Business Strategy for Deliveroo: Impact of Macro Environment, Internal Capabilities and Strategic Planning

This report analyses the impact of macro environment on Deliveroo's business operations and strategies. It also evaluates the internal environment and capabilities of Deliveroo using appropriate frameworks and models. The report further discusses strategic planning for Deliveroo using a range of theories, concepts and models.

Unit 32: Business
Strategy

Table of Contents
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
P1 Applying the appropriate frameworks and analysing the impact and influence of the macro
environment on a given organisation and its strategies..........................................................1
M1 Critically analyse the macro environment to determine and inform strategic management
decisions.................................................................................................................................4
D1 Critique and interpret information and data applying environmental and competitive
analysis to produce a set of valid strategic directions, objectives and tactical actions..........5
TASK 2............................................................................................................................................5
P2 Analysing the internal environment and capabilities of a given organisation with the use of
appropriate frameworks..........................................................................................................5
M2 Evaluation of the internal environment to assess the strengths and weaknesses of the
internal capabilities, structure and skill set of organisation. .................................................8
TASK 3............................................................................................................................................9
P3 Applying Porter’s Five Forces model evaluate the competitive forces of a given market
sector for an organisation.......................................................................................................9
M3 Devise appropriate strategies to improve competitive edge and market position based on
the outcomes.........................................................................................................................11
TASK 4..........................................................................................................................................11
P4 Applying a range of theories, concepts and models, interpret and devise strategic planning
for a given organisation........................................................................................................11
M4 Producing a strategic management plan which include tangible and tactical strategic
priorities and objectives........................................................................................................13
CONCLUSION..............................................................................................................................14
References:.....................................................................................................................................15

INTRODUCTION
For every business organisation, it is necessary for them to make and develop relevant
strategies which are effective in nature and which also leads to the growth and development of
organisation. In simple words, business strategy can be defined as the rough working plans
developed by the Human Resource Management of organisation for the purpose of achieving
goals, objectives, vision and mission of organisation. For the purpose of optimizing the financial
performance of organisation and making use of all available resources in best way, the
organisation is required to develop business strategies. The below mentioned report is based on
Deliveroo which is an organisation of providing services of delivering food online. In 2013, it
was founded by Will Shu and Greg Orlowski in London, England, United Kingdom. Currently
this company is working in almost 200 locations which incudes Kuwait, United Arab Emirates,
Hong Kong, Australia, Singapore, Italy and many more. The main purpose of making this report
is to know about the various factors of macro environment on the business operations f given
organisation. Along with this, it also highlight the internal environment and capabilities of
Deliveroo. P1: Stakeholder Analysis, PESTLE analysis and Ansoff Matrix
P2: Resource basedview, mackinsey 7s, VRIO
P3: Porter five forces
p4: Porter Genric, Bowman strategy
TASK 1
P1 Applying the appropriate frameworks and analysing the impact and influence of the macro
environment on a given organisation and its strategies.
The vision, mission and objectives of Deliveroo is given below:
Vision
The vision of Deliveroo is to open a biggest market for their customers and then make
limited restaurants for any special occasion and reducing the cooking habits of people. They
would like to take orders from people on regular basis.
Mission
The mission of Deliveroo states that the want to change the eating habits of customers by
bringing all the local restaurants into the home and offices of every person.
Objectives
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Environmental analysis
Internal environment can be explained as the collection of several elements of
environment which exists in the environment of business. For instance, employees, management
and organizational culture can be said as the internal environmental factors of an organisation as
it is within the organisation.
Several small forces which are available in the environment of organisation comes under
micro environment and implies the effect on the complete ability and effectiveness of the
organisation. There are few examples of factors of micro environment such as shareholders,
competition, employees, suppliers and customers.
The macro environment can be explained as the environment which include the factor
which are not in he control of business organisation. Such factors sometimes implies various
benefits to the business and sometimes it implies negative effect on them.
Below mentioned is the explanation of various forces of macro environment of
Deliveroo:
 Political Factors:
Such factors include the high influencing power with long term sustainability of the profit of
Deliveroo. This organisation is working in various countries and the international business
environment include dynamic political environments. This increase in the instability of global
political environment implies direct impact on the growth of industry.
Continuous change in the policies of government is also a challenge for business. The
management of Deliveroo is required to do the complete and detailed stud of current trends.
