Boots Organization: Porter's 5 Forces Analysis and Value Chain
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This report provides an analysis of Boots organization, including its history, Porter's 5 Forces analysis, logistic and operations, and the value chain. It also discusses the use of innovative ideas and information technology to improve business processes. The report concludes with a summary and references.
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TABLE OF CONTENT INTRODUCTION...........................................................................................................................3 Boots organization.......................................................................................................................3 History of company......................................................................................................................3 Porter's 5 Forces Analysis............................................................................................................4 Logistic, operations and outbound logistics.................................................................................7 Two activities in Porter Value Chain..........................................................................................8 Key value adding activities of company......................................................................................9 Use of innovative ideas and information technology to improve business process...................9 CONCLUSION..............................................................................................................................10 REFERENCES................................................................................................................................1
INTRODUCTION Business is an institute that is established to provide various products and services to people living in society for earning profit.Boots is a retailer of health and beauty products and pharmacy chain operating its business in UK and different countries Ireland, Netherlands and Thailand. Boost company by analysing its internal and external factors of environment is able to gain competitive advantages in the market. Porter value chain also helps in gaining competitive advantages by identifying opportunity available in market. This report covers brief introduction of company and its various operations that helps in gaining competitive advantages in market. Boots organization Boots firms was founded 171 years ago in 1849 in Nottingham, United Kingdom by John Boots and is one of the largest retailer in UK and Ireland. It has 2500 shops across Ireland and United Kingdom ranging from local pharmacies to large beauty and health shops (Sculos, 2019). Boot stores are mainly located on high streets and shopping centre to attract large number off customers.Ithas56000employeesinUKand1900inIrelandworkingeffectivelyfor achievement of organisational goals (Boots.2019.). It has well-established brand image as more than 170 years of trusted healthcare heritage and innovation in pharmaceutical wholesaling and community pharmacy. Since27consecutive years, Boost is included in FORTUNE's 2020 list as world most admired companies. Firms focus is to help customers feel and look better than they ever possible and is part of retail pharmacy International Division of Walgreens Boots Alliance. It has various brand such as No7, soap and glory and natural collection for skincare, sultan for sun-cream and. Boots opticians and boots retail Ireland are different subsidiaries of Boot and it operates retail websites loyalty card programme known as Boots advantages cars since 1997. History of company Jesses Boot at aged of 10 helped her mother in running a family herbal medicine shop in Nottingham after his father death by establishing Boots in 1849. It was incorporated as Boot and Co. Ltd in 1883 then Boots pure Drug company Ltd in 1888 (Powers, 2016). Boots was sold to American United Drug Company in 1920 by Jesse Boot but it again sold back to British hand in 1933 because of deteriorating economic condition. Its name was changed from Boots Pure drug company to Boots Company Limited in 1971. Boot planned to expand its business by diversified into manufacturing and diversified of drugs. One of the important research of company was drug
for congestive heart failure in 1980 named Manoplax. Nurofen brand was sold to Reckitt Benckiser in 2006 and then it expands its business into Canada by purchasing Tamblyn drugs chain in 1978. Further it planned to expand its business by bringing bicycle and cars parts as brand nameHalford's in 1991 but it was sold in 2002 (Halliburton, 2018). Boots Opticians Ltd became second largest retail optics chain in UK by acquisition of Curry and Paxton Ltd and Clement Clarke Ltd. It further diversified its business into dentistry in 1998 having large numbers of shops providing this services. It also ventures into Well-being services providing various services to customers such as homoeopathy and nutrition advice to laser eye surgery. It was announced that Walgreens would purchase 45% stake in Alliance boots for US$ 6.7 billion. Thus, it will helps in expansion of both brand in UK and china market and in 2014 Walgreens Boots Alliance purchase remaining 55% and form new holdings (Boots, 2018). Company is planning to close 200+ underperforming shops as per 2019. Products and services:Boots sells wide varieties of products and services to customer for maximizing profit and market share. It deals in health and beauty products and related electric products, food and drink, prescription and non-prescription medicines. Firms also provides photography services but now also provide kiosk printing services due to shift from film to digital photography. Opticians and healthcare are another products and services in which company deals. Porter's 5 Forces Analysis Competitive environment is defined by the level of competition in the market. It is associated with external business environment factor that denote the amount of competition availableforthebusinessorganizationinthesamemarketsectorassociatedwiththe organization. To assess the competitiveness in the business environment for the organization Porter's 5 Forces Model can be used. This model involves business environment factors like competitive rivalry, the bargaining power of supplier, power of customer, threat of new entrants and threat of substitute products. Effect of all the forces over business operations of the company are analysed in this strategical tool in order to frame an effective business strategy. Competitive Rivalry (High):Competitive rivalry is among the major force involve in the Porter's 5 Forces Model. This involves the amount of competition organisation face in all the sectors like healthcare, beauty, photography and pharmaceuticals (Mu and et.al., 2016). All such sectors involved in the business of Boot Company are very competitive in nature as company
