Business Strategy for Deliveroo: An Analysis of Internal and External Environment

This report provides a detailed analysis of the business strategy of Deliveroo, including its internal and external environment. The report includes a PESTLE analysis, Ansoff matrix, SWOT analysis, VRIO framework and McKinsey 7S Framework to evaluate the company's strengths, weaknesses, opportunities and threats. The report also highlights the internal capabilities and resources of the company and provides recommendations for future growth.

BUSINESS STRATEGY

Table of Contents
INTRODUCTION...........................................................................................................................1
MAIN BODY...................................................................................................................................1
Activity 1.........................................................................................................................................1
Pestle analysis of Deliveroo........................................................................................................1
Ansoff matrix of Deliveroo.........................................................................................................3
Activity 2.........................................................................................................................................4
The internal environment and capabilities of Deliveroo.............................................................4
CONCLUSION................................................................................................................................8
REFERENCES................................................................................................................................9

INTRODUCTION
The business strategy is the complete synopsis of the activity and determination an
organization design to take in order to reach its business goals and objectives. There are various
aspects of strategic management that are utilised for the production of the plans (Chelliah and
Swamy, 2018). These aspects are able to make various strategic priorities along with objectives
that assures the betterment of the organizations. In current world of modern business, the role of
business strategy are highly considerable and can never be ignored. As the role of business are
highly important and considerable, the whole report is prepared on the basis of food delivery
service company i.e. Deliveroo. It is an online food delivery firm based in London, England.
The organization operates in around two hundred locations across the United Kingdom.
Company provides employment to numerous employees and evaluated that there are more than
30,000 riders they are having all across the globe (Uyar, 2019).
This report will describe the study in detail including impacts of macro environment on
the firm Deliveroo, their business strategies, internal environment, its capabilities along with the
outcome of the complete analysis with the help of various models. Apart from this, the study
will also highlight the whole concept in elaborative manner with the help of theories which
enables others to understand and interpret strategic directions available within the enterprise
Deliveroo.
MAIN BODY
Activity 1
Pestle analysis of Deliveroo
Deliveroo is an online food delivery company working in Britain so the macro
environment of organization can be identified with the help of Pestle analysis framework
(Frederick and Parappagoudar, 2021).
Political factor: The food delivering services are also get influenced with the political
environment within the nations. Mainly the food delivering industry is impacted by taxes
reforms and the regulations related to the health. When there is change in the taxes rates to
perform this service in the market then this industry get highly influenced. When the
government change the guideline regarding the supply of food then this services industry all
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have to make change accordingly (Achinas, S. and et. al., 2019). This is found as a threat for the
food delivering industry so the Deliveroo also have to inspect this external factor to sustain the
market.
Economical factor: when the economic condition of the nations get changed then the delivering
services industry also get impact. In the food delivering service the employees are working so if
the cost of labour enhance then industry have to pay more and profit is reduced in this and when
the economy people are having disposable income so that they can spend more on their food.
Deliveroo is also got influence when the economic condition change positive or negative
according to the industry.
Social factor: When the trend in the market change about the food to eat then the food
delivering industry also influenced immediately. As now in UK people are highly educated, and
they know that healthy food is good for them, so they are now preferring the online food less
and preferring their home food (Li, C., Mirosa and Bremer 2020). When the trends of food
change the Deliveroo food service provider function are also changed, and they are also going to
move towards more healthy food that help them to sustain in the market.
Technology factor: The market uses to prefer the latest technology and when there is change in
technology the food delivering services are also highly impacted. As there are number of food
delivering companies in the market and all are trying to be the best and on time so when the
competitor enhance its technology then the customer of Deliveroo will instently shift their
choice and move to some other brand so the Deliveroo have to adopt the technologies according
to the market needs. This factor is being threat as well as opportunity for the company.
Legal factor: There are number of laws made by the authority which have to follow by the
companies in the food delivering industry. When the organization disobeys the laws the
government not support such business and customers are also not prefer such type of companies.
Mostly the safety standards are needed in the food industry and deliveroo have to make sure that
they are working with this law.
Environment factor: The environment is also uses to influence the business activities of food
delivering services companies because when there is any change in the surrounding environment
then services may delay or not on appropriate time. The food is not remained same in all the
environment so it is basically treated for the food delivering sector.
