Individual Management Report - British Catalogue Retailer

Individual
Management Report

Table of Contents
EXECUTIVE SUMMARY.............................................................................................................1
INTRODUCTION...........................................................................................................................3
MAIN BODY...................................................................................................................................3
PESTEL ......................................................................................................................................3
Mode of entering the market.......................................................................................................6
Market segmentation...................................................................................................................7
Porter's generic strategy..............................................................................................................8
CONCLUSION................................................................................................................................9
REFERENCES..............................................................................................................................10

EXECUTIVE SUMMARY
This assignment is based on different concepts and aspects of marketing and the
contribution made in activities of business organisation. Marketing strategies have been included
in this for helping the company achieve its goals and objectives. Argos Ltd. Is a company
situated in UK and Ireland. Furthermore, it is a British catalogue retailer which sells variety of
products in the category of household and personal. It is launching online service to Germany in
order to expand the market and customer reach.
Furthermore, this report comprises of different parts which start with PESTEL wherein
micro environmental factors have been analysed.
The second part is about various market-entry options that can be considered by Argos to
enter the market. These include Merger & Acquisition, strategic alliance and many similar
routes.
Third section has elaborated about market segmentation as well as targeting which can be
considered by Argos for identifying those areas having greater potential. This helps in
formulating market strategy.
The last division has explained marketing strategies for achieving goals and objectives. In
this part, Porter's generic strategy model has been used to analyse the level of competition.
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INTRODUCTION
Strategic marketing is a broad concept comprising of activities such as planning,
developing and implementing of plans and strategies formulated for this purpose. It is a process
which helps the company to outperform the competitors and create an identity which helps the
people differentiate it from other entities. In this report, Argos has been chosen which is
currently operating in United Kingdom and Ireland. It has its headquarters in Buckinghamshire,
England. It is a subsidiary of Sainsbury and is considered as one of the successful companies in
UK. It wish to expand the customer base and market segment for which it is planning to start
online service in Germany. This assignment comprises of analysis of micro-environmental
factors to determine opportunities and threats, various modes of entry in to the market, critical
evaluation of market segmentation and targeting and strategies of Porter's generic model along
with choosing one to apply within the organization.
MAIN BODY
Argos Ltd. Which is known as Argos is a British catalogue retailer carrying its business
in United Kingdom and Ireland. It is a subsidiary of Sainsbury. The operations are carried with
the help of physical outlets as well as online. The number of customers served by it is about
29million and it has retail shops approx 883. It is a leading company in this industry which
generates a good amount of revenue and makes high profit. It wish to expand the business by
entering into new markets through online services. It has analysed the potential in the markets of
Germany which can help Argos reach more customers with online services. However, it is
imperative on the part of this company to conduct detail analysis by using the PESTEL in order
to understand the impact of various micro-environmental factors. The same has been provided
below:
PESTEL
It refers to a tool utilised for analysing external factors which have impact on the
operations of the company. With the help of PESTEL, Argos can identify threats and
opportunities prevailing in Germany. The outcomes will be used for making plans and policies in
order to implement them within the organisation. The factors responsible for affecting the
business are shown with the help of PESTEL which is as follows:
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Political factors- These include all the policies and plans made by the government for
the benefit of people and organisation in a country. Some of the examples are foreign trade
policy, tax policy, labour law etc. For the markets of Germany, trade is an important factor for
which the government has developed policies to ease the business dealings and reduce barriers
for international exchange of goods or services. It makes the economy attractive for investors to
invest. Opportunity- The government of Germany has formulated plans for making cross borders
companies to invest in the country. Digital transformation is appreciated by the federal of
the chosen country. This support is constant and entities are encouraged to opt for this.
Therefore, Argos can easily get all the formalities done with the support of government in
order to begin the operations expeditiously.
 Threat- The main aim of the government of Germany is to make new laws and existing
enactments for business organizations. In this way, government intervene too much in the
matters which may cause issues in carrying business smoothly. In the context of Argos, it
must consult government for every decision or action related to trade.
Economic factors- There are variables such as interest rates, tax rates, law, wages,
inflation, labour, demand and supply etc. These have direct connection with business and should
be considered for making decisions. Germany's economy is growing rapidly and gained a strong
position by earning surplus amounting to $130billion from the free global trade. There is huge
scope for household and personal products in Germany's markets. Opportunity- Germany offers huge benefits for making investment in household and
personal products. Also, digitalisation has immense opportunities for the entities
expanding their business at international level. Argos can cover all those areas where
household and personal products are difficult to reach.