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management needs to deals with major rivalries in the market like Loreal. P&G and other groups. This force is high as all the company's strategies related to the business development and growth are majorly depends on over other competitors in the same market. Management always focus over taking competitive advantage with the business strategies. Company management also overcome the strategic advantages involve in the business strategies of other rivalry's in order to sustain and improve the growth potential of the company. Customer's will always be keen to procure the products and services of such companies who can offer better prices and product qualities. This analysis focuses over making a suitable business development strategies that can enable the company management of Boot company in taking competitive advantages in the market by overcoming the impact of strategies framed by other competitors. The Bargaining Power of Supplier (Medium):Bargaining power of suppliers is also a crucial aspect involve in Porter 5 Forces Model analysis. Suppliers are also a crucial aspect of the business operations as they enable the company management to serve its products to target customer's around the globe. Boot Company is a multinational organisations that also involve structuring and dealing with suppliers in other part of the country as well (Murphy, 2016). Effective supply chain management system also enable the company management to reduce its over all selling price as well. Out of all the impacts of suppliers over business operations and its cost efficiency this power is medium under Porter 5 Forces for the Boot Company. Big companies and organisations usually don't face any hurdle in dealing with its suppliers as all the suppliers are also mainly depends upon big corporate brand to expand the profitability. In normal business operations plenty of new suppliers also approach to big companies that also provide an edge to big corporate over suppliers in the market. Based on all the above applications with suppliers of company products the impact of this force is restricted to medium in nature. Power of Customer (High):Customers has a major involvement in business development and growth of the company. Customer's not only influence company's development and growth potential by it also has a major involvement in the sustainability of the corporate organisation. Boot company is among the major competitors in the beauty and healthcare sector that also denote about the brand acceptance of the company in the target customer base. As the customer's influence every aspect of business development and sustainability this power is relatively higher as compare to other forces (Sioshansi, 2016). All marketing and operational strategies of the company framed apparently to company's target customer base. Customer's support the company
in taking competitive advantage sin the market. Management of Boot company initiate several offers like discounts, festive sales and other associated offers in order to influence the buying decision of consumer's. Based on major implications of consumer's of company's products this force is high under Porter 5 Forces model. Threat of New Entrants (Low):New entrants are denoted by all the new organisations and companies entered in the healthcare, beauty and Photography sector. Power of new entrants is relatively lower for big brands and corporate organisations associated with the sectors. Boot company is a well-established brand as the company is operating its business operations from the year 1849 and currently company is serving its services in UK, Ireland, Thailand, South Korea and Bahamas. As the market area is such huge for the company this power impacts medium or low for the company. New entrants needs to establish a suitable base in the beginning so that company can sale its products and services. Big brands and companies do not generally affect new entrants. All the company's strategies are based on the major rivalry organisations associated with the sector that can influence the buying decision-making of company's target customer's. Irrespective the implications of this power is lower in market performance of Boot Company but new entrants can influence the business of the company at regional level in shorter area but in the major market this force is lower influence aspect on the business of the company. Threat of Substitute Product (High):Substitute product can be denoted by all such products that can replace the use of company's products. Big corporate brands always focus over products development and improvement. Such companies always carry the huge budget to conduct the research and development activity that enable big brands to introduce new products and services in the market that can replace the existing products and its associated usage (Terao and et.al., 2018). This force is higher in Porter 5 Forces Model as new product can effective influence the buying decision-making of the potential customer's of the company. Substitute products can also attractto company'sloyalcustomerbase. Thisforceisa huge threatfor bigcorporate organisations like Boot company as the company management is competing with leading brands of the sector which aggressively involve in research and development activities in order to upgrade the existing product qualities. All the forces involves in Porter 5 Forces model play an important role for the company in taking competitive advantages in the respective market sector.
