River Island Strategic Analysis

This report analyzes River Island's strategic position in the retail sector, examining its market orientation, strategic priorities, and competitive advantages. It also conducts an external analysis using PESTLE and Porter's Five Forces frameworks to identify key factors impacting the company's operations and future prospects.

RESEARCH

Table of Contents
INTRODUCTION...........................................................................................................................1
Background of Company.................................................................................................................1
Strategic Analysis............................................................................................................................2
Market Orientation.................................................................................................................2
Strategic priorities..................................................................................................................3
Competitive Advantages........................................................................................................3
External Analysis.............................................................................................................................4
Pestle analysis for River Island..............................................................................................4
Porter's five forces for River Island........................................................................................5
CONCLUSION AND RECOMMENDATION...............................................................................7
REFERENCES................................................................................................................................9

INTRODUCTION
This project is about the company in order to increase the profit, sales and market share.
Company wants to expand its business in different countries. Company has its aim to elaborate
its business in the world in order to occupy a leading position in the world. Company is
competing with high level of company. The present report is about identifying several elements
within external environment that has great impact on the operation and functions of business.
This assignment will also make understand the analysis of strategic marketing position of the
chosen company. In this assignment, River Island Company has been chosen for assessment.
River Island is a fashion clothing industries operating in retail sector. Furthermore, the report
will also analysis present market position of company as well as external factors affecting the
environment.
Background of Company
River Island is the most successful company in fashion clothing in retail sector. Bernard
Lewis is the founder of River Island. He is a retailer since his birth. In the year 1948, Bernard
Lewis has start his business in selling vegetables and fruits. After that it expands its business in
knitting wool in London. This company is expands its business in various retail businesses. It is
joined by three brothers and partnership begin in between 4 people. In the year 1965, River
1

island has about 70 stores in UK. The earlier brand name was Lewis Separates which was
changes or rebranded to Chelsea Girl. The name selected because of Chelsea was the hub of
fashion. It is the first chain of boutiques in UK (Hung, 2011).
In the year 1970, David and Bernard, left the business. They started Lewis Trust Group
and David has started other business in hotel sector. Bernard is running the retail operation which
allow company to elaborate its business into menswear with the launch of Man Stores in 1982. In
1988, Bernard has merger his business with Chelsea girl in order to make a single name of brand
of River Island. Bernard is an awesome retailer who is intelligent at taking the complex and
making it simple. Bernard open its first shop in republic of Ireland in 1993. The market of
Bernard has expanded to Russia, Poland and many other countries. Kids-wear in is launched by
River Island in 2010.
Strategic Analysis
Market Orientation.
The first and the main purpose of each and every company is to execute the needs and
requirements of their consumers by its products and services. In pastime, the main goal of
company is to increase the sales and profit, they did not focus on customer’s desire and wants.
Market orientation is a coordination in campaigns of marketing in between company and its
consumers. It always focuses on enhancing satisfaction of customer. In today's era of
modernisation, market is run by customers not by business. River Island Company is focusing on
intense worth and value to customers, which automatically increases the sales and profit of
company (Mpoyi, 2012). The concept of river Island marketing orientation is built on three
principle-
 Coordinated marketing
 Customer focus
 Profitability
River Island Company has ability to form an orientation in respect to any of three
principle. These all principles depends on internal and external structure and culture of company.
River Island follows market orientation strategies as they focused on customer satisfaction rather
than increasing sales and profit only. They are delivering effective products and services in order
to satisfy them. Furthermore, they are always being updated towards fashion and brand. The
2

competition in the market is at peak level, so River Island is also focused on sales orientation as
to sustain in the market (Doz and Prahalad, 2013).
Strategic priorities.
Strategic priorities is not a part of company's identity, it is third component of centre
culture of company. They are the values that helps company to achieve the organizational goals
and objectives of a business. Company cannot able to succeed if the strategies of company is not
linked with core culture.
The core points about strategic priorities of River Island Company are as follows-
 It should be standard for behaviour that directs how the aim and philosophy are put into
practise.
 In order to guide work, strategic priorities is the cardinal value.
 They are limited to small number of values that are essential to all areas of company.
 They are relevantly stable as well as they are pursuant with the purpose and philosophy.
River Island Company is following and developing a wide range of portfolio in order to
help its vendor in executing the demands and needs of consumers. Company is laying its great
efforts in order to engage there customers in their products and services.
Competitive Advantages.
A condition that puts a company is a favourable and highest position in the market is
known as competitive advantages. In general terms it is benefit that makes a company's products
and services highest to all customers. In retail sector there is high competition in the global
market as in the world of fashion, customers are highly fashionable (Williamson, 2010). So
River Island has to create a competitive advantage by taking three elements are as follows-
 Benefit- Company has to analysis the actual benefits which products of company supply.
It should be something that customers truly needs and offer real values. New and
advanced fashion is the biggest benefits for the company.
 Target market- In order to gain competitive advantage, it is very essential for company to
understand who buyers are, what they need. River Island target its customers and then
they gain competitive advantage.
 Competition- In order to gain competitive advantage, it is very essential to identify the
actual and real challengers and competitors. River Island company is identified its
competitors in retail sector. They are providing better than the competition.
3