Bureaucracy and corruption are the another factors which implies negative effect on the business.
Entering in the market of low taxation implies higher profit for them.
 Economic Factors
For the purpose of estimating the trajectory of growth of industry, the management is required to
analyse the economic environment of a specific country. Deliveroo id required to take care of
given economic factors as they are influencing the Deliveroo such as economic/business cycle
stage, Inflation/employment/exchange rates/interest, labour market condition, financial market
efficiency, economic structure and many more. It is found that the online food delivery market of
Europe is to be valued at $20.27 billion by 2026. Along with this, it is also estimated that the
market of online delivery may be highly volatile on post pandemic.
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 Social Factors
Societal norms, trends and values have a vital role on the culture of organisation. Several factors
which can help the Deliveroo in order to designing the effective strategies of marketing include
spending patterns of consumers, power structure, demographic trends and shared beliefs. The
management of Deliveroo has established a marketing department in their organisation which
help them in analysing the potential customers. Demographic trends, Equality and power
distance, Gender Roles, Societal norms and class distribution, online shopping, Spending
patterns and behaviour are the various social factors which influence the Deliveroo. After this
pandemic, audience is taking more interest in the online food delivery service. Growth of culture
of vegan has caused a surge in demand on the bases of plant based orders (Kammler 2019).
Many of demographic trends such as socio-economic variables, migration trends and aging
population plays an vital role in the business organisations which are performing operations
globally.
 Technological Factors
Next factor of PESTEL analysis is technological factors which helps the organisation in knowing
about the technological diffusion and advancement all over the world. Advance technology helps
the organisation in making more effective strategies in the process of decision making.
Analysing the technological factors may leads to the adoption of new and advance technology
which leads to the achievement of goals and objectives of organisation in an effective and
efficient manner. Social Media Marketing, Technological innovations and development level,
Research and development on technology and impact on cost structure/value chain, shortened
product life cycles can be considered as the effective technological factors of Deliveroo.
Delivering the food by using droven helps the organisation in gaining the attention.
 Environmental Factors
Change in the condition of climate and the growth of consciousness in environment comes under
the environmental factors of PESTEL analysis. For the purpose of avoiding undesired
circumstances, the management of Deliveroo The Food Delivery Startup on an Expansion Spree
is required to perform the detailed study of such factors. Along with this, environmental factors
of Deliveroo helps them in making the effective decision of entering in a new market or
introducing any new product. Environmental factors of Deliveroo The Food Delivery Start up on
an Expansion Spree include Recycling and waste management, Renewable Technology, Weather
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and climatic conditions, Attitude towards the ozone-friendly products, Rules and regulation of
environment for the purpose of avoiding resource depletion. Rapid growth of environmental
concerns which are related to the markets of delivery helps the organisation in knowing about the
various managing actions and justifiable steps by organisations.
 Legal Factors
It is also an important aspect of analysing the legal factors of an organisation for the purpose of
avoiding to get into any serious trouble. If any organisation ignore the legal factors to analyse, it
may result in the hurting of advantage of competition which also result in the harming of image
of organisation (Hew 2020). Legal factors which are influencing the Deliveroo includes
Employee protection laws, Consumer protection laws, Intellectual property laws and many more.
They are following the employee/labour health and safety laws because many of countries are
restricted to follow this law.
Ansoff Matrix Market Penetration: The main objective of organisation is to increase the sales of their
available service in the market by following aggressive strategies. With the availability of
growth potential, this strategy works well in the unstructured market. It is the challeneg in
front of Deliveroo to find the market in which they want to work. Market Development: Under this strategy, the organisation introduce the existing product
in a new market. The Deliveroo wants to enter in the new market, then it is the best
strategy. Product development: It can be defined as launching new products in the existing
market. It implies various strategies which are beneficial for market and growth potential.
 Diversification: It leads to the launching of new product in the new market. It is very
risky strategy.
TASK 2
P2 Analysing the internal environment and capabilities of a given organisation with the use of
appropriate frameworks.
SWOT analysis of Deliveroo is given below:
Strengths Weaknesses
 Deliveroo has developed a good  Deliveroo is facing loss on each and
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channel of merchants and riders which
include almost 115000 merchants and
1000 riders in approximately 12
countries.
