Porter's Five Force Framework Analysis

The assignment provided is an in-depth analysis of Porter's five force framework and value chain model. It uses these frameworks to analyze the competition within a business, determine the intensity of competition, and identify internal and external factors that affect a company's operations. The report also makes recommendations for implementing technology within an organization to enhance productivity and profitability.

Managing Information
Technology

Table of Contents
INTRODUCTION ..........................................................................................................................1
1. a) Introduction to House of Fraser..........................................................................................1
b) Identify current business strategies.........................................................................................2
c) Products and services offered by House of Fraser..................................................................2
2. Competitive environment of House of Fraser........................................................................3
3. Analysis of two primary activities and two support activities in Porter's Value Chain.
Evaluation of the strengths and weaknesses of House of Fraser...............................................5
4. Summary of above activities and reflection on how business could deploy IT and use
innovative ideas to improve their business processes and to enhance their competitive
positioning...................................................................................................................................8
CONCLUSION ...............................................................................................................................9
REFERENCES..............................................................................................................................10

INTRODUCTION
Information technology refers to usage of computers for storing, retrieving, transmitting
and manipulating information or data. It includes processing and distribution of data with help of
networks, systems and software (Cartwright and Cooper, 2012). House of Fraser is department
store with around 55 outlets, out of this 2 outlets are present within United Kingdom and Ireland.
It's headquarter is in London, England, UK. They provides products like fashion clothing, shoes
and boots, accessories, cosmetics and many more. This report includes introduction to
organisation, their business strategies and products and services offered by them. Porter's 5 Force
analysis is done to analyse their competitors. Porter's value chain to analyse primary activities,
their strengths and weaknesses are evaluated. At last innovative ideas are recommended to
enhance their business process and competitive positioning.
1. a) Introduction to House of Fraser.
House of Fraser was founded by Arthur and Fraser in 1849 in Glasgow, Scotland. After
Second World War they transformed their organisations acquisitions into national chain. They
have around 55 departmental stores. Apart from this they have 2 outlets in Ireland and United

Kingdom. They have also launched their online store in 2007 (House of Fraser, 2019). They are
known by name HoF. Their mission is to stay strong within market for more than 150 years.
Their products includes toys, gifts, furniture, electricals, homeware, cosmetics, accessories,
shoes and boots and fashion clothing. From 1936 they have acquired many brands, they are
Scottish Drapery Corporation in 1952, Binns in 1953, Barkers of Kensington in 1957, Dickins &
Jones in 1959, Howells in 1972, Army & Navy Stores in 1973. Ownership was taken by Al
Fayed in 1985 at around £615million After this they acquired Jenners for £46million and
Beatties for £69million in 2005. From August 2018, they have been Sports Direct International
plc.
They have provided their customers with different shopping options. They can do
personal shopping by contacting store of choice directly. Buying guides are provided to their
customers by this they can get help while choosing products for themselves. Recognition reward
cards are given to their customers. They are loyalty cards which can be used by customers for
collecting points online and in store. Exclusive events and offers are provided to them and they
can spend their rewards directly using their card.
b) Identify current business strategies.
In current era, customers are getting addicted to e-commerce for their needs of shopping.
House of Fraser is opting to become experimental retail store. Organisation cannot stay within
market until they look for new ways for encouraging their customers. HoF is separating their
stores in single building for introducing new concept within landscape. They are looking forward
for introduction to their non-shopping departments, they will include: champagne bars, wellbeing
centres, yoga studios and restaurants for all ages. Idea is to build a location where people can get
almost everything under same roof like food, shopping, pampering and many more. Apart from
this they are opting to get rid of discounts (Cresswell, Bates and Sheikh, 2013). They are looking
forward for increasing prices of their products for the first time rather than sales. This will help
them to provide excellent experiences and services. Reducing overall stock levels will lead to de-
cluttering shop floor and enhance view of shop. Aim is to make stores look premium. HoF is
focussing and aiming to provide best selection of contemporary brands to their customers. This
will help them to become agile to present exclusivity by partnerships by investing in product
innovation and trend spotting so that globally responsive supply chain can be launched.