External Analysis
Pestle analysis for River Island.
It is tools and instruments for strategic planning of business. It is a framework for
understanding external forces that influence on the function of operations. There are various
factors that affects the strategic planning of a business like new laws, tax changes, trade barriers
and demographic changes. It is a concept in principles of marketing. There are six factors in
pestle analysis which are political, economic, social, technological, legal and environmental.
Retail sector is largely affected by external forces.
Political factor- political factor has immense effects on the functions and operations of
business. It consists of laws and policies of government (Khilji, Davis and Cseh, 2010). For
example- government impose taxes, duties on the businesses or company which results in whole
changes in the structure of revenue. River Island Company has planned to operate in foreign
countries. These will often encounter laws regarding commencement which includes laws of
labour, employment etc. It is very essential to follow each and every laws and policies of
government.
Economical factor- This is the factors which affects the functions and operations of
business. Economic factors includes local economy, taxation, inflation, rate of interest, ratio of
import and export, international trade and many others. The retail store is very much affected by
the economic growth. In the economy of country, if there is high growth in GDP then customers
are in high number. Many investors are also attracted towards the business as because of possible
profit.
Social factor- Social factors are the most essential factors in retail sector as in retail
sector preference and taste of consumer is a base. Generally social factors includes
demographics, medial view of company, ethics of work, brand image, life-style trends, attitudes
of customers, issues regarding ethics and advertising a publicity. Now in the era of
modernisation, customers majorly prefers to do shopping in bulk. River Island Company is
organizing and carrying advertisements in order to attract customers.
Technological factors- Technological factors also have great impact on all business.
Generally, it includes emerging technologies, legislation of technology, maturity of technology,
intellectual issues in property and the most important research and innovation (Rossi, Vrontis
4

and Thrassou, 2012). River island company is providing Wi-Fi services in there stores, machine
billing and many other advance technology.
Environmental factor- It relates to the ecological and environmental aspects that has
great impact on the demands for an organisation's products and how business operates. It
includes environmental regulations, ecological regulations, effect of adverse weather and
sustainability. With the increase in the significance of corporate sustainability responsibility
(CSR). River Island Company has to meet certain environmental conditions which is set out by
legal bodies in a bid of encouraging safety and protection regarding environment for both
customers and employees of the chain stores.
Legal factors- This is the factor which is abided by the laws, policies, rules and
regulations that affects the way the company or business works. It includes current legislations,
future legislations, employment laws and protection of consumers, regulations regarding health
and safety and tax regulations. River Island company is fulfilling the all the laws and paying
taxes before and during operation. There are also some regulation and policies that manage and
control the legal relationship with suppliers and distributors.
Porter's five forces for River Island.
In the world-wide competitive market there are different elements or components which
are determining the performance all company or business. These components are affecting the
operation and functions at an advanced rate (Rovai and Downey, 2010). It is tool for examining
and determining competition of a business. This model describes five forces that help in
analysing the strength and weakness of company as well as it also describes the intensity of
competition and attractiveness of market.
The five forces are as follows-
Power of suppliers- This force describes the pressure exert by suppliers on the company.
Suppliers has significant power in respect to cost, quality and supply of products. To increase the
price, it is very easy for suppliers. So company has to control the bargaining power of suppliers.
River Island Company used to maintain relationship with number of suppliers, so that they can
easily switch off when any one of suppliers increases its price. If company is maintains
relationship with number of suppliers than no suppliers will able to increase the price of raw
material or any other (Chen and Chai, 2010). There are many ways in which the bargaining
power of suppliers is very high and strong are as follows-
5

 If company has few suppliers but has numerous buyers.
 There are few substitutes available.
 Suppliers hold insufficient resources.
 In case of raw materials, the rate of substitutes are very high.
Powers of Buyers- This force describes the pressure exert by buyers on the company.
Buyers are holding immense power than others. For small companies, if there is only a single
buyer switch to other products of company, it is a great loss for them. So it is very essential for
company to always work for the betterment and always be aware of their needs and requirements
(Reuter and et.al., 2010). Company will only be survive if there they can able to fulfil the needs
and demand of customers. There are following reasons where buyers have strong power are as
follows-
 Buying bulk of quantity.
 There are few buyers for company.
 So many substitutes available.
 Customers are very price sensitive.
 Low cost of switching.
Competitive Rivalry- This force describes the pressure exert by the competitors
prevailing in the business. In each and every business there is competition, somewhere high and
somewhere moderate. In retail sector, there is high competition. River Island Company is facing
immense completion in the business. Company has to identify the level of competition in their
area as they have to identify the strength and weaknesses of competitors in the market. They also
have to identify and understand the entire strategies of business and targeted audience. There are
some elements where threat of competition is very high are as follows-
 Number of challengers or competitors is very high.
 Barriers of exit is also very high.
 Slow and negative growth and development in the retail sector.
 The size of competitors are almost same in retail sector.
 In retail sector, products are not differentiated which can easily be substituted.
Threat of substitutes- This force describes the threat of substitutes. It is very important
for company to identify how many businesses of same sector is operating in the market. In retail
sector, threat of substitutes is very high in retail sector (Werther Jr and Chandler, 2010). There
6

