Analyzing Topshop's Retail Strategy

This assignment requires a thorough analysis of Topshop's retail strategy utilizing various frameworks. Students are tasked with applying Porter's Five Forces model to assess the competitive landscape, conducting a PESTLE analysis to identify external factors influencing the business, and examining Topshop's supply chain model for efficiency. The assignment aims to evaluate Topshop's strengths and weaknesses within the retail sector.

BUSINESS
ENVIRONMENT
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TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................1
MAIN BODY...................................................................................................................................1
a. Identifying and analysing the current environmental influences on Apparel Retailers
subsector within UK economy using Porter's 5 forces model................................................1
b. Analysing internal business environment of Topshop within UK using Value Chain model
................................................................................................................................................2
c. Appropriate adaptation which Topshop could undertake in response to the external business
environmental forces..............................................................................................................6
d. Reflection on the usefulness of Porter's five forces model in understanding business
environment and describing its potential limitations..............................................................8
CONCLUSION................................................................................................................................9
REFERENCES..............................................................................................................................11
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INTRODUCTION
Business environment consists of different aspects of useful resources that are required
for the organisational operations and functions. With this consideration, internal and external
elements helpsfirm to track resources and convert them into goods and services. These elements
highly influence to take business decisions (Huq, Chowdhury and Klassen, 2016). There are
different forces that influence functions and operations such as economic, social, political,
technological, etc. Present study is based on Topshop which is British Multinational apparel firm
that deals in fashion of clothing, shoes, make-up, accessories, etc.
For gaining insight information of the present report, it covers Porter's 5 forces model to
identify and analyse current environmental influences on the Apparel Retailers subsector in UK
economy. Furthermore, external business environment forces are explained along with analysing
the internal business environment through Value Chain model. At last, reflection on usefulness
of Porter’s 5 forces model will be given.
MAIN BODY
a. Identifying and analysing the current environmental influences on Apparel Retailers subsector
within UK economy using Porter's 5 forces model
Porter's 5 forces analysis is an approach which determines competitiveness in the given
market. It shows profitability for the business, competing with several other organisations in
global environment. Elements of Porter’s five forces model included in it that influence Topshop
in the UK economy are given as below: Buyer’s bargaining power (High): It is one of the important forces because buyers can
choose to push down prices not buy products or switch retailers. In Topshop, buyers
bargaining power is high because there are several alternative options in front of them.
Clothes shoppers are typically individual as compared to huge companies, buying in bulk,
etc. Due to alternative options, shop for apparel and little incentive also consider for
giving plenty of indirect bargaining power (Wiese, Zielke and Toporowski, 2015). Supplier’s bargaining power (Moderate): In the apparel retailer, supplier’s power is
relatively small and moderate force. This is because, in all over the world, there are
several suppliers exists those provide raw material to Topshop. Most of the apparel
companies source their products from third world manufacturers who receive fraction of
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the profits. Suppliers have little control over the fashion industry which can be
dispensable and always swapped out. Therefore, input price for the industry relatively
low and stay until global development close up significantly. Competitive rivalry (High): In fashion industry, it is interesting when it comes to analyse
with intensity of competitive rivalry. There are a large number of retailers who sold
similar products but concept of brand also allow in some companies to quickly saturate
with similar products. In fashion industry, it is difficult for Topshop to consider their
functions in effective manner because there are several larger businesses continuously
compete with each other. In this aspect, fashion industry is very difficult to get into for
many retailers (Venkatesh, Rathi and Patwa, 2015). For example, Zara, H&M, etc. other
organisations competing with the selected firm so that competitive rivalry in the country
is high. Threat of substitute (Low): In the UK, Topshop has low threat of substitute products
because in the fashion retail industry maximum people look for quality products. To sum
up, it can be stated that fashion industry seems difficult to successfully dive into bleak for
companies. The chosen company provide quality of products and services so that it
assists to effectively bargain with plenty of choice. There are several competitors make to
sustain place in the market. Therefore, it can be stated that it create positive impact on the
UK economy to develop their significant advantages (Kozlowski, Searcy and Bardecki,
2015).