c) Products and services offered by House of Fraser.
House of Fraser is offering wide range of services and products to their customers. They
are categorised into women's, men's, kids & baby, shoes & boots, beauty, homes & garden,
electrical and bags and luggage brands. Some women's brands are Adidas, AG Jeans, Calvin
Klein Golf, Chelsea peers and many more. Men's brands include: Barbour, Gibson, Pepe Jeans,
Levi's and many more. Apart from this customers are provided with buying guides which include
selection of products according to what is right for particular person (Desouza and Hensgen,
2015). This section includes fragrance buying, foundation buying, men's grooming, skincare
guide. Furthermore, it also includes protection of eyebrows, how to apply eyeshadow, contour
highlight, use eyeliner, lipsticks shades depending on colour and many more. This help their
potential customers to gain knowledge and can also attract customers who don't know what will
look good on them. They also provide home appliances which include technology like spring
clean. They provide effective services to their customers depending on their requirements and
gives them appropriate suggestions.
2. Competitive environment of House of Fraser.
Porter's 5 Force analysis is done by House of Fraser to analyse their competitive
environment. This model is a tool for analysation of competition within business. It helps to
determine intensity of competition and thereby enhancing attractiveness of industry in respect to
their profitability (Drucker, 2012). This model is applied to address wide range of problems from
helping businesses to become profitable and help government industries to become stable.
Threat of new entrants: Industries which produce high returns attract many new firms.
They will finally decrease profitability of other organisations in the same industry. It needs time
and money to open a new venture. Certain points are discussed below related to benefits which
House of Fraser have in terms to new entrants:
 When organisations need to spend money or resources to build brand, they will have few
resources available with them to compete within marketplace. These costs will have
positive effect on House of Fraser.
 If existing competitors have occupied best geographical locations, then new ventures or
competitors will have competitive disadvantage. Limited geographic factors can have
positive effect on House of Fraser.

 Economies of scale will help producers to reduce their cost by producing output at lower
cost. But when new ventures or competitors enter within market then, cost of production
will be high due to small economies of scale. Economies of scale leads to positive impact
on House of Fraser.
 When entry barriers are high then it will be difficult for new ventures to enter in market.
This will have positive impact on profits of House of Fraser.
Threat of substitutes: Customers can easily find substitutes of products which may
provide better quality and attractive prices (Drucker, 2012). Some positive factors, services
 When services and products are different, customers can find less comparable services or
products which can fulfil their needs. This is affirmative for House of Fraser.
 Limited alternatives or substitutes means that customers cannot opt for different services
or products at same price with same quality and benefits. High switching cost will have
positive affect of HoF.

 Alternatives or substitutes can be inferior and customers would not like to switch to
inferior products from House of Fraser.
Bargaining power of customers: They refer to capability of customers to put
organisation under pressure, this will have effect on sensitivity of customers to changing prices.
It is described as market output (Galliers and Leidner, 2014). Some factors in this context are
mentioned below:
 When customers need special customisation then they will not opt to switch to other
brands as they will have difficulty in getting what they require exactly. Customer's
customization will undoubtedly impact House of Fraser in positive manner.
 If buyers are less sensitive to cost, then increase in price will not affect customers. They
will still opt for same products. Inelastic demand has effective positive affect on House of
Fraser.
 When customers have found their taste in particular brand, for particular products then
they will end up in paying higher for same product. House of Fraser has occupied many
brands, this will yield them positive result.
Bargaining power of suppliers: It is described as market input. When there are less
alternatives available for organisation then suppliers of raw materials, services and labour can be
powerful. Certain factors are mentioned below which will have positive impact on House of
Fraser:
 When there is strong competition among suppliers is high then they will reduce prices to
organisation. Analyst needs to put more weight into high competition among suppliers.
Long-term positive impact will be on House of Fraser as this (competition) will add
value.
 Bargaining power of individual distributor will reduce, when there are diverse channels
of distribution (Holtshouse, 2013).
 When demanding production inputs are almost same then it is easier for mixing and
matching inputs, this will reduce bargaining power of suppliers.
 Suppliers have less bargaining power when suppliers are dependent on high volumes as
organisation can cut down the volumes and thereby reduce profit of supplier.

 Apart from all this, bargaining power of suppliers is also less when it is easy for
organisation to switch to other suppliers. Low supplier switching cost will have positive
effect on organisation.
Competitive rivalry: Intensity of competitive rivalry acts as crucial determinant for
identifying competitiveness of industry. Information related to competitors plays important role
in successful marketing of product (Major and Savin-Baden, 2012). Competitors of House of
Fraser are: asos, Topshop, Zalando, Soko Glam, ZARA and more. House of Fraser have
competitive advantage above all, it is mentioned below:
 Large industries allow multiple organisations and prosper without stealing market share
of other. Large industry size will have negative impact on their entity (organisation), this
subtracts from value of entity.
 When storage cost is less then there will be less risk of unloading all inventory at once.
Low storage cost have positive effect on House of Fraser.
3. Analysis of two primary activities and two support activities in Porter's Value Chain.
Evaluation of the strengths and weaknesses of House of Fraser.
Michael Porter has described value chain in 1985. Value chain refers to different
activities performed by organisation to provide valuable services and products within market.
This concept states that there are certain activities or events which arise within organisation, they
range from raw materials to delivery of goods (Marchewka, 2014). This chain consists of nine
steps and these steps can be altered to further add value to products.

