Analysis of Competitive Environment and Value Chain of River Island

This report analyzes the competitive environment and value chain of River Island, a high street fashion brand. It includes an introduction to the company, background information, Porter's five force analysis, analysis of inbound and outbound logistics and operations, and identification of value adding activities. The report also discusses the role of information technology in enhancing business processes and competitive positioning.

Business Report

Table of Contents
INTRODUCTION...........................................................................................................................3
MAIN BODY...................................................................................................................................3
Introduction to selected organisation..........................................................................................3
Background information of River Island....................................................................................3
Competitive environment of River Island by application of Porter's five force analysis...........4
Analysis of inbound and outbound logistics and operations.......................................................6
Analysis of support activities in porter's value chain of company..............................................7
Identification of main value adding activities along with justification.......................................7
Understanding of porter's value chain and porter's five force analysis.......................................8
Reflection on the way firm could deploy information technology and utilize innovative ideas
to enhance its business processes and competitive positioning..................................................9
CONCLUSION..............................................................................................................................10
REFERENCES..............................................................................................................................11

INTRODUCTION
Information technology is defined as the design and execution of networks of computer
for communication and information processing. It is the traditional computer applications which
involves storage of data and programmes in order to input data, process and output it (Alyousef
and et. al., 2017). This report is based on River Island which is a high street fashion brand
business headquartered in London, United Kingdom. The company was founded in year 1948
and offers clothes, accessories and footwear for men, women and children. It is very necessary
for an organisation to analyse its intrinsic and extrinsic business environment and evaluate the
role of IT in gaining competitive advantage. For analysing this, the report covers brief
introduction and background information of company with discussion of its products and
services. Analysis of competitive environment and inbound and outbound logistics and
operations of business are included along with two support activities in value chain of business.
The project identifies value adding activities of company and develops the understanding of
porter's 5 force and value chain analysis. At last, a summary and reflection on the way business
deploy IT and utilize innovative ideas to enhance its processes and competitive positioning are
included in report.
MAIN BODY
Introduction to selected organisation
River Island is one of the leading high street fashion retailer of London, United Kingdom.
It is one of the loved and well known brand of Britain. The company was founded around 72
years ago, in year 1948 and is operating its business activities in numerous markets all over the
world. It is a private company founded Bernard Lewis and Brothers and owned by Lewis Family.
There are around more than 350 stores of River Island across the Ireland, United Kingdom and
internationally (Avgerou and Walsham, 2017).
Background information of River Island
River Island is a well known fashion brand of London and develops affordable everyday
real life, distinctive and luxury fashion for any kind of occasion. This high street fashion brand
retailer has more than 350 stores in a Middle East, Asia, Ireland, Europe and United Kingdom,
alongside its 6 online websites shipping to more than 100 countries all over the world and
operating in 4 currencies (About River Island, 2020). Its head office is situated in London and

employs around 900 employees. Variety of products and services are offering by company for
the people who love fashion and customers come to its stores as they like the twist company put
on trends. It offers range of fashion clothes, footwear and accessories for children, men and
women (Bryson, 2017).
River Island is a designer brand that focuses more in bringing innovation in its products.
The unique touches in collection of company assist it in standout from the remaining high street
brands. The firm aims to bring original and new fashion to customers with good design. Initially,
the company started its business by selling vegetables and fruits and knitted wool. Then, the firm
expended to 9 stores after the 3 brothers of Bernard Lewis joined and the title Lewis separates.
By year 1965, the chain had seventy store empire in United Kingdom and the firm decided that it
needed new identity. Then, it was re-branded by the name Chelsea girl which became the very
first fashion boutique chain of UK. In 1970, the business was left by two brothers and Lewis
Trust Group was formed. In year 2010, kids wear collection was launched by River Island and it
launched RI Baby in 2018 to expand kids wear offering. Now, the company operates its
functions and activities successfully in many countries all over the world (Busse, Meinlschmidt
and Foerstl, 2017).
Competitive environment of River Island by application of Porter's five force analysis
In order to analyse the competitive environment, porter's five force analysis is an
appropriate framework which is utilize by company. Application of this model helps in exploring
the environment in which firm perform its business operations. It includes five main key areas or
forces which are discussed below in context of company (Byrne and et. al., International
Business Machines Corp, 2017).
Bargaining power of buyers: This is the force which analyse power of customers and
their impact on quality and pricing of a product. If there are few customers and numerous sellers,
then it becomes easy for buyers to switch to another company. In fashion retail sector of United
Kingdom, the power of buyers is relatively high as there are many fashion retailers available in
market which offers clothes, footwear and accessories to customers which makes it easy for
customers to switch the brand. So, the power of buyers is high for River Island however, by
offering high quality and unique products to customers at similar prices makes it easy for
company to sustain in market for long term and attain competitive advantage (Bytheway, 2017).

