Competitive Analysis of Primark: Porter's Five Forces and Value Chain Analysis

This report provides a competitive analysis of Primark using Porter's Five Forces and Value Chain Analysis. It includes an introduction to the company, its background, product and services, and an analysis of the competitive environment. The report also discusses the inbound logistics, operations, and outbound logistics of Primark, as well as the support activities in its value chain. It concludes with the identification of key value-adding activities and suggestions for deploying information technology.

PRIMARK

Table of Contents
INTRODUCTION...........................................................................................................................1
MAIN BODY...................................................................................................................................1
Introduction of the company.......................................................................................................1
Background of the company.......................................................................................................2
Product and services of the company..........................................................................................2
Analysis of competitive environment of the company...............................................................2
Inbound logistics, operations and outbound logistics.................................................................5
Analysis of support activities in Porter's value chain..................................................................5
Identification of key value adding activities...............................................................................6
Analysis of “ Porter's five force analysis” and “Porter's chain analysis”....................................7
Summarise and reflect on how the business could deploy information technology...................7
CONCLUSION ...............................................................................................................................8
REFERENCES..............................................................................................................................10

INTRODUCTION
Business environment involves the mixture of internal and external factors that includes
employees, staff, suppliers, buyers, customers, market and social trends, social and economic
factors, technological advancement, owners, rule and regulations of the governance and policies
as well (Alumbugu, 2020). It is an environment that reflects the strong relationship between the
customers and the company. These are those factors that are not in the control of company as it
changes as per the change in the market environment. But company implies some of the changes
within the business as to prevent themselves from the ongoing changes within the market.
Business environment reflects the ability of the business to build or maintain strong and
successful relationship with the customers. Primark is the retailing company of Irish fast fashion
and have headquarter in Dublin, Ireland with the subsidiary of retailing company ABF and food
processing. This report includes the introduction, background and product and services that are
dealt by the company. After that to measure the competitive analysis company applies porter's
five force analysis, value chain analysis, inbound, outbound and operations logistics. That all
factors has been analysed to measure the competitive analysis so that company gain the
competitive advantage in the market.
MAIN BODY
Introduction of the company
Primark is an Irish retailing company and have a subsidiary of food processing as well.
The company is named as Penneys in Republic of Ireland and this named is not used as on
international level as it is owned by American retailer J.C. Penney. Primark provides the services
to 13 nations with total number of locations of 373 as per year 2019. They provide their services
of around different areas and includes Australia, Belgium, France, Germany, Ireland, Italy,
Netherlands, UK, US, Spain, Portugal and Slovenia. The recent CEO and COO is Paul merchant
and they have their own websites as well named as Primark.com. They deals in retailing sector
and covers the wider area and include clothes of women, men, kids, home-ware, beauty (Akhtar,
2018). The works with the aim that products are made from Primark is with the respect of people
and for the planet as well. People welfare is what matter them the most whether they are making
T-shirts in Bangladesh, jewellery in India or sock sin Turkey they expects the fair wages and safe
working conditions for the employees and customers. Primark doesn't owned any of the factory
1

in fact, 985 of the factories making products of Primark and for other companies or brands as
well.
Background of the company
Primark was founded by Arthur Ryan in June 1969 on Mary street, Dublin and first store
was developed by the founder on behalf of Western family who has found Associated food of
British in 1935 (Ayantoyinbo, 2018). After getting success in Ireland company further expand
their business in UK and Penneys opened the large store in 1971 in Belfast city centre and in
1973 open the Primark store in Derby, England. Company couldn't use the name “Penneys”
outside the Ireland as it was registered by J.C. Penneys. After that the name Primark was
invented to use the name outside the country. Primark opened their new headquarter in Dublin,
Arthur Ryan house in 2015 that is formerly known as chapel house. As on 2018, a fire started on
the roof of store in Belfast and that whole building was destroyed and there is black smoke in
the city. Then that building was a former bank and have the historical value and after that new
store of Primark was developed on the same site and that is innovative in 8 of December in 2018.
Product and services of the company
Primark offers the diverse range if the product and services and includes the wide variety
of kids, women, menswear, footwear, accessories, beauty products, confectioneries and home-
ware. Primark sells product of Sephora Products with the rate of around £1 they also start selling
vegan snacks in January 2018 company also sells clothes at low price (Ceil, 2019). Primark
provides the fast fashion contemporary trends in the market as per their competitors and other
retailers as like Zara and H&M. Primark offers the most trendy and stylish clothes to the
customers with the more reliable and astonishingly prices. They also provides the vast variety of
kids clothes that attracts the large customer base and and encourage the customers to buy the
maximum amount of items.
Analysis of competitive environment of the company
There is a high competition in the market as there a lot of brands that works on same
sector and to imparts more and more sales company applies different and unique strategies in the
business. Before insist any of the strategies and plan within the business it is mandatory that
company must analyse the competitive environment. That provides the brief knowledge about
the different consequences that has been changes in the market as per the demand and
2

