Business Strategy: Analysis of Debenhams using PESTLE, SWOT and Porter's Five Forces Model

This report evaluates the internal and external environment of Debenhams using PESTLE, SWOT and Porter's Five Forces Model. It includes a discussion on different theories and models related to strategic management. The report covers the impact of macro environmental factors on the entity, analysis of internal environment and capabilities, and evaluation of competitive forces using Porter's Five Forces Model.

Unit 32
Business Strategy
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Contents
INTRODUCTION...........................................................................................................................3
TASK 1............................................................................................................................................3
P1 Analysis of appropriate frameworks and impact and the influence of macro environmental
factors on the entity along with its strategies...............................................................................3
TASK 2............................................................................................................................................6
P2. Analyse the internal environment and capabilities of given organisation using appropriate
frameworks..................................................................................................................................6
TASK 3............................................................................................................................................9
P3. Applying Porter’s five forces model evaluate the competitive forces of given market sector
for an organisation.......................................................................................................................9
TASK 4..........................................................................................................................................10
P4. Apply a range of theories, concepts and models, interpret and devise strategic planning for
given organisation......................................................................................................................10
CONCLUSION..............................................................................................................................12
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INTRODUCTION
Business strategy is known as tactic, technique, moves and actions that are undertaken by
company or an organisation for attracting customers or target audience towards products and
services of the organisation (Agha and Dixon, 2021. There is a need for the managers and
owners of the entity to develop and maintain effective strategies to operate and function for the
organisation along with timely completion of all the functioning of the enterprise in effective and
efficient manner. The organisation or the company that is chosen here for this project is
Debenhams. It is a huge multinational retail brand in the world and has its headquarters in
London, UK.
This report covers a detailed evaluation related with the internal and external environment of
this entity. It also covers PESTLE and SWOT analysis along with Porter’s five forces model.
This report provides a brief discussion also that is related with different theories and models
related to strategic management.
TASK 1
P1 Analysis of appropriate frameworks and impact and the influence of macro environmental
factors on the entity along with its strategies
Company's Overview:
Debenhams is a retail company that is based in London. Its headquarters are present in London,
UK. It was founded in 1778 by William Clark. Mission of the company is to put heart in
everything it does with investing in different aspects for understanding and seeing that the
customers are provided with boosted confidence along with sociable as well as fun experience.
The main objectives of this company to provide its customers with traditional factor related to
department stores along with trendy and new products to customers (Bodrunov and Plotnikov,
2019). There are various strategies that are being adopted by it for its growth and success.
Macro environment:
External factors are related with the macro environment; they are those factors or aspects
of the entity that are there in the outside environment of the organisation. It is necessary for the
organisation’s management that they have complete analysis of the external environment of
organisation so that the difficulties can be minimised of the management. It is necessary for
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Debenhams and for the management to conduct an analysis of PESTLE analysis, for seeing
impact and influence of external environment on its business operations.
PESTLE analysis of Debenhams
PESTLE analysis is connected with those analyses related to strategic management that is used
for evaluating the impact which is related to external environment on the business operations and
functions (Bolland, 2020). There are various factors and aspects that are related and are present
for its analysis as such political, economic and others. Debenhams uses PESTLE analysis for
knowing its external environment forces. The discussion that is related with these factors of
Debenhams are explained below:
Political Factors: There is political stability in UK but with the war that caused Brexit
happening in the world, there has a negative influence and impact on the business operations of
numerous organisations in UK and European countries. This lead to a decrease in the sales and
profits of Debenhams as Brexit led to closing of numerous stores in the other countries resulting
in a negative influence on Debenhams in UK. There are various trade regulations that has led to
more stability for Debenhams to operate its functions in various countries. This stability has led
to easy regulation of the strategies that it adopted for streamlining in its operations in other
countries.
Economic Factors: UK is market oriented economy as well as is highly developed social
market. After the covid or the pandemic situation in the UK, there has been a negative influence
on Debenhams. It has led to reduction in the sales as there are high prices of the clothes of the
company (Bonsu, 2019). There has been decrease also in profits because of the closing of
numerous stores of Debenhams because of lockdown situation that happened. The strategy
adopted for increasing its sales has to be balanced with economic situation after the pandemic.
Social factors: Clothing in UK market has a great influence on people as they are highly
inclined with the celebrities with their styles. In the market, there are unlimited celebrities as
well as sports personalities that influence the consumers for using products of Debenhams. It is
greatest strategy that has been adopted by Debenhams to endorse and advertise their clothing
with the help of these celebrities as they increase their sales and profits.