 Deliveroo has a well established and
recognized brand as it has been in this
business from a long time. People of
United Kingdom easily recognize the
name of their brand as they are well
known about their priced and taste.
 Deliveroo is constantly attracting the
customers along with beating the
competition by providing services to
the people on less prices.
 The menu list of Deliveroo is not
comprise of few products. They have
done customization in their menu
which implies a competitive edge.
every single order which they are
delivering.
 Pandemic has created a lots of problem
for the organisation as the people are
less preferring outside food because the
people become more health conscious
which result in the deduction of 15% of
jobs.
 The prices of food ingredients are
continuously increasing. Increasing cost
of raw ingredients of food products also
result in the increase in the final prices
of food products as the organisation is
adding values in their cost. Hence, it is
becoming very difficult to attract the
customers as the prices are too high.
 Customers are not able to see the
operations of food which is going on in
the kitchen. Hence, it is not an easy task
to build trust of audience on the
organisation regarding the quality of
the ingredients.
Opportunities Threats
 They have opportunities to improve the
traffic on the application of Deliveroo
by using the subscription services.
 It has been also found that the increase
in the demand of online food delivery
has been increasing day by day which
leads to the growth and expansion of
 It is very difficult for Deliveroo to
classify their drivers employees
according to their operations and
managing the total cost of organisation
(Kleinaltenkamp 2021).
 The market of Deliveroo is found as
hardly competitive as there is very less
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business organisation. They gain the
opportunity to start their business
operations in a new market where they
are targeting new group of people.
 Deliveroo also have opportunity of
doing expansion of their business in the
market of grocery. If the organisation
start delivering the grocery, it may
result in the higher growth and
expansion of organisation which leads
to the earning of high profit as well.
 Another opportunity that the Deliveroo
have to start food trucks and Wagons as
the organisation is facing trust issue. By
opening food trucks, the people can see
the quality of ingredients used in the
kitchen which help in minimizing the
issue of trust.
cost of switching.
 In this pandemic, people lost their jobs
and currently they are consuming their
savings. In this situation, people are not
able to spend more in online takeaway
and food delivery services. It is getting
very difficult for online food delivery
business to provide services on less
prices.
 The downfall in the economy implies
less purchasing power of customers.
They are not able to spend too much
amount on food products.
It has been found that good brand image and the relationship of Deliveroo with their
merchants and riders are the strong strengths of the selected organisation. Trust issue of
customers on the organisation is the main weakness of Deliveroo along with the continuous
increase in the costing of food products.
VRIO Analysis
It can be considered as the important framework or model used by the various
organisations with the purpose of identifying and evaluating the capabilities and resources of
organisation. VRIO analysis of Deliveroo is given below:
 Valuable
It has been found that the financial resources are high valuable as it is very useful while doing
investment in any opportunity which is available in the market.
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Another valuable resource of Deliveroo is the employees of organisation. It has been found that
the employees working with Deliveroo are highly skilled and trained. Along with this, it is also
identified that the employees of Deliveroo The Food Delivery Start up on an Expansion Spree
are also loyal and detainment level for the company is high (Nguyen 2020).
 Rare
The financial resources available to the Deliveroo has been found as rare and it is analysed that
the there are only few organisations in this industry who have strong resources of finance (Tang
2020).
The local food products which has been offered by the Deliveroo are not found to be rare as they
are easily available to customers by their competitors. It implies that the local food products
leads to the competitive parity for Deliveroo.
 Imitable
The financial resources available for Deliveroo are found as costly to imitate as recognized by
Deliveroo The Food Delivery Start up on an Expansion Spree. It is possible only because of
prolonged profits earned by the organisation over the last many years. If any new entered
organisation or any competitors are firstly require to earn equal profit for a long period of time in
order to accumulate the equal amount of financial resources.
The local food products which are provided by the Deliveroo are not so costly to imitate. Hence,
it is not so tough task to acquire such products by the competitors. Such food products do not
require many years of experience.
 Organisation
For the purpose of capturing the value, the financial resources of Deliveroo are organised. Such
resources gives the proper directions to the management to invest the finance at right place so
that organisation can grab all the opportunities by combatting threats. It can also be said as the
competitive advantage for Deliveroo.