requirement of the customers (Cepel, 2019). All the companies wants the higher amount of sales
and for that imparts different tactics within the business and that all information will be gathered
by performing an analysis. For that company performs porter's five force analysis that is as
explained below as:
Porter's five force analysis: It is an analysis that shows the market analysis that
furthermore, helps the company to gain the competitive advantage by knowing different
opportunities that has been generated from the market. There are different factors that includes or
discussed in this analysis that is as explained below as:
(Source: Porter's five forces analysis, 2019)
Threat of substitutes: It is a factor that shows the brief about the substitutes products and
services that is offered in the market by someone else company or by there competitors. But
fortunately, fashion industry have less substitutes thus this force doesn't have large impact on the
company (Flanagan, 2018). Thus fashion industry have the fear about the competition only and it
is difficult to measure success as bleak of the businesses are already in the space. Primark has
3

few threat of the competitors and the suppliers as that have the huge power of bargaining in the
market. Buyers have the large amount of options in the market thus it is hard to gain the
continuous success for that company provides the best quality products in the market.
Threat of new entrant: It is an aspect in which company faces the threat from the new
entrants as new company might runs with the less revenue and well. To get established in the
market company must applies different strategies to gain the competitive advantage. New
entrants also find unique and creative ways to popularise their products in the market and they
might use social media and digital marketing for to get the success and acceptability. Fashion
industry also has huge risk and high rewards for the new entrants as it is not easy to gain the
higher productivity. In context of Primark to gain the safety pack as from their competitors they
might use different strategies as like provides high offers to there consumers. Also provides
valuable discount and vouchers to their consumers that attracts them to keep linked with the
company for the longer period of time.
Bargaining power of customers: It is an analysis that shows the different aspect of the
customers as they have the wider option in the market and with that they choose any of the
option as per their requirement. They have that much power to lowers down the prices of the
products and services of the company thus buyers have higher force. Thus, Primark provides the
accurate and relevancy products to the customer with that maintain the high quality products for
the customers (Holzapfel, 2018). Primark also open new stores in different places and provides
relative clothes to them as per the location.
Bargaining power of suppliers: It shows the power of suppliers but in fashion industry
there is quite less force as success is not depends upon the suppliers. Company gets the product
from other suppliers as well with the flexible prices as they offers the raw material in high
amount thus they get the material with relevant prices. Thus Primark gets the benefit of that and
further provides the services to the customer with more cheaper rate.
Rivalry among existing competitors: It reflects the strength of the competitors and in
fashion industry the intensity of rivals is quite more high. There are large amount of retailers that
works for similar products but fashion industry known for the brand name as well. Thus it is
difficult for the fashion industry to get over from the already set brands. Primark has several
rivals as like New look group, Marks and Spencer and many more. Thus this market has on it
saturation and all gain equal advantage in terms of profit and sales (Isa, 2018).
4

Inbound logistics, operations and outbound logistics
Logistics refers to the management of transfer of information from one place to the other
so that supply chain of an organisation can be well managed which help in effective
procurement, storage and transportation of goods in businesses. Inbound logistics is related to
sourcing, storage and receiving of goods into the business whereas the outbound logistics relates
to warehousing, packaging and transportation of goods going out of company so as to reach to
customers. These operations and logistics need to be monitored by company's management so
that a strong distribution network can be developed which can help in maximum customer
satisfaction by providing them with required goods and services on time. Also the company's
transportation and storage cost can be minimised through efficient logistics so that price can be
lowered thereby attracting more number of customers (Kasemsap, 2018). Primark has an
efficient inbound and outbound logistics and operations which help it in reaching to its customers
in an efficient manner. The company receives its products from in its stores from its
manufacturing units which are located in various locations and the outbound logistics is done by
selling all its products through its physical stores. The effective supply chain management help
in distribution of products and reaching to customers in speedy manner while also ensuring
quality received by customers.
Analysis of support activities in Porter's value chain
There are various activities which are performed in an organisation so tat it can
successfully survive and sustain in the business environment like designing, production,
marketing, staffing, research etc. Value chain analysis can be done by businesses to analyse their
internal activities so that the most valuable activities of company can be recognised so that a
competitive advantage can be gained in the market (Mirabito, 2018). This model also help in
diving all the activities into two parts which are primary and secondary activities. Primary
activities are related to inbound and outbound logistics, marketing, sales and service whereas
secondary activities are the ones which help in running the business smoothly. The support
activities of Primark are as follows: Firm infrastructure: It relates to the structure of organisation and its management ,
planning, accounting, finance and quality control mechanisms so that the company goals
are efficiently achieved. Primark sell its products through its 370 stores which are located
across 12 countries and it does not promote online selling. This means that the customers
5