 Threat- The fluctuations in the business cycle may bring period of inflation which may
cause adverse effect to entities. This may enhance the costs of labour and other related
elements. Therefore, Argos can hire cheap labours and prevent making investment at the
time of inflation.
Social factors- These are the attitude, beliefs and values of people living in a society.
Factors included in this are distribution, age, and similar elements. Germany has seen huge jump
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in immigration from all over the world and majority are from England. This can create
favourable market for Argos. Opportunity- The ratio of young people as compared to aged ones is just double. When a
person starts to getting older, the need for household and personal products arise so as to
make their lives much easier. In this way, Argos can make increased sales.
 Threat- There are huge number of people who still rely on buying goods or services from
the physical outlets. This is the traditional approach which has been followed from
generations. This can create dilemma for Argos regarding the success of the plans.
Technological factors- These include advancements, developments of new technology
which can be used in the business operations for achieving goals and objectives. German
government has analysed the potential in switching to digital mode for conducting trade
smoothly. This can increase the attractiveness of the market leading to good infrastructure and
technological facilities. Opportunity- Germany is growing very fast which need advance technology to compete
with other economies. Furthermore, there are limited entities providing online services
for selling household and personal products, this can help Argos to fix economical prices
and give cut throat competition to other entities.
 Threat- German market is entirely new to Argos and to launch online services there may
require huge investment. Therefore, it must plan and make decision effectively for the
application of its profits and retained earnings.
Legal factors- The laws in the legal system of a country are included in this factor.
According to statues, there should be fair competition and trade practices along with equal
opportunities. There are different levels before the incorporation of a business for which
permission should be obtained by Argos. Opportunity- With the policies for free global trade, the number of formalities and legal
requirements are low and the whole procedure is easy. This is a positive point in
conducting the business in German markets.
 Threat- The main issue for every business is to understand external factors which may
create impact on the operations of the entity. Argos may have to change plans and
policies according to the modifications taking place outside the company.
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Environmental factors- These factors are related to nature, environment or ecology of
places where human being are living. Every organization use resources which are extracted from
the nature. With the imbalance in the nature because of industrialisation, the level of pollution
has increased in Germany and other countries as well. Opportunity- Online services have lower harm on the nature as Argos can deposit the
goods at one place from where it can deliver to the locations from where orders have
been received. Therefore, the level of pollution in the air and other areas are what the
government wants.
 Threat- With the increase in environmental issues, the government of Germany has made
strict rules and regulations for controlling such activities. This can cause additional
problems for Argos as it has to abide by the applicable statues in order to avoid any legal
consequences.
Mode of entering the market
A business entity needs a way to enter the new market therefore, different entry modes
are there which can be used. It is a strategic matter for which decision should be made with great
caution. In order to start business in Germany, Argos should opt for a suitable mode by
considering the costs, time, benefits and so on. Some of these have been elaborated below- Merger & acquisition (M&A)- It involves two words viz. Merger which is refers to
combination of two companies into one and acquisition is done when one company is
taken over by the other. It is done to attain synergy for creating increased revenue and
profit. By using this M&A, Argos can become stronger and competitive within the
German market. It is believed that, combination of two companies can create more value
as compared to one. However, the disadvantage for Argos can be that growth may be
affected adversely. Strategic alliance- It refers to an agreement executed between two individual businesses
for achieving some common goals. There is no creation of new entity such as joint
ventures or partnerships. However, the resources are shared with each other leading to
greater efficiency. If Argos use this mode, then it can select any local company for using
the resources in an optimal manner. On the contrary, it is difficult to find a company of
German origin who can share the resources with Argos.
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 Joint venture- In this, two companies come together with a motive to agree on using the
collective resources for achieving particular tasks. Also, there is a specific time period
given for the accomplishment. In other words, it is established for temporary period and
as soon as the defined purpose is fulfilled the joint venture comes to an end. Argos can
use the technology, expertise etc. for launching the online services in the markets of
Germany. But on opting this mode of entry, Argos would be under an obligation to obtain
approval from the other partner. This may sometimes lead to conflicts.
The above-mentioned are the entry modes by which entry can be made to the new
market. In the context of Argos, it should select that mode which goes with the objectives and
goals i.e. to expand the business. By analysing the above modes, it can choose strategic alliance
wherein it can form an agreement with another entity up to the time it believe to mark its own
position in German market. Furthermore, combined resources can be used which can help it
achieving its goals and objectives.
Market segmentation
It refers to the process by which a market is categorised into different segments or sub
groups. Also, the classification can be done on the basis of interests, demographics, needs etc.