It is analysed that the patents of Deliveroo are not in the form of well organised. It implies that
the organisation is not able to use their patents potentially (Ott 2019 ). This can be said that in
this situation, the patent can be put as unused advantage of competition. It can also be changed if
the organisation start selling products with patents.
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M2 Evaluation of the internal environment to assess the strengths and weaknesses of the
internal capabilities, structure and skill set of organisation.
From the above studies, it is analysed that the the distribution channels which include
merchants and riders along with a good brand image of Deliveroo are the strengths of
organisation. The main benefit of these strengths is that they are attracting the customers towards
their organisation. For the purpose of maintaining these strengths, the organisation is required to
do the investment financially and technically along with human resources.
Trust issue of customers and constantly increase in the prices of food items and
ingredients are considered as the higher weakness of Deliveroo. They have a good opportunity to
do the business in new markets.
TASK 3
P3 Applying Porter’s Five Forces model evaluate the competitive forces of a given market sector
for an organisation.
The application of Porter's five model which are used to evaluate the the competitive
force are given below:
Threat of new entrants
 Because of requirement of high amount of capital and resource investment, entry in the
food delivery industry is difficult (Palmer 2021). If any other company come in the
market with product and service differentiation, it leads to the loss in strength of
Deliveroo.
 In the case of high psychological switching cost for consumers along with establishing of
loyal customer base by existing brands result in low threat.
 New entry can be demoralized in the case of accessing the restriction on distribution
channels.
Rivalry Among Existing Firms
It implies the various competitors of Deliveroo. It is also found that this organisation is on the
expansion Spree bear strong pressure from the rival firms. This organisation is following the
targeting and pricing strategies which implies less profitability. Low rivalry among the existing
firm for the Deliveroo The Food Delivery Start up on the expansion Spree , only in the case if:
 Number of firms of the same industry in the market is less
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 Fast rate of growing of industry
 Availability of clear market leader
 The differentiation of products can be done in many ways and each & every firm of
industry focus on different sub segments.
 The cost of psychological or economic for customers are high.
 These is lack of barriers on the exit of a firm, it implies that any organisation facing
losses can easily quit from this industry.
Bargaining Power of Suppliers
The evaluation of bargaining power of suppliers is very tough as the food delivering
firms use only technology which can not be developed internally. The aim of Deliveroo is to
offers a variety of restaurants from which they can order. Deliveroo has not decide any limit of
restaurants which can be a part of there network which implies that there are no any limit of
suppliers. Deliveroo is highly independent from the side of their suppliers which has a low
bargaining power. Several reasons are given below:
 Not concentrated suppliers
 the cost of switching is very low
 Similar products have been offered by the suppliers
 Availability of substitute product
 Less threat of forwarding integration by suppliers.
Bargaining Power of Buyers
In this growing market, a customer have various choices of companies. Deliveroo is
facing a problem of higher transparency of prices which implies that the bargaining power of
buyers is high. The customers are the King of business. They are sitting with a strong position as
they want high quality product at less prices. It is only because of availability of various firms in
the industry with a small amount of differentiation. It implies various problems in retaining the
customers towards the organisation (Peng, X., 2020). There is no any extra costing in switching
the companies because all restaurants work with many delivery companies and it is in the hand
of customer to do the selection of any one company.
Threat of Substitute
The main factor of substitute of food delivery company Deliveroo is the deliveries of
food order done by the restaurants itself. They think that the can hire employees or riders who
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can deliver the food to customers on the place of doing any contract with the external contractor.
Availability of substitute product and services make the competitive environment more
challenging. It has been determined that the threat of substitute is high for Deliveroo as people
have many other options to use alternative or any other product in order to satisfying their needs
and requirements. There can be various reasons behind the situation. Some of them are:
 Same product and services are available for customers at low prices offered by different
firm of same industry.
 Low cost of switching of psychological which state the moving of customers to the
substitute products.
 Substitute offers best quality of food and service to customers as compared to the
Deliveroo The Food Delivery Start up on an Expansion Spree's product.
TASK 4
P4 Applying a range of theories, concepts and models, interpret and devise strategic planning for
a given organisation.
For the purpose of understanding the strategic positioning of an organisation in the
market, two models i.e. Porter Genetic Strategies are considered as the important models.