Outbound Logistic:It is outward movement of finished products and services of company to final consumers thus it interacts company with customers. It includes distribution channel and transportation of products and services to customers. Boot has 2500 shops across United kingdom and Ireland that range from local pharmacies to large beauty and health products shops. Customers can easily purchase its products at stores of boots are mostly located on high streets and shopping centre (Talupula, 2019). It has large number of subsidiaries company such as Boots opticians and Boots Retail Ireland that helps in expansion of sales and profitability of business. It retails website also helps in attracting large number of customers as it provide ease to them by offering products at their doorsteps. It has large number of pharmacy chain in United Kingdom and other countries for quick delivery of products and services to customers. Two activities in Porter Value Chain Porter value chain analysis five primary activities of firms that are supported by secondary activities for achievement of organisational goals. Primary activities such as inbound logistics, operations, outbound logistic, marketing and sales and service that are supported by variousactivitiessuchasprocurement,humanresourcemanagement,infrastructureand technological development. Thus, Human resource department and technology development helps in smooth operations of inbound and outbound logistic of company. Humanresourcedepartment:Itisresponsibleforrecruiting,selecting,trainingand development of employees for growth and success of organisation. Human department of Boots is responsible for hiring right person for right job in order to perform function of organisation effectively(GrandaandVillarreal,2017).HRmanagertrainandenhanceknowledgeof employees to deliver qualitative services and products to customer. It is also select person that can effective manage stock of raw material for meeting demand of customers. Thus, human resource department of Boots support various primary activities such as logistic, marketing and sales and operations of business. Technologydevelopment:Continuouschangeintechnologyhelpsinreducingcostof transportation and helps in quick delivery of goods and services to customers. Boot by continuous updating its technology and diversifying in research and manufacturing of drug and other medicines is able to gain competitive advantages in the market. Boots also use social media to market its products and services thus attracting large number of customer at reasonable cost. It has also offered varieties of product on its official websites that provide easy to customer in
buying products and services. It also uses live track solution to ensure delivery of products to customer within limited time. Thus, technology development helps company in expansion of business and increasing profitability of company. Key value adding activities of company Activities that added value to products and services of company in order to enhance sales and profitability of company by satisfying needs of customers beyond their expectancy. Boots value added activities that helps in increasing sales and profitability of company are as follows: Standardize quality of products:Boots focus is to provide qualitative products and services to its customers at reasonable rates. Supplier of company are fully aware of standardize raw material to provide qualitative products and services to customers. Strict policies and rules of company are to be abided by supplier while manufacturing products thus it helps in maintaining standard quality and satisfaction of employees. After sales services:Company in order to expand its business and market share provides 24-7 customers support to attract large number of existing and new customers (Damanpour, 2017). Highly skilled and knowledgable employees also helps in providing quality services to people and achievement of organisational goals. Company by building strong relationship with customer through its website able to get feedback and improve itself where it lacks. Thus, it helps in adding value or sales of Boots products and services in the market. Use of innovative ideas and information technology to improve business process From the above analysis it can be stated that innovative ideas and information technology helps in improvement of business process and enhancing competitive positioning of company in the industry. Boot by offering its products and services through online website is able to gain competitive advantages in the market. Customers can easily make purchase of products and services by staying at their home (Chuang, Lin and Chang, 2016). Firm in order to expand its business has use social media to market its product and services to large customers at reasonable rates. Social media is used by large number of people thus it helps company in gaining competitive advantages. Continuous investment in research and development department also helps company in bring new and innovative products to satisfy needs of customers. It has diversified in research and manufacture of drug for development of Ibuprofen Painkillere during 1960. Boot has also introduced Manoplax by continuous research for drug for congestive heart failure. Technology development has contribute company growth and success as it develop
business such as children world business and Halfords bicycle and car parts business. It also helps in enhancing brand image of company as innovative products and services attract large number of customers. Information technological also helps in tracking of delivery of products within appropriate limited time to customer. It also helps in storing data related to inventory present in the warehouse and requirement of raw material as per demand of customer. Thus reducing cost of maintaining extra inventory and wastage of material. Innovative ideas helps company in gaining competitive advantages in the market by differentiating it from other competitors. Information technological helps in availability of raw material within reasonable time to meet needs of customers effectively (Secundo and et.al.,2019). Thus, information technologicalandinnovativeideasenhancescompetitivepositionandbusinessprocess. Company by using information technology can analysis its sales and profitability during various years and improve its performance. Online presence of boots also helps in getting quick feedback and building strong relationship with customers. CONCLUSION From the above report it can be concluded that business by using information technology and innovative idea is able to gain competitive advantages in the market. There are various activities that are needed to be performed by company to achieve organisational goals. It can also be explained that Boots by analysing internal and external of environment is able to gain competitive advantages in the industry. It also concluded from above report that porter value chain model helps in effective delivery of good and services to customers and achievement of organisational goals.
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