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 Threat of new entrants (Low): In the UK, Topshop has low threat of new entrants because
apparel industry requires unique to bring popularise in their own products. New entries
also find with unique ways to make popularity in products and services with building
novel brands. With the help of social media, fashion industry face high risk and high
reward for new entrants to take proper care of these products. Moreover, new businesses
also requires to consider more fund to consider operations and functions in this sector.
Therefore, threat of new entrants is very low in the market (Nurhayati, Taylor and
Chatterjee, 2016).
b. Analysing internal business environment of Topshop within UK using Value Chain model
It is important to consider value chain analysis for apparel business environment analysis.
It encompasses with the production of such fibres and make into fabric. From the apparel
industry, it takes products of the industry and make into finished wearable products. In this
aspect, Topshop consider a way to visual analysis business activities to create competitive
advantages. It helps to the company and understand how it adds value to something and
subsequently. Value chain analysis consider following elements:
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Illustration 1: Porter's five forces model
(Source: E-Business Strategy, 2018)

Primary activities
In primary activities, there are several elements included that consider important role to
involve acquisition and consumption of resources. In Topshop, primary activities are directly
concerned with creating and delivering product. Primary activities are usually the source of cost
advantages so that where costs can be easily identified, each activity properly managed
(Nurhayati, Taylor and Chatterjee, 2016). It is directly add value in the production process but
not important as supportive activities. It can be grouped into five main areas that are explained
under here: Inbound logistics: Inbound logistics refers to goods that being obtained from the
enterprise's suppliers and used for producing end products. In this regard, different
activities need to be taken to support and improve effectiveness of Topshop. For instance,
the chosen company taking raw material from different suppliers to produce end product
in the market (Venkatesh, Rathi and Patwa, 2015). There are several options also
available from other countries to create effective functioning. Operations: Raw materials and goods are manufactured into final product. Therefore,
value is added to particular product in this stage to moves through production line.
Operations within the selected enterprise consider to make new products and changes in
existing goods to develop effective results. Outbound logistics: When products have been manufactured, they are ready for
distribution in centres, wholesalers, retailers and customers. Distribution of finished
goods is known as outbound logistics (White, Nielsen and Valentini, 2017). With this
consideration, Topshop needs to focus on method through they can easily reach towards
ultimate consumers. Marketing and sales: Marketing must make sure that product is targeted towards correct
customer group. Marketing mix is also used to establish and effective strategy. In this
way, competitive advantages can be clearly communicated to target group with
promotional mix. In addition to this, it can be stated that Topshop needs to determine
promotion of their products and services in different areas of the world. There are several
ways to marketing and sales (Bernon, Cullen and Gorst, 2016). In this way, advertising
can be successfully build through consumers those are drawn to the particular brand with
unique style and appeal. Another way to target more customers is membership services
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and incentives to keep loyal customers satisfied. Highly fashionable & quality of clothing
often keeps consumers hooked. Wide variety of clothing ensure that there is something
for each person on occasion (Campaniaris, Murray and Jeffrey, 2015). High global brand
recognition also helps to the selected firm to consider marketing and sales high.
 Services: After products and services has been sold, the chosen business should assess
what kinds of support services requires in the organisation. In this way, offer for
customers must be successfully develop in the form of after sales training, guarantees and
warranties (Laffy and Walters, 2016). With the help of online store, Topshop can easily
consider international delivery with their functions and operations. Site is continuously
updated with all the latest fashion trends and distribute around 300 new products.
With the above activities, combination of different aspects, it is essential to develop
competitive advantages. As a result, competitive advantages will be successfully gained to
support services.
Supportive activities
Supportive activities helps primary activities in the enterprise to accomplish competitive
advantages. Nowadays, supportive activities as information systems continuously grow that is
important source for R&D or general management. It is usually important to develop more
creativity so that it ascertained more effectiveness that can be identify for each activity and
properly managed (Burt, Johansson and Dawson, 2015). There are four main areas of support
activities that are explained under here: Firm’s infrastructure: Topshop needs to ensure that their finances, legal structure and
management structure work in efficient manner that assists to drive organisation forward.