Technological factors: There are a lot of technological advancements going on in UK
market in the fashion industry. Debenhams uses various strategies for gaining competition in
market with the use of new and advanced technology. This helps it in tracking and management
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of these products and inventory. It also uses the artificial intelligence as other strategy for other
data sources, with the aim of delivering the précised predictions of the supply and demand of its
products in the market.
Legal factors: There are various legal laws and policies that are needed to be followed.
Debenhams also follows various rules and regulations for its operations (Chidiac, 2018). The
various laws that are used by Debenhams are Consumer protection, employment law, health and
safety law, data protection and others. It adopts strategy to implement these different laws in its
business operations that will result in greater profits and sales.
Environmental factors: As it is known that fashion industry is of dynamic nature and
keeps on changing as it relies on various things especially weather conditions. DEBENHAMS
produces its clothing products according to the different locations and countries and then sell its
products accordingly. It also leads to a lot of wastage and pollution in the environment. It has
even taken measures and policies to reduce this pollution and try to be sustainable and recyclable
by 2030 that influences its strategies positively to sustain for longer time period.
Stakeholder Analysis:
Stakeholders are people who are interested in knowing the results of business activities of an
organisation. They have their interest in growth, success and other operations as they play an
important part (Gunawan, 2019). They implement strategies through which the management
related to stakeholders is made easier in the business organisation.
Power
High Government Board of directors, owners,
investors
Low Customers Employees
Low High
Interest
High power, low interest: The government of UK has high power but is not certainly
interested in what does the company operates. In case with Debenhams, government is just
concerned about payment of taxation by the company. If there is no timely payment of taxes by
Debenhams, then there is government interference of it in the operations and working which will
hamper strategies of business adversely.
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Low power, high interest: The employees have low power but are interested highly in
the operations and functioning of Debenhams as to know all the relevant information about
profits and sales. Moreover, employees perform practices in accordance to established strategies
so that the company achieve its objectives promptly.
High interest, high power: The board of directors, owners, investors, etc are the
stakeholders that are having high power as well as high interest in strategies of Debenhams for
all the profits and sales on a large scale (Gutman, Rytova and Bogdanova, 2019). They are
highly interested in each and every details of the strategies of the establishment.
Low interest, low power: The stakeholders that carry low interest along with low power
are known as the customers of an organisation. For example, customers are only interested in
products that they need to buy at particular time period, when they devise purchase decisions, it
impacts positively on strategies of company to improve customer base and enhance sales
volume.
TASK 2
P2. Analyse the internal environment and capabilities of given organisation using appropriate
frameworks.
Internal environment:
Internal environment is known as the aspects or factors that directly influence the
operations and functions of a business organisation. To analyse internal environment, managers
of Debenhams use SWOT Analysis that is as follows:
SWOT analysis
It is a tool that is used by business organisations for measuring factors that impact the
business operations and functions (Nagel and Aviles, 2021). It is necessary for business
organisation to have an analysis of internal environment by using SWOT analysis in an effective
and efficient method. It provides various guidelines to entities for creating various strategies and
plans for achieving the goals of organisation. SWOT analysis helps a business organisation in
knowing and evaluating its strengths, weaknesses, opportunities and threats that are present in
market. SWOT analysis of Debenhams is discussed as follows:
Strengths
 High level of customer loyalty
Weakness
 There is irregular population that is
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towards Debenhams as customers
trust its quality of the clothing
products.
 There is high brand recognition of
Debenhams towards its products in
the market.
being targeted by Debenhams. There
is no clear basis of target audience
selected for its customers.
 No proper positioning and unique
selling proposition is there.
Opportunities
 The biggest opportunity that is
present for Debenhams is that of
international expansion. It can
expand its stores in other countries.
 Debenhams can increase its sales
with the help of online platforms and
that will have a wide reach to its
customers.
Threats
 High level of currency fluctuations
as it operates its operations and
functions in many countries.
 There has been a decline in sales and
profits because of lockdown in Covid
and closing of my stores at many
locations in different countries.
Capabilities:
The capabilities are the strengths or the positive aspects for which the organisation is known for.
Debenhams is for its quality products in the market as well as for improving its in store and
online offering and selling of its various products (Newburry, Deephouse and Gardberg, 2019).