The main advantage of this is that companies can understand the demands of the customers to
fulfil them. In the context of Argos, it should conduct a research for analysing the demands and
needs of the target customers. This is going to help it planning in an efficient and effective way
so that cost, time and energy are not wasted. The target audience for Argos is those people who
belongs to the middle and higher income section.
Demographic segmentation is another concept which is used to identify the appropriate
individuals who can be approached for buying the goods through online services. For this
purpose, it can taken into account factors like nationality, religion, family, gender etc. Argos can
use this segmentation for dividing the customers on the basis of their earnings. With this, it can
adjust prices according to willingness of buyers to pay.
Target market-
It has been defined as set of individuals who are on the target of the company for selling
them the household and personal products on the basis of catalogue provided to them. Germany
is a big country and it is important to find the market Argos wish to capture for making the sales.
Hence, it has considered target customers as those who fall in the category of middle and high
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classes. The products of Argos are not cheap as they have quality in them. This is the reason that
the final prices get increased. Furthermore, it will be providing delivery services for which
additional taxes and shipping charges are to be added leading to even high prices. Therefore,
medium and high class people are being targetted by it who can afford Argos' products.
Porter's generic strategy
This model is used by organizations to assess the profitability, sustainability and position
in the market. This helps in formulating strategies which can be used by entities for mitigating
the issues and problems. Argos need to develop policies and strategies to sustain in the market
and become competitive. For this purpose, it can use Porter's generic strategy which are available
in three types for making the organisation get competitive advantage. Some of the strategies are
provided below:
Cost leadership- According to this strategy, the organization comes at the point where it
can fixed the prices low in order to attract huge number of customers in the initial stage or the
price can be according to the demand. The motive is to give lowest possible prices to products or
services. In order to opt for this strategy, there should be adequate capital to make investments,
contact and buy the raw materials having the low costs, and appointing human resource for
delivering the products from one place to another. It Argos go for this strategy, it has to consider
all the costs that are involved in availing the products to the ultimate customer. With this, the
pricing strategies of competitors should be taken into account in order to keep the prices low.
However, with the use of this strategy, it will be difficult for Argos to meet the costs of
production.
Focus strategy- As per this strategy, niche market should be approached first wherein
segmentation must be done on the basis of cost advantage or by creating differentiation. Here,
company in cost advantage target the narrow segment and offer product or services in as low
price as possible. On the other hand, in differentiation company try to sell products or services
which are different from that of competitors i.e. have unique characteristics. But differentiation
focus required strong brand loyalty among customers. It is very essential for a company to ensure
that its product remain unique to market in order to stay ahead from the competition prevailing in
market. For example Argos can apply this strategy in order to cater the differential need of
customer in Germany. This will help them in achieving the trust within new market place which
in turn will provide the competitive advantage at new marketplace. But as Argos doesn't want to
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keep its focus over single segment as it decided to start with segmenting medium and high
income people. Therefore this strategy will not be an appropriate option for Argos.
Differentiation leadership:- This strategy suggest a business to target larger market for
achieving competitive advantage by differentiating itself in whole industry. This includes
bringing up a new product or services that having some unique feature whose substitute is not
available to market. For instance, by adopting this strategy Argos will be able to sell its car at
premium prices because of its unique idea and technology that differentiate it from other players
in Germany market (D. Banker, Mashruwala and Tripathy, 2014).
These all are the strategies suggested by Michael Porter which a firm can use in order to
achieve competitive advantage in market. But among all these Differentiation leadership is an
appropriate strategy for Argos. As company want to expand its business in Germany by bringing
up a technology which is new to market i.e. online service. By adopting this strategy company
will be able to cover its all production and establishment cost from its new car. As this
technology is new to market hence, Argos can charge premium prices from its target market.
CONCLUSION
From the above given report it can be concluded that strategic marketing plays an
essential role in development of strategic plans that support a company to achieve sustainability
at marketplace. These strategies can be better formulated by assessing the external factors
present in market with the help of PESTLE framework as it focuses on determining the
opportunities or threat present in market. Apart from this segmentation or targeting also plays a
major role in formulating strategy as it provide a base to focus on certain criteria that must be
meet by the product offered by company. But in order to get succeed in new marketplace it is
very essential for a company to adopt an appropriate entry mode that support them in achieving
new heights in market. In addition to this for achieving sustainability in new market company
must enter with an effective strategy that provide competitive advantage which can be better
formulated by using a model named as “Porter's generic strategy”. As this model focuses on
explaining three different strategies that support a company to perform better from its competitor
in market.
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REFERENCES
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