(Source: Porter's value chain, 2012)
Primary activities include: marketing and sales, services, outbound logistics, operations and
inbound logistics. Secondary activities are: infrastructure, technological development, human
resource management and procurement. If House of Fraser want to add or enhance customer
value in processes then they need to refer to value chain.
Two primary activities of House of Fraser:
 Inbound logistics: Everything which is brought within organisation or business for
process of creation of products fall in category of inbound logistics. In other words, it can
be referred to as handling of inventory and raw materials which are received from
supplier of organisation (Margetts, 2012). Within House of Fraser they include:
receiving, storing, handling of materials, warehouse management, inventory control and
schedule vehicles. An example can be considered to understand this further, suppliers
from which raw material is brought, storage system used in-house for storing received
materials.
 Operations: These are day to day actions which are performed within organisation for
converting inputs into outputs. It is responsibility of organisation to take raw material
from suppliers and convert it into something or products or services which people will
opt to purchase. This will add value to customers. Within House of Fraser operations
Illustration 1: Porter's value chain

include machining of raw materials, packaging of output, assembly of different parts,
maintenance of equipments, their testing, printing and facility operations.
Two secondary activities of House of Fraser:
 Human resource management: This includes support activities for developing
workforce within organisation which acts as key elements. In every organisation, this
includes training and coaching of employees, recruiting staff, compensating, motivating,
supervised and retaining them (Pearlson, Saunders and Galletta, 2016). Within House of
Fraser, value of people is understood which leads to success of organisation and they
never take their employees for granted. Management of House of Fraser hires talented
people and train them as per their requirements in disciplined manner. By this they gain
high advantage within market.
 Technology development: This refers to development of services and products of
organisation both externally and internally. They helps to improve activities which are
performed within primary activities. House of Fraser is using latest technology for
bringing products with high quality within market. They have managed balance between
latest technology and cost required in that (Schwalbe, 2015). This includes: technological
innovations, IT, development of products on basis of technology and improvements in
existing activities.
Strengths of House of Fraser: There are various strengths of House of Fraser. Some of them
are mentioned below:
 Innovative culture is present within House of Fraser, which helps them to provide unique
services and products to serve needs of customers. Apart from this, it also helps in
gaining long-term impact which adds value to their customers.
 House of Fraser has ability to charge their customers with high prices as products which
they are offering are of high quality. Apart from this, these products are available with
them only. Pricing power has relevant impact, for this analyst of House of Fraser has
given more weightage to this.
 They have strong supply chain which helps them to obtain right resources from supplier,
this helps them to deliver right products to their customers within stipulated time
(Valacich and Schneider, 2015).

 They offer unique products, which makes them different from their competitors. This will
have long lasting impact on their customer's and this will add value to their products.
Weaknesses of House of Fraser: Apart from their strengths, they do have certain weaknesses
which they need to address to gain competitive advantage. Some of these are mentioned below:
 They have high competition from other shops which offers their products and services at
lower amount.
 They follow same pricing strategies as offered by other brands, this lead customers to opt
for superior brands rather than House of Fraser (White, 2015).
 They have given grant or permission on sharing same floor space, this lead customer's to
visit another shops present there.
 They lack in proper advertisements, as they have many outlets and they serving in
different segments within market, this leads customer to forget their services. Home and
furniture sections of House of Fraser are mostly affected by this.
4. Summary of above activities and reflection on how business could deploy IT and use
innovative ideas to improve their business processes and to enhance their competitive
positioning.
From above report it can be summarised that House of Fraser is British departmental
store with almost 55 outlet in different countries. They are providing their services in different
sectors like accessories, electricals, cosmetics and many more. Porter's 5 force analysis is done to
analyse different factors which can have negative impact on House of Fraser. But apart from this
have certain plus points which leads to positive impact. Porter's value chain is done to analyse
factors required to perform different activities within working premises, they range from raw
materials to final product.
House of Fraser has an agreement with Capgemini for providing IT simplification
strategies. Capgemini will proceed to provide services like IT infrastructure and application
support to House of Fraser. Furthermore, they will also provide additional services designed for
House of Fraser to unlock innovation in IT network. They will provide them digital service desk
which provides employee of organisation with multi-channel mobile access so that they resolve
certain issues quickly. Apart from this, they are also providing organisation with maintenance
platform, next generation application development, business process oriented and industrialised
approach to service for providing efficiency in retailer's applications estate.

