Strategic Analysis of a Retail Company

This assignment analyzes the strategic environment of a retail company utilizing Porter's Five Forces framework to understand industry competition. A VRIO analysis is conducted to identify the company's core competencies. The report concludes with recommendations for enhancing the company's performance, drawing upon other strategic management tools.

STRATEGIC
INFORMATION SYSTEM

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................1
PART 1............................................................................................................................................1
1. Business background of Nisa limited......................................................................................1
2. What industry Nisa is..............................................................................................................1
3. Environmental analysis of company.......................................................................................1
4. Environment of the industry ...................................................................................................2
5. Competitive environment........................................................................................................4
6. Opportunities and threats........................................................................................................4
PART 2............................................................................................................................................5
1. Resources of firms that is tangible and intangible..................................................................5
2. Identification of capabilities....................................................................................................6
3. Analysis of core competency..................................................................................................6
4. Suitable information system solution which helps Nisa company in meeting needs............8
5. Evaluating proposed system and some recommendations for organisation............................8
CONCLUSION................................................................................................................................9
REFERENCES..............................................................................................................................10

INTRODUCTION
Strategic analysis is a process which involve research on business environment of
organisation in which it operates. For this assessment chosen entity is Nisa private limited which
is a groceries' wholesaler brand. In this report, factors will be analysed on external business
environment of entity. Further, internal analysis and proposal will be developed for firm's
resources so that effective recommendations will be suggested.
PART 1
1. Business background of Nisa limited
Nisa limited is a retail industry which deals in providing benefits to other independent
retailers in food and drink market of UK (Hill, 2017). Company is offering cakes, Pringles,
sauces, rice, water bottles, wine gums, nachos, washing powders etc. it is founded in 1977 with a
motive to provide a single platform shop for customer in accordance with their needs. They have
comprises effective strategies in which high quality products with unbeatable breadth of range
are offered to customers so that they get attracted. Now, company has almost captures retail
business market by winning many best symbol retailer awards.
2. What industry Nisa is
Nisa is a wholly owned subsidiary which is known for Co-operative group limited.
Formally, company initiated with mutual organisation which is owned by its members. It has
collecting buying power in large group of members so that effective deal negotiated with
suppliers of business market. It supplies on over 4000 small supermarkets and retail shops with
cost-cutter symbol group in UK market. In 2017, its net worth is of £1.252 billion (Ayers and
Odegaard, 2017).
3. Environmental analysis of company
General environmental analysis is to be measured with political, economical, social,
technological and with legal factors of business market which are as follows-
Political factors:- Revenue and profitability of Nisa limited is mainly affected by
government policies. Impact of such regulations will affect consumer buying habits as well as
international trade laws. Food products which offered by organisation must be comply with
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health guidelines which proposed by government. If such policies will not be adopted by stores
then it could lead to a legal trouble.
Economic factors:- when there is a rise in economy, consumers increased their buying
habits, which means that more investors are interested in profitability of retail stores (Frynas and
Mellahi, 2015). Retail industries have capabilities for upholding itself during a recession period.
Currently, with emerging economics retail industries have huge chances for expanding its
business.
Social factors:- consumer preference is the main social factor which affecting Nisa's
business operations. People mainly enjoy buying products in bulk. Therefore, industry have to
develop market research to which analyse buying trends and shift in consumer behaviour.
Therefore, Nisa organisation by setting targeted able to add more visitors in their stores.
Technological factors:- variety of technologies are developing every day in retail
organisation. Nisa also using such up gradation for managing cash register money after every
sales transaction. There is a shift in using computers and ipad in this organisation for managing
work easily and speedy. With the use of internet, company now able to capture market customers
through promoting products and offers in websites.
Environmental factors:- state of environment mainly affect quality of food products and
now more retail stores are offering such products (Hanson and et.al., 2016). Nisa is also one of
them. Therefore, company must have to provide detailed information of used ingredients in their
offering so that they will able to meet environmental requirements. These regulations will also
ensure employees and customer safety.