Bargaining power of suppliers: It analyse the power which is possess by suppliers and
the control they have on increase in prices of raw materials. The power of suppliers is high when
there are few suppliers available in market and low when the suppliers are more. In context of
River Island, the power of suppliers is less as there are numerous suppliers available in market of
United Kingdom from which company can source its raw materials for products. Apart from this,
clothing firm source its goods from third world producers which makes the control of suppliers
less. This provides an advantage to company to source inputs at low prices and earn high
profitability in market (Desouza and Hensgen, 2015).
Threat of new entrants: This force analyses how easy or difficult for a new company or
competitor to enter into market. Access to inputs, strong brand identity and economies of scale
are some barriers to enter into market. In fashion industry, there are many competitors available
in market who perform their operations from many years which makes it difficult for new entrant
to enter into fashion retail market. So, the threat of new entrant for River Island is less as it
requires high amount of funds and strong brand identity for new entrant to get succeed in market.
Threat from substitute product: It analyse the switching power of customers to another
brand or product. In the fashion retail industry, there is no substitute available for clothes.
However, the people who can not afford high priced brand, there are some substitutes available
for them that can offer high end styles at low prices. This creates substitution threat for company.
So, the threat of substitution is moderate for company as there are only few competitors available
in market who offer substitute products to customers and buyers can switch to those brands who
offer high quality fashion products at low prices (Huh, Cho and Kim, 2017).
Rivalry in the industry: This factor of framework analyse the intensity of competition in
market. In fashion retail industry, large number of firm operates who sells similar goods. But, the
concept of brands is also there which enable some of the firms to sell clothes for ridiculous rates.
Today, the innovation in retail industry is less, so the market place is becoming saturated quickly
with same products. As there are various competitors of River Island are available in United
Kingdom's market like Marks & Spencer, Primark etc. So, competitive rivalry is high for
company in market of United Kingdom.
As per the above analysis, it can be said that the competition in United Kingdom's market
for River Island is high. However, the high quality luxury clothes of company with their unique
designs provides an advantage to company in gaining competitive advantage in market over the

rivals. It enables firm to get growth and success in market for long term (Ilmudeen and Bao,
2018).
Analysis of inbound and outbound logistics and operations
Inbound logistics-
These are the component of value chain analysis. These refers to those logistics which
includes receiving of raw materials , warehousing and mobility of goods in business etc. Such
types of activities are used for production and output and mainly deals in b2b market. Inbound
logistics contains huge cost and is time consuming process. In relation with RIVER ISLAND,
price and quality are two most important factor which should be focused by firm while dealing
with customers. Affordable prices and good quality of products will leads to wider market area
and more opportunity.
Operations-
Operations are important and necessary to carry out final product in the business. IT is
the most essential aspect of value chain analysis because it assist firm to convert raw material
into final product to end users. RIVER ISLAND operate their operations smoothly by efficient
use of resources and managers in entity are active when any problem or hurdle arise in the
operation process (Khalifa and Ali, 2017). This is most essential process in value chain analysis
inputs are processed and reliable output is produced. Operation includes certain phases such as,
packaging, testing, analysis, management etc. So, while going with operation level a proper
research should be considered and additional alternatives as well as resources need to
predetermined so that process does not get stopped.
Outbound Logistics-
Outbound logistics are those in which transportation of goods are carried out outside the
firm. Inbound as well outbound logistics both are continuous process in business. In relation with
RIVER ISLAND, they use smart solution and provide its customers total satisfaction. This
logistics comprises of selling final products to customers, distribution, etc.
It helps business in growth and overall development and maintain a positive relationship between
customers and entities. Outbound logistics require proper management and strategies so that task
in this level works properly and in effective manner (Marchewka, 2014).

Analysis of support activities in porter's value chain of company
Porter's value chain is a model for building an analytical structure which follow
autonomous activities from acquisition of input to production of end product and delivery to
customers. Application of this framework helps a company in streamlining the processes of
business that take a good from idea to market (Nicho, Khan and Rahman, 2017). It includes
different activities like maintaining technology and infrastructure of company in order to
enhance the performance of River Island. Currently, the administration team of company focus
on advantages over the competitors like Marks & Spencer, Primark etc. In order to attain this,
porter's value chain analysis helps the company by streamline the process of its business. The
two support activities of value chain of River Island are mentioned below:
Technology development: In order to enhance the quality of products offering by
company, it is very necessary to implement advanced technology in its business operations and
processes. This helps company in attaining competitive advantage in market. The management
of River Island emphasize on employing latest technology in business processes as with the helps
of this, firm enhance the experience of customers who shop its products online. Introduction of
new distribution channel helps in increasing the productivity and profit ratio of company.
Human resource management: Effective management of human resource helps
company in performing its operations efficient and successfully. It supports River Island in
offering high quality products and services to customers that further assist in satisfy them. The
main focus of company's management is on hiring candidates with diverse skills and
competencies so that goals and objectives of company can attain successfully. Hiring talent from
different cultures and backgrounds assist in bringing innovation and creativity at workplace
(Pattinson and et. al., 2017).
Both the support activities of value chain of River Island help company in attaining
competitive advantage at marketplace by streamline its processes appropriately. This helps in
improving its productivity and profitability and ensure its long term sustainability in market.
Identification of main value adding activities along with justification
There are some value adding activities of an organisation that plays vital role by adding
value to it. Some main value adding activities of River Island are mentioned below:

