Analysis of Iceland's Competitive Environment and Value Chain

This report analyzes the competitive environment and value chain of Iceland, a retail giant in the frozen food industry. It examines the Porter's 5 Forces, products and services, and the role of information technology. The report also provides recommendations for business managers to enhance performance levels.

Iceland

Table of Content
INTRODUCTION, .........................................................................................................................3
Background information..................................................................................................................3
Products and services.......................................................................................................................3
Competitive environment (Porter 5 Forces)....................................................................................4
Porter's Value Chain Analysis of Marks and Spencer.................................................................6
Inbound Logistics.........................................................................................................................7
Operations....................................................................................................................................7
Outbound Logistics......................................................................................................................8
Reflection and Recommendation.................................................................................................9
CONCLUSION..............................................................................................................................10
References......................................................................................................................................11

INTRODUCTION
Internal and external business environment are of huge importance for company to build
strong presence in market share among consumers, information technology plays huge role in
today dynamic business world. This report analyses external and internal business environment
of company explaining what are the dynamic competitive fores which are affecting business
structure. Iceland is one of the fastest growing most innovative retail giant with over 960 stores
throughout country, with large varieties of frozen food products and grocery services recognized
as one of the best retail brand. It also explains the role of information technology in providing
innovative business solutions to problems and provide opportunities for organizations to reach
enhanced performance levels in competitive business world. This report also analyses problem
solving skills necessary in business information and technology environment and what strategies
can be built by business manager in company to reach benchmarks through strong performance
levels.
Background information.
Iceland was started by Sir Malcom Walker in the early 1970s who build the idea of
selling frozen food items to customers and operated into business platform (Markosyan,2020).
Today around 50 years later it has positioned itself as an iconic brand with stores in almost every
street for east convenience of people to all quality frozen products. Company has employed
around 25,000 people who are efficiently trained with strong communication standards with
customers and high management skills to deliver their duties with efficiency. Brand offers wide
variety of frozen foods, including ready prepared meals and vegetables for easy convenience of
customers where the quality standards are given high importance.Iceland has been serving UK
frozen food market where it has placed itself as strong brand value with high goodwill among
consumers and it plans to capitalize on key point of difference through “Power of Frozen” food
campaign. Company lays high focus on convince purchasing factor for customers by combining
frozen food, easy to prepare and minimal wastage materials.
Products and services
Iceland has wide food products categories where there are large options of frozen, ready
to eat meal food products, beverages and bakery items where there are high quality standards to
reach customers goodwill benchmarks. There is fast delivery services by company where
convenience and ease of shopping for customers are given high importance who wish to get fast

online shopping platforms (Berejiklian,2020).There are various everyday essential food items
and fresh grocery options for customers to choose on online shopping websites of brand.
Slimming world offers various dietary food products for people who have strong goodwill for
brand products and quality standards. The company offers value discount offers and vouchers for
customers who bulk purchase on websites and stores, and also on various holidays by promoting
people and new segments of customers. Meet, fresh chicken pieces, vegetables and baked food
products along with fresh grocery items are on top of their products list in company stores. Brand
lays high emphasis to customer goodwill and satisfaction levels by highly bringing innovation in
products and services and the platforms where they can promote their production.
Competitive environment (Porter 5 Forces)
External business environment has large implications on business strategies of company
and the operational structure where there are various factors which impact the decisions on long
term stability. Porter 5 forces framework is method for analyzing competition in business market
share and how the position of brand can be strengthened for long term goodwill among
consumers (Huang,2019).These forces enable business managers and leaders in company to
analyze the various segments and areas which need to gain competitive growth for gaining
benchmarks in performance levels. These factors conclude the arenas where company needs to
build innovative arenas and invest in new technology production equipment.
Industry rivalry (High)- There is high competition in frozen food industry as there is real rivalry
among competitors due to new brands coming up with great innovation factors and delivering
wide variety of food products and beverages. Manufacturers with new designs and development
capabilities to enhance their production competency levels with the changing preferences of
customers are becoming strongly dominant in market share. Industry rivalry is high as it is
justified by the fact that there is extensive competition among other new brands entry, and
innovative preferences of customers in products quality and customer satisfaction services on
online as well as offline platforms (Hunziker,2019).
Bargaining power of buyers (High)- The level of interest and concentration of buyers towards
the product can influence the profitability factor of suppliers operating in market by imposing
strong conditions that are not much favorable for suppliers in terms of price and quality services.
Powerful buyer can flip the side of powerful superiors by demanding reduction in prices or
enhancement in quality services which will affect company business performance and financial