Legal factors:- operating business functions needs to be meet by legislative conditions
such as taxation laws, labour laws etc. Nisa must have to follow such standards so that company
did not have to face any legal trouble in operating functions in market.
4. Environment of the industry
Industry environment of Nisa limited will be analysed through porter's five forces model
which are as follows-
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Competitive Rivalry- Nisa has strong force of competitive rivalry. In this sector of
market, there are many large and smalls industry in market which is giving a tough competition
to Nisa and will significantly affecting its profitability. Therefore, it has large number and large
variety of retail firms in this market.
Bargaining power of buyers- Generally Nisa has weak bargaining power from buyers.
Because of large population of buyers, there is weak form of bargaining powers and for buyers it
is difficult to impose pressure on retail firms. Therefore, with this impact individuals buyer has
negligible impact on overall revenue of company.
Bargaining power of suppliers- for Nisa limited, bargaining power of suppliers has
strong intensity. Suppliers has maximum influence on this small sector of firm. Large firms in
this sector has majorly captures suppliers of business market because of that Nisa have to face
strong influence of suppliers of business market.
Threat of substitutes- there is a weak intensity of threat of substitution for Nisa
organisation. Company is offering wide range of goods and services to customers by which few
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Illustration 1: Porter's five forces
( source: Five Forces Model: Summary, Significance and Framework, 2016)

or no substitutes available. Therefore, it has moderate availability of substitute products in
market.
Threat of new entrants- there is a strong intensity of new entrant in market for Nisa
limited. For entering in this type of market, newcomer is easily able to enter. There are number
of small retailers which are providing tough competition to organisation. Therefore, it has
moderate or high cost of brand development. It is because cost of running this business is low to
moderate which is beneficial for any new entrant.
5. Competitive environment
Top competitor of Nisa is McColl's organisation. This company is providing tough
competition to Nisa in business market (Jenkins and Williamson, 2015). Quality of products and
offers which proposed by McColl is much more attractive for customers in comparison to Nisa.
McColl has strong promotion strategies. They attract customers with amazing merchandising in
which creative display and arrangements have been arranged to capture customers in
organisation. With effective display McColl company have also developed an effective
communication to its customers via emails and social media. With this strong communication
relationship, company is able to influence customers easily which overall helps in increasing
profitability of company.
With this tough competition of McColl a threat have been created in minds of
management of Nisa. Its business operations is majorly affecting with strategies of its competitor
(Merrilees and Miller, 2015). Nisa has to be aware in Promotion of products online,
communicating customer through social media and developing recent market trends to provide
tough competition to its competitor.
6. Opportunities and threats
Dealing in retail industry is nowadays becoming tough choice because of large
competition in market. Nisa is also dealing in same line of business because of that company
have to face some threats and opportunities. Therefore, opportunities of company is as follows-
 Digital strategies- going digital is one of the opportunity for Nisa organisation because
customer now are demanding improved experience in terms of searching products and to
conduct transaction online. Social media is also becomes a popular tool for customers
where company will able to educate audiences about their products and services.
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 Expand business in emerging economics- currently many international firms have
shifted their business in emerging economic too because there is huge growth of business
in such economies (Chatzoglou and et.al., 2018). It is an opportunity for Nisa to expand
its business in emerging economic market.
Threats for company are as follows-
 Tough competition- Nisa has major threat with its business competitors in market. In
retail sector large number of competitors are available in market which are providing the
best offers to customer so that they will get attracted.
 Rising commodity pricing- another threat for Nisa is the rising commodity product
prices because of increased labour cost for manufacturing of such products. Increase in
raw material cost is also a threat for such organisation (Knott, 2015).