 The company include unique touch in its clothes which adds value to them as by this,
customer satisfy more when they get trendy clothes which satisfy their needs and
preferences (Pearlson, Saunders and Galletta, 2019).
 River Island use high technology promotional tools which helps it in promoting its goods
and services in such a manner that attracts lots of customers towards the brand and
enhance the value for company.
 The twist that company put on trends in its products and services creates value for its
customers and helps in attracting the people who love fashion.
 Apart from this, the company undertakes various corporate socially responsible activities
like commitment to ethical trading, developing meaningful relations with community,
employees and suppliers and operating its stores in such a manner which is mindful of
demand on limited resources of planet adds value to company by enhancing its brand
image and sustainability in market for long term (River Island, 2020).
 The company operates global manufacturing, sourcing and supply chain networks all
over the world. It maintains good relations with its suppliers that helps it in developing
long term, strong and ethically responsible relationships which adds value to firm by
ensuring its constant success.
Understanding of porter's value chain and porter's five force analysis
Both the frameworks, that are porter's five force analysis and value chain helps River
Island in gaining competitive advantage in market place over the rivals. With the help of porter's
five force analysis, company enable to analyse its position in market and determining the
intensity of each force in context of company. Apart from this, it helps in analysing which force
is strong, moderate and low for firm. It supports River Island in understanding the forces that
impacts profitability of company and help management to take informed decision regarding
development of competitive strategies, increasing capacity and whether to enter in a market
(Preece, 2018). On the other hand, application of porter's value chain helps management of River
Island in breaking down the activities associated with production of product or service and
understanding differentiation and cost saving areas. Moreover, it helps company in eliminating
the waste, optimizing processes and improving profitability. By providing valuable insights to
management, value chain helps in bringing greater value for customers. Apart from this, the two
key support activities of company including technology and human resource, both play crucial

role in its growth and success. Both these helps in enhancing the products and services of
company and provides it competitive edge over competitors (Rohitratana, 2017).
Reflection on the way firm could deploy information technology and utilize innovative ideas to
enhance its business processes and competitive positioning
In current competitive environment, information technology plays crucial role in growth
and success of a company. Deployment of IT in business leads it towards high growth and
becoming one of the leading firm. It provides competitive advantage to company in market and
helps in ensuring its long term sustainability. There are some ways a company could deploy
information technology in its business and utilize innovative ideas in order to enhance the
position and process of business. Some of the ways are mentioned below:
Online advertising: Information Technology enables the company to advertise its
products and services online in an effective way. By the utilization of information technology, it
enables firm to make its information accessible to large group of people that benefits it with large
traffic to the own site of River Island thus, maximise the chances of taking advantage for
company. It aid company in reaching to large group of customers and communicate with them,
thereby enhance exposure to their adds.
Global communication: Deployment of Information technology could be serve as a
powerful tool for company as it provides it an ability to communicate all over the world without
any restrictions. File sharing services and e-mails allow company in to transfer any document
instantly across the nation. The use of Skype is increasing greatly which enhance the efficiency
of conference calls through enabling meetings to be performed internationally by using mobile
devices and computers. River Island make use of smartphones that enable the associates of
business to interact from different locations (Ustundag and Cevikcan, 2017).
Online data storage: Application of information technology in business helps in storing
all the crucial data online. It helps management of River Island in reducing the number of files.
Cloud storage services such as Google drive, Dropbox, OneDrive etc. now replace completely
the physical storage devices and makes it easy for company to store large amount of data at one
place.
Apart from these, use of information technology helps company in effectively utilizing its
innovative idea that helps in improving its competitive positioning along with business
processes.

CONCLUSION
As per the above mentioned report, it has been concluded that information technology
plays very crucial role in a company in attaining growth and success in market. Porter's five
force analysis framework helps company in determining its competitive position in market. The
support activities of porter's value chain helps in streamlining the processes of business from
acquisition of raw materials to deliver a product to consumers. There are some activities that
adds value to company as well as its customers. Deployment of information technology in
business leads it towards success and provide it competitive advantage.

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Online
About River Island, 2020. [Online]. Available through: <https://www.b.co.uk/company-profile/>
River Island, 2020. [Online]. Available through: <https://www.riverisland.com/inside-river-
island/about-us/corporate-social-responsibility>