Burnett (Chief information officer) says that they have invested three quarters in
transformation of organisation, this include technology and digital investment. They need to
focus on improvement of logistics and distribution of operation, channel agnostic operation.
Business intelligence programme with aim of streamlining usage of data more effectively. There
were chances of exploitation of data as they have wide range of data on daily basis and this data
is used by multiple organisation and customers have direct access to their warehouse. They need
to produce around 18000 reports per day. For this they are using BI programme using
MicroStrategy 10.
For predictive analytics capability, price optimisation and machine learning must be used
so that organisation can set their prices and discount rates of products. For this they must
implement mesh network in all stores so that they can provide connectivity with each outlet. For
this they can go for Beacon technology, this will act as access point for providing bluetooth and
Wi-Fi connections. This will help them to build up image of their customers who are within
premises. This can be done to analyse impression or gesture of customers for their product. This
will help them to enhance their product and this will also provide them with an idea to set their
retail shop as it will provide analysis of areas in which they are spending more time. For this they
can opt for Cisco's technology and then this data and details can be uploaded within Microsoft
Azure Cloud platform. Furthermore to get clear review and understanding of trends and patterns
they need to use MicroStrategy's visualisation.
To gain competitive positioning they must develop strategies by keeping in mind certain
political, social, economical and technological factors. These factors can help them to grow
positively but if they are not implemented appropriately, then this will lead to negative impact.
They need to use technology so that they can enhance their activities and increase their
profitability by providing their customer's with desired products with high quality.
CONCLUSION
From above report it can be concluded that information technology plays vital role within
organisation. It deals with effective usage of systems and technology to enhance growth and
profitability of organisation. Porter's five force framework is used to analyse competition within
business and determine intensity of competition. Porter's value chain is done to determine
different activities carried out within organisation. Apart from this internal factors of
organisation are determined which have positive and negative impact on organisation.

Furthermore external factors are analysed to gain competitive advantage. At last
recommendation is given in terms of technology which they must implement within their
organisation to further enhance their productivity and profitability.
REFERENCES
Books and Journals
Cartwright, S. and Cooper, C. L., 2012. Managing mergers acquisitions and strategic alliances.
Routledge.
Cresswell, K. M., Bates, D. W. and Sheikh, A., 2013. Ten key considerations for the successful
implementation and adoption of large-scale health information technology. Journal of
the American Medical Informatics Association. 20(e1). pp.e9-e13.
Desouza, K. C. and Hensgen, T., 2015. Managing information in complex organizations:
semiotics and signals, complexity and chaos. Routledge.
Drucker, P., 2012. Managing in a time of great change. Routledge.
Drucker, P., 2012. Managing in the next society. Routledge.
Galliers, R. D. and Leidner, D. E., 2014. Strategic information management: challenges and
strategies in managing information systems. Routledge.
Holtshouse, D. K., 2013. Information technology for knowledge management. Springer Science
& Business Media.
Major, C. H. and Savin-Baden, M., 2012. An introduction to qualitative research synthesis:
Managing the information explosion in social science research. Routledge.
Marchewka, J. T., 2014. Information technology project management. John Wiley & Sons.
Margetts, H., 2012. Information technology in government: Britain and America. Routledge.
Pearlson, K. E., Saunders, C. S. and Galletta, D. F., 2016. Managing and Using Information
Systems, Binder Ready Version: A Strategic Approach. John Wiley & Sons.
Schwalbe, K., 2015. Information technology project management. Cengage Learning.
Valacich, J. and Schneider, C., 2015. Information Systems Today: Managing in a Digital World
Plus MyMISLab with Pearson eText--Access Card Package. Prentice Hall Press.
White, J. D., 2015.Managing information in the public sector. Routledge.
Online
House of Fraser. 2019. [Online]. Available through:<https://www.houseoffraser.co.uk/company-
information/our-history>.

House of Fraser. 2019. [Online]. Available through:<
https://www.houseoffraser.co.uk/recognition-card>.