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Ansoff matrix of Deliveroo
This is a strategic tool which is being used to help the business and also assist in the
growth perspective (KUMAR and GOVINDARAJO, 2017). There are basically four strategies
of this tool that company can make use of to grow in the market.
Market penetration: This is one of the effective strategy the deliveroo can use in this business
uses to grow in the market with existing products in existing market place. So when the
company will make use of this strategy then production of existing product will raise then
efficiency will also enhance. This also help in increasing the marketing investment and products
are also available in those areas where there is need of it. The operational cost also tends to
reduce because the production is done on a large scale.
Market development: When the deliveroo will use this strategy then they can effectively move
in new market with its existing services range. For doing this the company must have to invest in
research and development to identify which market is being most suitable for the company. This
will help the company to expand the awareness of brand in the market. Customers of different
market will also able to know about the product of the company.
Product development: When the deliveroo want to grow in the market then this is also effective
exercise for the company (Hanif and Fafurida, 2018). In this to attract the customers the
company will introduce a new service in the market the company can do this in many ways as
they can upgrade their service or they can introduce a new kind of service. Moreover, they can
also improve the quality of the service they provide.
Diversification: This is also one of the great way to grow in the market with new service in new
market that can adopt by deliveroo. This strategy will assist to grow more effectively in the
market in this the company can make use of vertical diversification that is increase service range
under the smilier category (Raupova, 2020). Another one is horizontal diversification in this the
company uses to enter a new category segment in the new market to attract the customers more.
From the above analysis it is found that Deliveroo food delivering services need to adopt
the product development strategy because there are different competitors available for the
company and when the company will introduce new service in the existing market then more
customers will shift their choice and aware of the new service range. With this strategy then can
offer modified product in the existing market according the needs of the customers base.
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Activity 2
The internal environment and capabilities of Deliveroo
In order to understand internal capabilities of the firm Deliveroo, the internal analysis
plays a vital role which are able to provide detailed information. An internal analysis is the
complete exploration of the establishment's competency, expenditure perspective and
competitive practicality within the market place in which the firm are operating (Afza and
Ahmed, 2017) . Conducting an internal analysis often incorporates measures that are able to
provide useful information about the organization's strengths, opportunities, threats and
weaknesses. With the understanding of all these measures in detailed format, it can be evaluated
that the role of internal environment is extremely important for any organization. In order to
provide detailed analysis if internal assessment about the Deliveroo, SWOT analysis has been
done:
 Strengths
1. Location and facilities the firm are providing: Deliveroo is not an physical firm but a
service provider company through the help of proper application supported by various
gadgets including smart phones, laptops, etc. This means that in terms of locations and
facilities, they offer intangible services to their consumers. The firm are not producing
their own goods and thus able to make their position within the market place with the
help of their effective services only. These facilities allows them to avoid any kind of
traditional taxes and employment fees.
2. Marketing and brand value of the firm: Deliveroo is a young and recently established
firm for providing effectual services to millennials. With the involvement of recent
trends and research, the establishment is able to brand themselves accurately to their
demographic. The firm utilises sleek and minimalistic logo of their brand name and
“millennial humour” as their advertisements, the establishment is able to attract more and
more customers along with convincing them they are able to deliver best of their services
within the market space (Büyüközkan and Ilıcak, 2019). The firm are not only provide
services to facilitate ones life but also something they want to be a part of.
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 Weaknesses
1. Operations: Deliveroo promises to provide effective services with high quality and
efficiency but this can be difficult when they rely on variable forces like drivers. The
company faced various issues with late and cold food items deliveries due to the reason
that have been given by the drivers that they are not easily able to find address of the
consumers.
2. Technical malfunctioning: The business operating through the app mode, which can
develop various possibilities of crashes. Companion faces such kind of huge issues in
their past terms and led to lose hundreds of orders from their consumers and thus charged
triple for that.
 Opportunities
1. Technical changes: Deliveroo is bale to take advantages from the introduction of
advancement of technological changes within their business operations. The recent the
technology, the more they are able to process the data which enables them to offer more
accurate and useful app with detailed features to their customers.