PART 2
1. Resources of firms that is tangible and intangible
Tangible resources-
 tools and equipments
 land and building
 furniture
 computer
 cash and cash equivalents
 company vehicles
 stock-in-hand investments
Intangible resources-
 goodwill
 trademarks
 patent
 customer lists
 brand recognition
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2. Identification of capabilities
Capabilities of Nisa limited will be measured through its strength and weaknesses which
are as follows-
Strength-
 Automation in activities of company has brought a consistent quality of products and
services, which develop a strong capability in company in fulfilling market demand.
 Nisa has strong brand acquisition among customers which helps it in gaining competitive
advantage from business market (Slack and Brandon-Jones, 2018).
 It also has strong financial capabilities by which customer expectations will easily get
fulfilled. By fulfilling expectations, Nisa has strong loyalty from its customers.
 By providing successful training and development programs, company have skilled
workforce which are motivated for achieving business goals.
 It also has strong brand portfolio by which company is able to expand its business in new
products and services.
Weaknesses-
 Nisa has lower investment in research and development activities because of that other
competitors in market becoming more efficient in terms of developing goods and services
in accordance with current trends of market.
 From comparison to its competitors, company is not good at product demand forecasting
by which they missed varieties of opportunities.
 It has stiff competition with every segment present in retain sector business by which
overall performance and profitability of business get affected (Longoni and Cagliano,
2015).
These are the identification of capabilities of industry which indicate about business operations
of Nisa in market place.
3. Analysis of core competency
Core competency is a concept in management theory which is used by organisations to
harmonised multiple resources and skills which distinguish entity in marketplace. Therefore, to
analyse core competency of Nisa organisation, VRIO model of strategic management will get
used (VRIO Analysis, 2018). It is an analytical technique which is used for the evaluation of
company's resources and for its competitive advantage. The dimensions of VRIO stands for-
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Value- with this measurement will provide on expensiveness of resources and from where it can
be obtained on market.
Rare- under this analysis will be done on how rare resources are?
Imitability- here analysis will do on how difficult it is to imitate resources?
Organisation- here it is analysed that is resources supported by any law with respecting
arrangement and whether it will use properly or not?
Therefore, core competency analysis of Nisa is as follows-
Is valuable? Is rare? Is difficult to
imitate?
Is organisation
organised
around?
What is the
result?
yes no no yes Automation in
business
activities.
yes no yes yes Strong brand
acquisition.
yes yes yes yes Strong financial
capabilities.
yes no no yes Strong brand
portfolio
From the above table it can be interpretable that Nisa organisation have strong
capabilities. Automation in business activities is valuable and organisation is also set around for
its development. It also has strong brand acquisition which is difficult to imitate and is more
valuable. It will also be measured through above table that Nisa organisation has strong financial
capabilities which is valuable, rare, difficult to imitate and organisation also set around for its
development (Grant, 2016). Further, company also have strong brand portfolio which is valuable
in nature.
Therefore, it can be analysed through VRIO model of strategic management that Nisa
organisation have some strong capabilities by which profitability of company get increases.
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4. Suitable information system solution which helps Nisa company in meeting needs
For meeting the needs of company, appropriate structure which followed by Nisa
organisation is Executive support system. It is the type of information system which is designed
to help higher authority for developing effective business decision. With the help of this system,
management will able to gather, analyse and summarise key internal and external information
which is used for the developed of day to day business activities.
This system supports inventory of all present information assets which projects revenue
figures by which new products and sales expectations will get meet by management with
efficient strategies. It provides strong reporting and will drill down capabilities of organisation to
meet its future goals. It helps top-level management to analyse, compare and to highlight trends
of important variables so that effective monitoring of performance and opportunities will get
identified to achieve growth of organisation (Wheelen and et.al, 2017).
Therefore, to meet the needs of Nisa organisation, executive support system is an
effective information tool by which management will able to develop effective business
strategies. With this system, higher authority of organisation will able to properly analyse,
compare recent trends in current market by which growth of organisation will get achieved.