Inefficient infrastructure waste resources can create impact on firm reputation. Hence, it
open to fines and sanctions to develop more effective results at workplace (Mangiaracina,
Marchet and Tumino, 2015). Organic cotton farming consider in firm infrastructure
which contain sunshine and water. Human resource management: The chosen organisation will have to recruit, train and
develop right people for the enterprise to make successful results. Staff will also have to
be motivated and paid on the market rate to stay with enterprise and add value as well. In
the service sector, employees are competitive advantages as customers to purchase a
service that is provided by employees (Mohr and Batsakis, 2018). In Topshop, customer
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take away with them to ascertained desired level of results. Human resource require in
the chosen business for manufacturing process of garments in bulk. For instance, it
includes spinning, knitting, dyeing and cut & sewing. Technology development: Supportive activities also contains technology development
because use of advance technology obtain competitive advantages that is more important
for today's driven environment. Technology can be used in many ways which includes
production to reduce cost and add value (Huq, Chowdhury and Klassen, 2016). For this
aspect, Topshop consider research and development program to develop new products
and internet so that customers can easily access 24*7 hours services. However, the
selected firm face problem and issue in transportation so that technology advancement
assists to develop more effective results in the business.
 Procurement: In this department, source of raw material for the enterprise also obtain at
best price. Challenges for procurement is also obtained in best and possible manner with
quality available for their budget. Procurement consider branding, final checking, and
distribution in stores of worldwide (Paul, Sankaranarayanan and Mekoth, 2016). As a
result, it assists to focus on operations that can develop more effectiveness in Topshop
with business development. In this regard, source of raw material can be successfully
accomplish with business developing outcomes. The chosen business can easily procure
their functioning with different kinds of raw material that helps to fulfil their goals and
objectives in desired manner.
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c. Appropriate adaptation which Topshop could undertake in response to the external business
environmental forces
External environment analysis consider important aspect in the business to regulate
different functions and operations in the country (Gardetti and Torres, 2017). With this regard,
PESTLE analysis is one of the tool that contain different external business environmental forces
in the business. They are as follows: Political factors: In the UK, political conditions not stable and so, it creates negative
impact on the results and outcomes. In order to setting up stores, Topshop teams frame
with energy and power so that it also influence functions and operations to undertake
responses from external business environment forces. UK government also encourage
foreign investors to setting good rates. In order to encourage local market government for
increasing export and reduce duties as well (Wiese, Zielke and Toporowski, 2015).
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Illustration 2: Topshop supply chain
(Source: Value chain analysis, 2018)

Encouraging of development of local market, allowances by government sponsoring of
the industry in UK with cheaper and low quality products. Economic factors: In the UK, high interest rates in country is one of the elements that
influence to company. Interest rates also fluctuate towards higher side and due to this,
Topshop face difficulties to establish finances in the country. Such kinds of economic
condition pushes public to more savings and it affects the sales of enterprise. In addition
to this, there are several changes in country also impact on the organisation such as
inflation rates, currency exchange rates, etc. (Bertrand, Brusset and Fortin, 2015). Social factors: In order to make changes in social life of people, there are several impacts
on Topshop has been occurred. As per the market changes and trends, customer demand
products and services accordingly. Therefore, the chosen business needs to focus on latest
demands and requirements of customers. Furthermore, market trends also important so
that it is important for the business to conduct research regarding market. Therefore, it
will assist to deal as per latest aspects of the environment (Nurhayati, Taylor and
Chatterjee, 2016). Along with this, Topshop has opportunities to make cultural shift
towards particular brand that penetrate to the whole market in desired manner. As a
result, it assists to focus on effective results at workplace. Technological factors: Efficient production of the organisation also requires that enable
to produce effective results at workplace. With the help of advanced technology, Topshop
has opportunity to produce qualitative products and services in the market. Technological
advances bring and enhance effective results with high conversation rates. With the
advanced results, they can easily equip new technology at workplace. Efficient
production can be enabled with technological advances and so, it assists to produce
effective functioning at workplace (Beh, Ghobadian and O'Regan, 2016). Technological
enhanced products bring quality and develop more significant advantages at workplace.