can only purchase kits products from the physical stores that are available nearby
(Newman, 2020). The company deals in highly fashionable clothing to all the people at
affordable prices which makes the company well recognised and respected in fashion
clothing industry. The revenue which is earned by company through its on-store selling is
£7.79 billion with about 78,000 employees working in the company. The strong and
efficient supply chain network of company help it in reaching to its customers and
providing them with clothes on time, with accordance with fashion and at the right place. Human Resource management: The company employs many workers so that the
activities of company can be carried out efficiently which can help it in achieving its
goals within stipulated tome and budget. The HRM of company helps in recruiting highly
skilled and talented employees in company who can work together and achieve company
goals. Primark gives its employees freedom to engage in company activities which help it
in bringing innovation in company so that the prices of goods can be further reduced and
more number of customers can be attracted. The management function of company help
in coordinating and integrating the work of employees so that effective results can be
drawn. Technology development: The company invests in technology so that water-resistant
fabrics can be developed along with developing season's latest colours so that most
fashionable and durable outfits can be developed. This can help in attracting customers
and building a loyal customer base so tat the company's brand image can be developed
which help in increasing company profits. It also help in giving training to managers and
reducing company costs through improved operations so that prices can be reduced while
enhancing cloth quality (Novikov, 2018).
 Procurement: Primark has an efficient supply chain management which help it in
procuring its raw materials from suppliers who provide high quality and innovative
products so that the final goods which are delivered to customers can help in increasing
their satisfaction. It also help in meeting the fashion requirements of customers and
providing them with highly fashionable clothes.
Identification of key value adding activities
Value adding activities are those which help in providing customers with goods and
services so that they can be highly satisfied and high value for money can be generated for them.
6

With the help of these activities raw materials can be converted into finished goods which help in
providing them with goods and services as per their demands and changing requirements. Higher
the value of goods provided to customers more will be the reputation of company which is
important to become competitive in business environment. Primark provides highly fashionable
clothing to its customers at lower pricers so that their changing fashion demands can be met
efficiently (Saura, 2019). The supply chain management of Primark is efficient which helps in
procuring materials that are high in quality so that the final products which are manufactured are
in accordance with customer needs. Operational efficiency of company also help it in gaining a
competitive edge in market and reaching to customers effectively so that company sales can be
increased thereby also increasing customer value. For Primark the key value adding activities are
competitive pricing policies, advertising, sales promotion, introducing loyalty schemes etc. so
that a large customer base can be created and maintained.
Analysis of “ Porter's five force analysis” and “Porter's chain analysis”
It has been analysed that Primark gain all the brief of the market as by knowing the
different aspect of the market by performing porter's five force analysis. It shows all the diverse
affects of the market and includes the information about there threats and substitutes. With that
also provides the accurate information about the rivals and bargaining power of suppliers and
buyers that provides a proper pathway to the company that further helps to gain the competitive
advantage. Porter's chain analysis also helps to performs all the function on continuous basis that
helps to gain the stability and long term success to the business (Shukla, 2019).
Summarise and reflect on how the business could deploy information technology
Information technologies are increasingly used within the modern world by using IT
companies performs their operations and working in effective as well as efficient way. It is
helpful for the businesses because it allows employees and manager to do better work and gives
creative ideas for the purpose of taking corrective actions. It can be done in such a way which
facilitates unique platform to the organisations in order to manage and perform their operations
in a systematic manner (Sotiriadis, 2018). Within the context of Primark, it is termed as a leading
retailer company that mainly deals in selling footwear, clothes and accessories so that they
requires to be used information technology in their organisation to perform business operations
in effective way as well as company has direct competition with Marks & Spencer, Loavies,
7