Various facts has been highlighted under the Porter Genetic Strategies which explain four
different strategies which are to be undertaken by the business organisations in order to dealing
with the various issues along with gaining the advantage of competition. Cost leadership strategy
implies that Deliveroo can earn huge profit by applying cost deduction method. In addition to
this, Deliveroo can also attain the brand by offering the products and services at less prices
which leads to the increase in market share.
According to this strategy, the business organisation have to ensure that all the resources
and efforts do focus on minimizing the cost. Along with this, differentiation can also be
considered as the strategy under which Deliveroo have to focus on the developing and offering
the various varieties of product and services.
This objective of an organisation can only be fulfilled by doing various innovations and
improvement in the quality of product and services. As per the strategy of Cost Focus, the
organisation have to focus on on one particular and niche market which means offering the
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products and services at less prices (Sanchez 2019). On the other hand, Differentiation focus
strategy state that the business organisation is required to do some changes in their items and
make them different from others, which implies in attracting and retaining the customers.
Bowman Extended Model of Strategy
According to this model, Deliveroo is adopting 8 strategies which are required to follow
in order to gaining the competition benefit from the other companies working in the same
industry. Various strategies comes under this model are given below: Low price and low value added: As per this strategy, Deliveroo is required to provide
products and services which implies low value at low prices. Low prices: In order to increase sales and provide services at low prices, the
organisation have to make focus on minimization of cost. Hybrid: This strategy state that the Deliveroo should focus on some aspect of low prices
and some aspect of differentiation. Differentiation: Under this strategy, the Deliveroo is required to highlight on offering
services which are innovative in nature which include high perceived value. Focus Differentiation: Deliveroo is required to position their services at the price level
which are high in the whole industry. Risky High Margin: As per this strategy, the Deliveroo should take risk of gaining
margins by providing products and services at very high prices without adding any
value to their customers. Monopoly pricing: It implies the situation when there is no any competitor is available
in the market. In such situation, Deliveroo can charge any price from their customers
against the product and services.
 Loss of market share: By following this strategy, the Deliveroo is required to provide
services of higher value in comparison with the competition.
M4 Producing a strategic management plan which include tangible and tactical strategic
priorities and objectives.
Summary
The below mentioned plan is made on providing advantage to Deliveroo over the other
firms available in the market. Increase in the competition can be considered as the threat which
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effect the success, operations and growth of organisation. The plan of management has been
developed according to the strengths and capabilities below mentioned plan is going to offer the
competitive benefit by differentiation and entry in new market (Sandberg 2021).
Vision
They would like to do the business in the biggest market and then make the limited restaurants
which are available for any special occasion which also leads to the reduction in cooking habit of
people.
Mission
They would like to make available all the food items at home in a different manner from other
food delivery companies.
SMART Objectives
 In order to bringing differentiation, Deliveroo wants to develop new services or some
addon in their services in every 12 months or 1 year.
 In attaining 1 new international market in 2 years
 To increase the sales by 20% in next 1 year.
Evaluating and monitoring plan
Suitability: Deliveroo is looking forward to improve their services around the world and it is
found that the current strategic plan is suitable it help the organisation in achieving the goals and
objectives in an effective and efficient manner. Good quality of service and strong brand image
is the strengths of Deliveroo and their plan has been developed on the basis of their core strength.
Appropriate: The appropriateness of the strategic plan has been evaluated through a method such
as cost-benefit analysis and it has been identified that the selected plan is very appropriate for
Deliveroo. The brand will be required to bear a considerable cost in implementing the plan but
the long-term benefits linked with the plan are very high (Sun 2020).
Tactical Action
It refers to those actions which are performed on daily basis in order to managing the day to day
tasks. Deliveroo is required to do proper research and analyse the services of organisation with
the other organisations of same industry.
CONCLUSION
It has been concluded from the above report that strategic plans plays an important role in
an oprganisation as it helps in getting the various opportunities in order to achieving the
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organisational goals and objectives in the long run. Along with this, major threat of Deliveroo
can be considered as increasing competition and new entrant as it leads to the growth and success
of organisation.
It is recommanded to Deliveroo to make focus to doing some innovation which
differentiate their product and service from other organisation. They should do research which is
important in carrying out the brand before starting the business operations in a new market. As it
is helpful for organisation as it help them in understanding all the factors and aspect of business
environment of new country and result in the effective operations.
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References:
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