2. Social trends: Deliveroo follows the latest social trend of instant satisfaction where the
customers are able to receive what they want from the establishment. As a young and
recently open company it can easily adapt these current trends and therefore adapt tom
the customers requirements and desires.
 Threats
1. Competition: This is the biggest threat for any firm as food delivery industry is an easy
market to enter. Such establishments requires very less government policies and low
capital requirements which enhances the amount of competition for the firm Deliveroo.
2. Legal issues: Company faces certain legal issues with the employment of their drivers.
They offer specific measures so that the riders are unable to negotiate their pay scale and
hours of working (Zharan and Bongaerts, 2017).
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In order to analyse internal capabilities of Deliveroo along with resource based view
VRIO framework has been explained in detail in order to provide detailed information for
competitive analysis (Koutroumanis, 2021). VRIO falls into the internal analysis step of such
procedures but is utilised as a framework in this study in order to evaluating just about all the
resources and capabilities of Deliveroo, irrespective of their strategies or phase of the strategic
model it falls within. Below explained the table provides complete information about the
Deliveroo through VRIO framework:
Resources\ Capabilities Value Rarity Imitability Organization
Technology ✔
R&D skills ✔
Ability to raise capital ✔
Equipments ✔
HR management ✔
Operations set up ✔ ✔
Quality product mix ✔ ✔
Business locations ✔ ✔
Employees benefits ✔ ✔ ✔
Socially responsible
corporate image
✔ ✔ ✔
Buying power ✔ ✔ ✔
Inclination for innovation ✔ ✔ ✔
Customers experiences ✔ ✔ ✔ ✔
Corporate leadership &
vision
✔ ✔ ✔ ✔
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Well known brand image ✔ ✔ ✔ ✔
From the above table it has been identified that in terms of value of the Deliveroo they
are highly able to provide there valuable services with fulfilling each element of resources and
capabilities as it involves the question that is the particular resource of capability is valuable for
the firm or not. Thus, in the above diagram it has been stated that all the resources and
capabilities mentioned above are valuable for the firm Deliveroo. In context of rarity which
shows details about the factor that is the resources of company are rare in nature or not. Which
has been explained in the above table that apart from technology, R&D skills, abilities to raise
capital, equipments and HR management, all other capabilities and resources are rare for the
firm Deliveroo. In terms of Imitability which describes that without a particular resource or
capability, the firm will face cost disadvantages in obtaining or developing it compared to firms
that already possesses it. From the illustration of above table, it has been described that
Deliveroo are imitable in context of employee benefits, their buying power, CSR
image,Innovative behaviour, consumers experiences, operations leadership, company vision and
brand image of Deliveroo (Vargas-Hernández and Medrano, 2019). And the last one is
organization under which it has been identified that whether the firm is capable of arranging
competitive advantages or not. Thus, in discourse of Deliveroo, it has been evaluated that the
customers experiences, corporate leadership, firms vision and famous brand image are comes
under consideration that under such capabilities or resources, Deliveroo are able to take
competitive advantages.
In order to critically evaluate the internal environment to appraise the strengths and
weaknesses of Deliveroo's internal capabilities, skills set and structure, McKinsey 7S
Framework has been utilised. It is the powerful framework which can be utilised within the
system of Deliveroo to find out the levels, origin and power of internal abilities. This is a
strategic vision for groups, to involve businesses, business units and teams. The flatter structure
along with highly coordinated in terms of hierarchy within the Deliveroo enables the firm to take
faster decisions in appropriate manner. The other side shows that the strategy that has been
utilised by the firm are extremely clear, goal oriented, competitive, flexible and adaptive in
nature by the employees of the firm. They have a share vision which has been carried on to the
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other parties within the system. The working system of Deliveroo is very much efficient where
the working style is really very effective as managers follow participative leadership techniques
to resolve any kind of issues. Deliveroo offers supportive and encouraging organizational culture
within the establishment. The company have very skilled and commendable workforce with
great understanding on various technical sides (Baharudin and Abdullah, 2020). This is the way
through which the establishment are able to handle all the issues within the system of Deliveroo.
The human resource of the Deliveroo are one of the core competitive advantages as they helped
their employees to develop skills according to their job roles and responsibilities.
CONCLUSION
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REFERENCES
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