goals. Iceland has been largely dependent on large customer base revenue in food industry where
it lacks sales revenue from other diversified services in separate sectors. This factor can bring
negative impact on company business performance as buyers have power to change their
preference due to dynamic innovative new company products coming up in industry. The
customers have strong buying power in Iceland, due to these factors it is important for company
to bring quick new innovations in portfolio of products category and enhance its customer
services along with focus on building cost efficiency in production levels for eliminating wastage
of resources (Juliana and Nyoman, 2019).
Power of suppliers (Low)- There is low power of suppliers as Iceland is huge retail giant with
high investment funds as resources to put in multi-channel of supply distribution for reaching the
stores effectively into set target time periods. Company has its own fixed channels to distribute
products into desired output stores where the outside suppliers do not posses any competitive
advantage. Moreover, the company keeps it input resources near to production areas for
maintaining grocery freshness and food terms are efficiently delivered to customers within their
demanded time frame. Iceland maintains balanced relationship with all suppliers to keep their
margins in accordance with company performance goals and profit margins (Kim,Rim and
Lee,2019).
Threat of new entrants (Low)- There is low threat of new entrant as Iceland has large
established goodwill among consumers due top long years performance and high quality
maintenance in all food products. There are industrial as well legal barriers along with huge
capital investment needs for new companies to establish their business in market-share. Cost
related to entry and access to raw materials along with investment of promoting new business
operations are huge which makes it imperative difficult for new startups and small companies to
impact Iceland business performance. Iceland has established strong technical standards in
productions and customers services with huge modernization investment of capital finance, all
these factors negatively impact new companies establishments as competitors in industry
(Lumbanraja,Dalimunthe and Hasibuan,2019).
Threat of substitutes (High)- High threat of substitutes lead to decreased profitability levels of
company revenues as it limits industry profit margins by placing price ceiling due to fear of
being substituted by other company products. Iceland has large threat due to substitute products
and services by new brands entry in industry as there is increased preference of fresh grocery

items and food products instead of frozen food items, where the profit margins can get impacted
hugely. New brands are offering huge competitive prices and quality standards in production
with wide variety of products offering into new sectors. New technological advances and
substitute products are an increasing threat of substitute for Iceland company brand image where
it needs to cope up with strong performance parameters and enhanced customer services to
maintain goodwill (Singh, 2019). Threat of substitutes is being analyzed on high margins as
customers have changing preferences of relying on fresh grocery eatery products from farm
markets which are locally sourced.
All these force analysis enable us to understand that Iceland has long established
goodwill among consumers in market share with high quality products delivery and strong
consumer feedback services. It is difficult for new entrants to establish their business scale with
same goodwill levels as there is high capital investment needed on various parameters to
establish new company in rood industry. However, there is high threat of substitutes and
competition in terms of technology usage and modernization of product where Iceland needs to
lay focus on for building competitive growth and gain new segments of customers. The brand
needs to innovate by bringing new chains of fresh grocery items which can be locally sourced
from organic food farms (Xu,2020).
Porter's Value Chain Analysis of Marks and Spencer
Porter value chain analysis refers to a process of activities that are performed by
company to enhance value of product and services by adding something unique while render it to
customers. It helps in increasing profitability and brand image of Iceland as value chain analysis
reduces cost of product and service manufactured by company. This value chain analysis of
Iceland mainly focus on cost and profit earned by company by satisfying needs of customer's
beyond their expectancy (Dembek, Singh and Bhakoo). Porter value-chain-analysis includes
number of activities such as primary and supportive activities that are performed by Iceland to
minimize cost of production.
Inbound logistic, production, outbound logistic, Marketing and sales and services are primary
activities of Iceland that are supported by secondary activities such as firm infrastructure, human
resource management, procurement and technological development (Monastyrnaya and et.al.,
2017). Thus, both primary and secondary activities of Iceland by effectively utilizing different
resource is able to increase its profitability and market share.

Primary Activities
Primary activities of Iceland impact directly on manufacturing, maintenance and sales of
products and services that are delivered to customer's. It includes collection of raw material from
source that offer quality input at affordable price, their effective management and delivery to
large number of customers within specified time and cost. Therefore, helps Iceland company in
reducing cost of products and increasing profit margin by satisfy needs of customer beyond their
expectancy.
Inbound Logistics
It is involves different activities related to collection, maintenance and distribution of raw
material or input within firm for effective utilization of product and services of company. Iceland
company maintain strong relationship with its supplier to get sufficient amount of qualitative
input at reasonable price and time to satisfy needs of customers in better way. It has functional
organisational structure so material are distributed quickly and efficiently within organization
without any further delay in production (Koval and et.al., 2019). Space of warehouse is also
large to store huge number of input in case of limited resources in the economy. Company use
Information technology to maintain records of demand and supply of consumers and raw
material available so that sufficient amount of input is available for production to meet customers
demand.
Operations
There are different operation that are performed by company to convert raw material into
finished products and services. Operational system and management of Iceland company helps in
effective utilization of available resource by minimize cost and wastage of material. Operational
management of Iceland continuous supervise and monitor that employees of company work
effectively for achievement of company objectives. It also plans for bring new technology to
bring economic of scale so that firm can offer standard and unique product and services to its
customers (Mattsson and Simkó, 2017). High skilled and knowledgable employees of company
is another advantages that helps in manufacturing of products at reasonable rate within time for
growth and success of company in the market. Employees of company are highly motivate to
work in coordinate manner to achieve desired target and also brings innovation and new ideas
within firms. Therefore, innovative technology and highly motivated employees helps in Iceland
in gaining competitive advantages in the market.