New technologies also becoming common and therefore, likely to increase customer base
as well. Legal factors: In the country, there are several legal factors exists that create impact on
Topshop. Heavy taxes on the import industry is one of the element that impact on the
functions and operations. With this regard, it can be stated that the chosen business need
to follow all regulations and norms that assists to meet with desired level of results. In
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this consideration, effectiveness will be successfully develop to ascertained more
creativity in the enterprise (Venkatesh, Rathi and Patwa, 2015). Along with this, labour is
privileged in the nation because it abides by all aspects of the country with minimum
wages rate.
 Environmental factors: Shoes that are made by Topshop are of leather which is sourced
from animal skin. Therefore, it creates impact on environmental aspect. With this
consideration, it is important to protect environment with following different rules and
norms. In this consideration, it can be stated that environmental laws are actually
protecting with devise ways that are closer to nature. As a result, it can be stated that
protect environment is one of the important aspect for the enterprise to focus on regulate
functions and operations in effective manner (Kozlowski, Searcy and Bardecki, 2015).
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Illustration 3: PESTLE analysis for Topshop
(Source: What is a PESTLE Analysis and how can it help?, 2018)

d. Reflection on the usefulness of Porter's five forces model in understanding business
environment and describing its potential limitations
With the help of Porter's five forces model, I understood and learned business
environment in an effective manner. It also contains certain potential limitations that exists in the
enterprise. Threat of substitute products (Moderate): I learned that Topshop consider their footwear
for children although with high quality and compatible that still existing in the industry to
beat very hard. Therefore, it can be stated that threat of substitute products moderately
favoured. In this consideration, there are several substitutes’ products I have seen in the
market that create impact on the chosen business enterprise. Threat of new entrants (Low): In the UK, I have analysed that Topshop consider well
established brands and distribution channels. Therefore, customers are loyal to existing
products and services of the chosen business. From past years' analysis, I had seen that
the selected business bringing low cost for clothing and shoes in market. With research
and development process, it has been analysis in effective manner to focus on comfort of
people. Bargaining power of buyers (Low): From the market analysis, I have seen that buyers
are fragmented within country in a large number of perspective. In this consideration I
had understood that bargaining powers of buyers becomes low regarding concentration.
Buyers bargaining power is low so that the chosen business can easily consider fixed
price on their products and services. Switching cost is high so that Topshop provide good
quality at cheap prices. Therefore, I had learned that bargaining power is favourable to
produce qualitative products and services. Bargaining power of suppliers (Low): I had learned that bargaining power of suppliers is
very low because raw material have commodity status. Suppliers are very dependent on
consumers so that Topshop has advantage to favourable in term of effective bargaining
power. In this regard, it can be stated that suppliers can be replaced easily due to
globalisation. I have seen that the chosen business purchasing raw material from different
suppliers so that it assists to gain more systematic advantages at workplace with effective
raw material.
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 Competitive rivalry (High): However, I have seen that competitive rivalry is high
because there are several well established and huge competitors who competing due to
online shopping. In this consideration, I had learned that competing at global level by
Topshop leading in industry to increase costs. Research also conducted by the enterprise
to gain competitive advantages. Therefore, they can lead with greater success in the
business to produce more qualitative results at workplace.
CONCLUSION
From the above report, it can be concluded that business environment consider important
role in success of every enterprise. In this consideration, several perspectives have been included
that assist to conduct business analysis in positive aspect. With this regard, report summarised
about porter’s five forces model that describe to focus on gaining competitive advantages in
Topshop. Furthermore, it includes value chain analysis which shows operations management in
the business and effective process to focus on targets. Further, primary and supportive; two types
of activities are explained that ascertained with desired level of results at workplace. Moreover, it
articulated about external environment analysis which helps company to attain growth and
sustainability. At last, reflective assessment is given on the basis of Porter’s five forces model
that helps Topshop to increase its scope of business and gain a competitive edge over others.
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