are very close substitutes in retail sector. Any change in the price and quality, switch customers
to others. As in the market, there are so many substitutes available. Customers are very much
concern about the price of the products and services. For example. When the price of tea increase
people switch to coffee. So it is very important for company to manage and threat of substitutes.
In retail sector, River Island Company is facing intense amount of threats in the business. As in
UK, fashion changes at very fast (Werther Jr, and Chandler, 2010). Many companies come up
with discounts and offer which directly increase the switching cost.
Threat of entry- This forces are those forces which describes the threat of new entrants.
In retail sector threat of entry is not an easy if infrastructure is considered as in retail sector there
is high requirements of money in establishing the business. In the period of inflation, the degree
of new entrants is increases as because of high profitability. Further, if company has its unique
identity, it is very difficult for new entrants to enter in the business. There are various factors
where threat of new entrants is high-
 If company has low amount of capital.
 If there is no patent and copyright or trademark or any other security ion the
business.
 If there are no rules and regulations of government.
 Low cost of witching of customers.
 If customers are not loyal.
 Goods are nearly closed.
River Island Company is facing all these pressures and they are overcoming all the issues and
troubles. They are doing very well in the market. They have immense growth and development
in there economy (Rovai and Downey, 2010)
CONCLUSION AND RECOMMENDATION
From the above report it was stated that River Island Company is leading in retail sector
within the global market. The report also summarized that company make used of Competitive
Advantages, Strategic priorities as well as market orientation in order to strategic analysis.
Furthermore, report will also do external analysis such as porter’s five forces and pestle analysis.
Beside this report make understood the In retail sector there is high competition in the global
market as in the world of fashion, customers are highly fashionable and Strategic priorities is not
a part of company's identity, it is third component of centre culture of company.
7

Apart from this, with the study there are some of the suggestions that can be followed by
the River Island which are as follows:
Research and survey: Organizations should focus on conducting frequent research and
survey so that they are able to determine the opportunities that prevail in the market. This way,
preferences of customers can be satisfied in appropriate manner.
Training to workers: There are certain set of skills and capabilities that are needed in order
to perform a given job. Management should monitor their employee’s performance so that the
areas in which the improvement that has to be made can be identified and steps can be taken for
the same through which they skills can be enhanced.
8

REFERENCES
Books and journals
Chen, T.B. and Chai, L.T., 2010. Attitude towards the environment and green products:
consumers' perspective. Management science and engineering, 4(2), p.27.
Doz, Y. and Prahalad, C.K., 2013, January. Quality of management: An emerging source of
global competitive advantage?. In Strategies in Global Competition (RLE International
Business): Selected Papers from the Prince Bertil Symposium at the Institute of
International Business, Routledge (pp. 345-368).
Hung, S.J., 2011. Activity-based divergent supply chain planning for competitive advantage in
the risky global environment: A DEMATEL-ANP fuzzy goal programming
approach. Expert Systems with Applications, 38(8), pp.9053-9062.
Khilji, S.E., Davis, E.B. and Cseh, M., 2010. Building competitive advantage in a global
environment: Leadership and the mindset. In The past, present and future of international
business & management (pp. 353-373). Emerald Group Publishing Limited.
Mpoyi, R.T., 2012. The Impact of the" BRIC Thesis" and the Rise of Emerging Economies on
Global Competitive Advantage: Will There Be a Shift from West to East?. The Journal of
Applied Business and Economics, 13(3), p.36.
Reuter, C and et.al., 2010. Sustainable global supplier management: the role of dynamic
capabilities in achieving competitive advantage. Journal of Supply Chain
Management, 46(2), pp.45-63.
Rossi, M., Vrontis, D. and Thrassou, A., 2012. Wine business in a changing competitive
environment–strategic and financial choices of Campania wine firms. International
Journal of Business and Globalisation, 8(1), pp.112-130.
Rovai, A.P. and Downey, J.R., 2010. Why some distance education programs fail while others
succeed in a global environment. The Internet and Higher Education, 13(3), pp.141-147.
Werther Jr, W.B. and Chandler, D., 2010. Strategic corporate social responsibility: Stakeholders
in a global environment. Sage publications.
Williamson, P.J., 2010. Cost innovation: preparing for a ‘value-for-money’revolution. Long
Range Planning, 43(2-3), pp.343-353.
9