New Look Group etc. If company require to increase its better results then they need to be focus
on that how they can introduce new techniques for their operations (Uluskan, 2018). For
example, the company's management brings new technologies in their organisation and they can
focused on launching systems of online payments then it will become simple and easy for their
consumers in order to pay for their purchases. This will aid in reducing the requirements of
handy cash and saves time also. In addition, Primark must focuses on their online stores instead
of physical or offline that will allow their clients to directly communicate with the firm. This will
facilitate an option of doing shopping when customers sitting at home along with the full of
comfortableness. Along with this, company have an another alternative to use Smart mirrors
through which customers video will be automatically made which allows them to see the looks
of themselves in new clothes and minimise the use of changing rooms (Viet, 2018). By using all
these technologies the company can able to gain competitive leading positions within the
marketplace.
CONCLUSION
It has been concluded from the above report that information technology is considered as
a crucial aspect that helps in the growth and success of businesses within the competitive
marketplace. Companies can use IT in a systematic and effective way so that their offerings and
operations developed appropriately and that assists in increasing the customer satisfaction. Retail
businesses use Porter's five force analysis in order to know about the competitive situations and
positions. Along with this company's logistics operations are appropriately managed so that
company developed their supply chain management and timely deliver goods and services to the
customers. Thus, IT is essential to use by company in order to develop positive and strong
market image and generate huge profitability.
8

REFERENCES
Books and Journals
Akhtar, M. and Sushil, S., 2018. Strategic performance management system in uncertain
business environment. Business Process Management Journal.
Alumbugu, P.O., Shakantu, W.W. and Tsado, A.J., 2020. Analysis of Outbound Logistics
Channels for Construction Material. Journal of Engineering, Project, and Production
Management. 10(1). pp.19-26.
Ayantoyinbo, B.B. and Gegeleso, O.M., 2018. IMPACT OF INBOUND AND OUTBOUND
LOGISTICS SERVICES ON SMALL SCALE BUSINESS. Transport & Logistics.
18(44).
Ceil, C., 2019. Michael Porter’s Theory About Value Chain and Knowledge Management.
Available at SSRN 3521075.
Cepel, M. and et. al., 2019. Selected economic factors of the quality of business environment. J.
Int. Stud. 12. pp.228-240.
Flanagan, D.J. And et. al., 2018. Coopetition among nascent craft breweries: a value chain
analysis. Journal of Small Business and Enterprise Development.
Holzapfel, and et. al., 2018. Product allocation to different types of distribution center in retail
logistics networks. European Journal of Operational Research. 264(3). pp.948-966.
Isa, W.A.R.W.M and et. al., 2018. A Mobile Teaching Value Chain Framework. Advanced
Science Letters. 24(1). pp.596-599.
Kasemsap, K., 2018. Mastering business process management and business intelligence in global
business. In Global Business Expansion: Concepts, Methodologies, Tools, and
Applications (pp. 76-96). IGI Global.
Mirabito, W.F., Floorwatch Inc, 2018. System and method for assisting parties in a business
environment. U.S. Patent Application 15/836,373.
Newman, C. and et. al., 2020. Corporate social responsibility in a competitive business
environment. The Journal of Development Studies, pp.1-18.
Novikov, S.V., 2018. Strategic analysis of the development of high-technology manufacturing
facilities. Russian Engineering Research. 38(3). pp.198-200.
Saura, J.R., Palos-Sanchez, P.R. and Correia, M.B., 2019. Digital marketing strategies based on
the e-business model: Literature review and future directions. In Organizational
Transformation and Managing Innovation in the Fourth Industrial Revolution (pp. 86-
103). IGI Global.
Shukla, M.K. and Pattnaik, P.N., 2019. Managing customer relations in a modern business
environment: Towards an ecosystem-based sustainable CRM model. Journal of
Relationship Marketing. 18(1). pp.17-33.
Sotiriadis, M., 2018. Strategic Analysis and Competition Analysis'. The Emerald Handbook of
Entrepreneurship in Tourism, Travel and Hospitality. Emerald Publishing Limited,
pp.53-70.
Uluskan, M. and Godfrey, A.B., 2018. Business environment-supply chain framework and
benchmarking supply chain structures. Benchmarking: An International Journal.
9

Viet, N.Q., Behdani, B. and Bloemhof, J., 2018. Value of information to improve daily
operations in high-density logistics. International Journal on Food System Dynamics.
9(1). pp.1-20.
ONLINE
Porter's five forces analysis. 2019. [Online] Available through: <https://medium.com/product-
gyaan/porters-five-forces-analysis-868945aa5846>.
10