For determining capabilities of Debenhams, VRIO Model is underneath:
VRIO model for Debenhams
VRIO model is used for analyzing internal resources and advantages that helps a business
organization in creating competitive edge in the market. It stands for value, rare, imitable and
organization. VRIO model used for Debenhams is explained below:
RESOURCES \
CAPABILITIES
VALUABLE RARE INIMITABLE ORGANIZED
Cost structure ✓ × × ✓
Employees ✓ ✓ × ×
Patents ✓ ✓ ✓ ×
Financial ✓ ✓ × ×
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resources
Valuable: It helps in determining the value of a company.
 Cost structure – The cost structure made for Debenhams is done by the management
which is of great value as it provides a base for knowing various costs of it.
 Employees – The employees play a major role and are most valuable source for
Debenhams as they are trained and skilled for providing great outputs to company.
 Patents- The patents are of great value to Debenhams as they stop other organisations
from copying its products and allowing it for its sales in market without any competitive
interference (Phillips and Moutinho, 2018)
 Financial resources- Financial resources of Debenhams is valuable as it is a strength for
the organisation and help in investments of external opportunities.
Rare: Managers use this for finding uniqueness of resources.
 Employees: Employees are rare as Debenhams involves completely trained and highly
skilled personnel with
 Patents: The patents of Debenhams are of a rare nature as they are not easily available to
other people or the competitors, allowing it to use without any interference.
 Financial resources: The financial resources are rare as they are of huge amounts and
this huge amount is possessed by a few entities.
Imitable: It is useful in determining rate of internal elements of Debenhams.
 Patents: The patents taken by Debenhams cannot be intimated in any case. It gives no
permission to the competitors in developing similar rights or patents for any usage.
Organised:
 Cost structure: The cost structure is completely organised of Debenhams as it allows in
seeing that the company has its different costs divided into proper segments and for
proper use.
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TASK 3
P3. Applying Porter’s five forces model evaluate the competitive forces of given market sector
for an organisation
Porter five Forces model is used for evaluating competition in the market of a company and it is
connected with those model of strategic management. There are five factors in this model that
helps an organisation in knowing environment influence on business organisation (Purnomo
Suryana, and Sari2018). The Debenhams’s management helps the company in knowing its
competition in the market. The five forces related to Debenhams business operations are as
follows:
 Threat of new entrants
There is high level threat of new entrant for Debenhams as the clothing industry is of dynamic
nature and keeps on changing. There are low barriers that are present on the entry in the clothing
industry. The biggest benefit in this industry lies with the fact that there are no specific
knowledge and skills required to be a part of this entry. Companies such as Amazon use newly
upgraded and advanced technologies and take over the market.
 Threat of substitute
There is moderate threat for substitute for Debenhams as it operates its functions in market of
clothing. The target audience of clothing has a sensitive nature for the dynamic trends and
fashion. This results to have companies being completely up to date with their fashion styles for
retaining their target audience in market (Rahman and Ahmad, 2020). It does not influence
Debenhams as there is regular upgradation in their fashion style and in its clothing industry.
 Bargaining power of the customers
The bargaining power that lies with customers in market is relatively very high in Debenhams as
there is sensitive nature of customers when it comes to switching from one product to another in
market. There is low switching cost in fashion and clothing industry.
 Bargaining power of the suppliers
There is moderate bargaining power that lies in the hands of suppliers in this clothing industry.
It is necessary for Debenhams’s management to do evaluation of bargaining power of suppliers
for developing and maintaining effective and efficient strategies for the company in the market.
 Competitive rivalry
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In the clothing industry, there are huge competitive rivalries that are present in the market. With
this huge number, they have negative outcomes for business organisations. Competitive rivalry
like Marks and Spencer, Tesco and others are present in market and these carry high level
competition in the market.
TASK 4
P4. Apply a range of theories, concepts and models, interpret and devise strategic planning for
given organisation
Strategic directions are the decisions that are made and implemented for obtaining and achieving
goals and objectives of a business organisation on a predetermined time period. It also sees that
vision and mission is fulfilled of the entity (Remmer and Gilbert, 2019). For Debenhams, the
theories, concepts and models that are used and implemented are discussed as follows:
Ansoff’s matrix
It is important model that is developed by Ignor Ansoff in 1957. It is related to those model that
gives different strategies for growth of organisation and also for expanding its business. The
discussion related to strategies for growth of Debenhams is as follows:
 Market Penetration- It is related to strategy of growth that helps management of
Debenhams in increasing sales of its existing products in existing market. If Debenhams
uses this strategy to penetrate in the market, it will result it in more promoting and
marketing of its products in new market.
