead to more disposable income. Therefore it can be said that it is one of best times to
venture in the country and capitalise upon this opportunity.
CONCLUSION
It can be concluded from the above report that it is extremely important for business organisation
to take up expansion strategies so that operations can be prolonged in the market. Before
expanding it is crucial to understand dynamic of upcoming market so that decision will be made
whether this business will be profitable or not. The analytical tool PESTLE is deployed so that
various forces of market can be understood and capitalised upon. This analytical tools assists
management of the country will be forming plans relating to venturing in the market. Finally data
collected through secondary research approaches have stated that it is a right choice for business
to venture into economy of Portugal with a view to make financial gains.
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Illustration 2: Labour Market Growth, 2016

REFERENCES
Books and Journals
Anderson, D.R. and et. al., 2016. Statistics for business & economics. Nelson Education.
Brustbauer, J., 2016. Enterprise risk management in SMEs: Towards a structural model.
International Small Business Journal. 34(1). pp.70-85.
Goleman, D., 2017. Leadership That Gets Results (Harvard Business Review Classics). Harvard
Business Press.
Henry, C., Foss, L. and Ahl, H., 2016. Gender and entrepreneurship research: A review of
methodological approaches. International Small Business Journal. 34(3). pp.217-241.
Sekaran, U. and Bougie, R., 2016. Research methods for business: A skill building approach.
John Wiley & Sons.
Shahriar, A. Z. M., Schwarz, S. and Newman, A., 2016. Profit orientation of microfinance
institutions and provision of financial capital to business start-ups. International Small
Business Journal. 34(4). pp.532-552.
Storey, D. J., 2016. Understanding the small business sector. Routledge.
Tukker, A. and Tischner, U., 2017. New business for old Europe. Taylor & Francis.
Van Der Aalst, W. M., La Rosa, M. and Santoro, F. M., 2016. Business process management.
Wales, W. J., 2016. Entrepreneurial orientation: A review and synthesis of promising research
directions. International Small Business Journal. 34(1). pp.3-15.
Westhead, P. and Solesvik, M.Z., 2016. Entrepreneurship education and entrepreneurial
intention: Do female students benefit?. International Small Business Journal. 34(8).
pp.979-1003.
Online
Portugal - Economic forecast summary (November 2017). 2017. [Online]. Available through:
<http://www.oecd.org/eco/outlook/portugal-economic-forecast-summary.htm>.
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