Outbound Logistics
It consists of all such function that are related to store, collection and distribution of
manufactured goods and services to the end user of the products. Various channel used by
company and technology for transportation of finished goods to customers. Company has more
than 950 stores that are located in various street to attract large number of customers. Iceland's
focus is to build strong relationship with customer by providing standardize and qualitative
products to satisfy their need in effectively manner. It also offers ease and comfort to customer's
by providing option to purchase its products through online sites (Tansuchat, Piboonrungroj and
Nimsai, 2016). Iceland also ensure that products and services are to be delivery at customer's
doorstep within limited time and cost to increase value of products. Firm also provide various
marketing offer such as Buy One Get One Free and meals deals in its stores that enhance market
share of company. After sales services of firm is also good due to highly motivated,
knowledgable and skill employed within organisation.
Support Activities
Supportive activities such as Human resource and technological development department
helps in performance and operational of primary activities of company. Both primary and
secondary activities of Iceland are necessary for reducing cost and increasing profit margin.
Therefore, two main activities of Iceland that support primary activities are explained below:
Technology Development
Continuous changes and innovation in technology and increasing demand of customers to
use innovate method while rendering various products and services impact on functioning of
company. Research and development department of Iceland work effectively to introduce
innovative and qualitative product to meet customers demand. Company use information
technology to maintain records of regular customer, employees performance, inflow and out flow
of cash within organisation. All such records helps company in maintaining and retaining
customer satisfaction and loyalty. Highly presence in online sites helps in improving company
performance by quickly addressing various issue of customer's.
Human Resource Management
Human resource management is responsible for recruiting, selecting and planing for
growth and promotion of employees in the organisation. HR Manager of Iceland recruit right
person for right job that helps in competition of task effectively with limited wastage of time and

material (Porter’s Value Chain Analysis. 2019). It also uses differential piece wages rate to
motivate and influence employees of firm to enhance its productivity and performance for
growth and success of business. HR manager use information technology to know about total
employees, their compensation, performance in order to make decision such as recruitment of
new employees or promotion and transfer.
Key Value Adding Activities
Thus, from above analysis it can be illustrated that there are different activities of Iceland
that add value to its products in order to satisfy needs of customers. Such as Marketing strategies
of company that it use social media to attract large number of customers within limited time and
cost. Promotional offer of company such loyalty card and buy one get one free and meals deals
added value to its products. Better and 24 hour customer's services also helps company in
maintaining and retaining satisfaction of customers. Iceland HR manager by using information
technology enable to analysis and evaluate employees performance and finds ways to improve
them for success and growth of company (Chalaby, 2016) . Highly knowledge and skill
employees helps in reduction of cost and wastage of products thus helps Iceland in gaining
competitive positioning. Thus, all such factors add value to manufactured products and services
and enhance profitability and market share in the industry.
Reflection and Recommendation
From the above analysis various changes can made by company to overcome its
weakness, to expand its market share and profitability. Such as Iceland by launching organic
food in its product range can satisfy needs of people that are more concerned about their health.
Operational manager of Iceland by building strong interpersonal relationship within employees
and promoting employees on the equal basis is able to enhance performance and productivity of
employees. Manager is able to perform all such function with the helps of information
technology that maintained records of employees. On such basis manager can plan and organize
various training and development programs to increase knowledge and skills of people. Iceland
has well-established brand image in the UK that can be used by company for expansion of its
business across nation. As it operates in retail industry it has to face tough competition from Two
discount providers such as ALDA and ASDI that offer qualitative products at reasonable rates.
Therefore, company by using update technology can bring economic of scale and reduce cost of
production to increase its profitability and market share. Supplier power is low so large number

of supplier are ready to provide qualitative input at reasonable rates. Iceland face high threats of
substitute products thus company has to continuous innovate its products to different itself from
other competitor in the market. Firm by retaining its qualitative and innovative products can
remove threats of high bargaining power and can charge high prices from consumers. 24 hours
customer's care services also helps Iceland in retaining and satisfying needs of customer's thus
increases profitability of company (Attard, Orlandi and Auer, 2016). Company by launching
large size clothing in its product range can attract new and existing customer to prefer company
product over other. Due, to Brexit people of UK are less willing to spend money on unnecessary
things so company has to change its marketing strategies to attract large number of customers.
Information technology can be used by marketing manager for records trends, culture of people
in which company operates its function to prepare various strategies in gaining competitive
advantages. Thus, company by managing and using innovating and update information
technology to record data such as customers, sales, cash out and inflow, supplier is able to
function smoothly in the market.
CONCLUSION
From the above report it can be concluded that porter five forces analysis of Iceland
identify various threats of company and opportunities to expand its business. Therefore,
company by identifying high power of consumers and substitute product can protect itself by
adopting various strategies. Such as by continuous innovation and maintaining quality of product
and services given to customers. Porter value chain analysis of Iceland helps in adding value to
products by providing products and services within limited time and cost.

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Online

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