 Market Development- It is the strategy that helps Debenhams to develop new market
along with targeting customers with its existing products. If Debenhams uses this strategy
it will result it in grabbing new opportunities from market.
 Product Development- This part of matrix helps management of Debenhams in
developing and providing new products in its existing market (Thorén and Vendel, 2018).
If Debenhams develops new products in market with its innovation level, it will help it in
gaining new target audience.
 Diversification- It is related to Debenhams in offering new products in new market. In
respect to Debenhams, if they adopt this method, then it needs to develop a new product
that is caps, mufflers, masks along with launching of them in existing market.
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From the above matrix, it can be said that the best strategy that can be used by Debenhams is to
produce new products that is caps, mufflers, masks in the existing market. This will help
Debenhams in capturing its existing market by gaining new target audience with greater profits.
Horizontal/ vertical integration
The horizontal integration is used by an organization for acquiring or merging its business
operations and functions with the competitors. Vertical integration on the other hand is acquiring
the business operations and functions within the same production or other activities in a vertical
form (Tonelli and Cristoni, 2018). For this company Debenhams, the vertical integration strategy
will be a great strategy as it will lead to increase its product line in context of masks, caps,
mufflers on a reasonable and affordable price in its clothing variety. This will also result in more
number of products to be served to its target audience in market. This strategy will be of great
use to Debenhams for increasing its profits and sales.
Bowman clock framework
The Bowman clock framework is another strategy that is used in providing various
choices for positioning of different products in a market. It is based on pricing strategy and value
of the products to customers. It has eight major positions for developing strategies in an
organisation. These are low price and low value added, low price, hybrid, differentiation, focused
differentiation, risky high margins, monopoly pricing and loss of market share. The best strategy
that can be adopted by Debenhams for gaining success and more profits in market is low price.
The low price strategy will be of great use as it will increase the customer base and target
market.
Strategic management plan
Strategic management plan is a document that is used by an enterprise for business goals,
setting priorities, operations, resources management, ensuring that there are common goals set
for stakeholders and employees, establishing agreement for great results. It is used for changing
operations and management that provides strategies for decision. Strategic management plan
consists of mission, vision, objectives of business organisation for better performance along with
decision making process (Wehde, 2018). The strategies, objectives and other details that are
related to strategic management plan for Debenhams is discussed as follows:
Organisational background and structure: Debenhams plc was a store chain that was
operating in UK. It is a British departmental store that was founded in 1778. It was first set up as
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a single store in London but with time it grew in 178 locations. It has organisational structure of
line and staff structure as it has many departments.
Vision, mission, values: Debenhams concentrates on giving its heart in each and every
thing it does with huge investments in understanding and allowing it to satisfy its customers
along with delivering a “confidence boosting, sociable and fun” experience to its target audience.
Objectives: Debenhams aims to have a traditional aspect of its departmental stores along
with selling and offering on the products that are trendiest in market.
Marketing mix: The marketing mix adopted by Debenhams is discussed as follows:
 Product: It will develop new products like caps, mufflers, masks and all that will help
Debenhams in capturing new customers from existing market.
 Price: Debenhams will provide its product on a lower price than its competitors.
 Place: The place that Debenhams will choose to sell its products will be its existing
market that is London, UK.
 Promotion: It will use various promotional strategies for marketing its products like the
use of social media platforms, various offline marketing channels and others.
Strategy formulation: The strategy that has been formulated by Debenhams is that it
will use vertical integration that is launching of new products like caps, masks, mufflers etc in
the existing market. This will result in gaining new target audience from the existing market
only.
Implementation: With the implementation of various strategies like low price, launching
of new products in existing market and other, Debenhams will be able to gain and capture a large
target audience from market thereby helping it with increased profits and sales.
Evaluation: Debenhams will use various KPI for evaluating its performance of its
operations in market. It will use customer satisfaction, profit margin, increase in target audience
for evaluating its progress and success in market.
CONCLUSION
From the above report it can be concluded that internal and external factors and aspects are
important for a business organisation. These internal and external factors help an entity in
evaluating their forces for growth and success of organisation in market. PESTLE analysis and
stakeholder’s analysis are applied to analyse macro environment of the establishment. VRIO
model and SWOT analysis are applied for internal environment analysis. Ansoff matrix,
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horizontal/ vertical integration and Bowman clock framework is used for strategy planning. This
report also discusses a strategic management plan.
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