5. Evaluating proposed system and some recommendations for organisation
Executive support system is a software which allows users for transforming data of
enterprise into quick accessible and executive report. This information system helps in enhancing
decision making for higher management of business. For increasing business performance it is
essential for managers to identify effective resources for company which will helps in improving
such business practises. Therefore, ESS is an effective software which helps management in
gathering internal and external information which will be useful for day to day business
operations.
Some of the recommendations for Nisa organisation-
For meeting needs of company, information tool other that ESS software which company
will follow is as follows-
Management information system-
This is the software which mostly concern with internal sources of information.
Management may use this system because it is a tool which usually take data from transaction
processing system by which such information will get summarised into a series of management
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report. With the help of this tool, company will able to generates exact and timely information by
which organisational problems get resolved and effective decision will get developed for
achieving growth in business market.
Decision support system-
It is a software which is used by management to reach a decision when any decision-
making situation will get arise. With the use of this system, higher management of company will
able to collect information and will also analyse alternatives of particular information so that
smooth business operations will get developed.
Transaction processing system-
This is the another information system which management of Nisa organisation may
used. With the help of this software company will able to design process of repetitive transaction
efficiently and accurately. This software will be useful for organisation for billing systems, stock
control system and to calculate weekly or monthly payroll.
Knowledge management system-
For sharing and creating various business information, this system may be used by
management of Nisa organisation. Use of this software helps company in sharing information
that will provide a growth opportunity for business.
These are some other software which may be used by management of Nisa organisation
so that effective decision will get developed to achieve organisational objective and for getting
growth of company.
CONCLUSION
From the above report it can be concluded that for achieving business growth strategic
planning plays a crucial role. In this report, analysis is done on Nisa organisation which is a retail
industry. With macro-environmental factors important facts of company is analysed. Porter's five
forces is used in this report for letting know industry environment of company. Internal analysis
of firm is also explained in this report where with the help of VRIO model of strategic
management core competency of company get measured. Lastly, recommendation with other
information tool is provided so that company will able to meet its needs.
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REFERENCES
Books and Journals
Ayers, J.B. and Odegaard, M.A., 2017. Retail supply chain management. CRC Press.
Chatzoglou, P and et.al., 2018. The role of firm-specific factors in the strategy-performance
relationship: Revisiting the resource-based view of the firm and the VRIO
framework. Management Research Review. 41(1). pp.46-73.
Frynas, J.G. and Mellahi, K., 2015. Global strategic management. Oxford University Press,
USA.
Grant, R.M., 2016. Contemporary strategy analysis: Text and cases edition. John Wiley & Sons.
Hanson, D and et.al., 2016. Strategic management: Competitiveness and globalisation. Cengage
AU.
Hill, T., 2017. Manufacturing strategy: the strategic management of the manufacturing function.
Macmillan International Higher Education.
Jenkins, W. and Williamson, D., 2015. Strategic management and business analysis. Routledge.
Knott, P.J., 2015. Does VRIO help managers evaluate a firm’s resources?. Management
Decision. 53(8). pp.1806-1822.
Longoni, A. and Cagliano, R., 2015. Environmental and social sustainability priorities: Their
integration in operations strategies. International Journal of Operations & Production
Management. 35(2). pp.216-245.
Merrilees, B. and Miller, D., 2015. What Capabilities Do Small Retailers Need to Compete
Against Retail Giants?. In Proceedings of the 1997 World Marketing Congress (pp. 509-
509). Springer, Cham.
Slack, N. and Brandon-Jones, A., 2018. Operations and process management: principles and
practice for strategic impact. Pearson UK.
Wheelen, T.L and et.al, 2017. Strategic management and business policy. pearson.
Online
Kunchala, R., 2016. Five Forces Model: Summary, Significance and Framework. [Online].
Available through <http://www.mbahelp24.com/five-forces-model-summary-significance-
framework/>
VRIO Analysis. 2018. [Online]. Available through <https://managementmania.com/en/vrio-
analysis>
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