Strategic Management - Parkson Assignment

Strategic Management

TABLE OF CONTENTS
INTRODUCTION:..........................................................................................................................1
PURPOSE OF THE REPORT ........................................................................................................1
OVERVIEW OF PARKSON..........................................................................................................1
OVERVIEW OF PARKSON..........................................................................................................1
Strategic challenge......................................................................................................................1
MISSION AND GOAL STATEMENT..........................................................................................1
SMART objectives......................................................................................................................3
SMART objectives as below:.....................................................................................................3
ENVIRONMENTAL ANALYSIS .................................................................................................3
INDUSTRY ISSUES:......................................................................................................................5
CAPABILITY ANALYSIS .......................................................................................................6
VRIO model ...............................................................................................................................7
PROPOSED STRATEGY ............................................................................................................10
Swot Analysis:..........................................................................................................................10
STRATEGY EVALUATION .......................................................................................................12
CONCLUSION : ...........................................................................................................................12
REFERENCES:.............................................................................................................................13

Illustration Index
Illustration 1: Scanning the Environment: PESTEL Analysis, 2016..............................................................................3
Illustration 2: The Ansoff Model..................................................................................................................................10

INTRODUCTION:
In order to grow and develop business requires different types of strategies. A strategy is a plan or blueprint that shows how
company will achieve goals and objectives. Strategic management refers to developing of effective strategies in appropriate time
(Trigeorgis and Reuer, 2017). This helps business to minimise the impact that it can have due to change in external or internal
factors. Besides this, strategies provide right direction or way to business to enter in new market. Strategies management is an
important part of organisation as it helps in attaining the overall goals and objectives. It also deals with various problems that occurs
while implementation of strategy. Moreover, their role is to allocate resources and take decisions regarding change in strategy. For
present report organisation selected is Parkson. It belongs to retail sector and operates in Asian countries.
PURPOSE OF THE REPORT
This report is prepared to identify the role of strategic planning in developing strategies. Also, a strategic plan of Parkson will
be developed. It will include the macro and micro environmental analysis and other factors such as Porter five force, value chain, etc.
(Goetsch and Davis, 2014) The development of this plan will help Parkson to expand in new market.
OVERVIEW OF PARKSON
Parkson is an Asian based departmental store company that operates in retail sector. It majorly operates in Asian market
having stores in countries like China, Malaysia, Indonesia, etc. the total number of stores company is having are 131. In today's era
Parkson is operating successfully in Malaysia. They are now focused on expanding in other Asian countries. The parent group of
Parkson is Lion group.
OVERVIEW OF PARKSON
1. Year of incorporation – In 1987
2. Year of listing- 1995
3. Business divisions- 5
4. No of employees- 287
5. Current FYE revenue.- 3964 million
Strategic challenge
Strategic management is facing some problems and issues in Parkson. It is due to increase in competition in different
markets. This has highly affected the growth and development of company (Goldfarb and King, 2016). Now they need to develop
short term goals so that it can retain market share and earn stable profits.
Parkson is also facing the challenge of declining sales. Due to this company has to close their store in Maju junction mall.
Also, the mall is not performing well so the sales of Parkson is declining. Moreover, the rent of mall are rising to a great extent. This is
increasing the expenses of company. They are not able to earn enough profits. It is the major challenge company is facing in Malaysia
(Bergh and et..al 2017). The strategies that are developed by top management is not implemented well resulting in failure.
MISSION AND GOAL STATEMENT
Mission :

To inspire our people
To delight our customers
Objectives
 Honesty and integrity
 Customer first
 Respect and empathy
Mission, vision and objective
According to (Richter and Torstensson, 2016) mission statement must emphasise on both employee as well as customers
satisfaction. The mission statement of Parkson emphasis on this. It states that to inspire our people. Here people refers to employee of
company. To inspire means to motivate them in growth of organisation.
The vision statement do not focus on this. It is not so clear. The issue Parkson is facing tough competition in other countries. This has
restricted its growth. Due to this they are not able to expand in countries like India, Australia, Japan, etc. the new vision and mission
statement must be developed :-
Mission
To inspire employees by building effective relations
Vision
To be Asia most effective and largest departmental store
The mission statement gives an insight to people about how they will be inspired by purchasing goods from Parkson. It
completely shows that company focuses on people lifestyle so that high quality products can be provided to them. According to
(Goetsch and Davis, 2014) it is said that parkson is able to enhance the living standard of people by fulfilling their needs. Also,
mission statement focus on motivating people.
Focus, clear and motivate
As per (Gallus and Frey, 2016) old mission statement reflect employees role in Parkson. It showed that how employees are motivated by
company. It clearly focuses on both employees as well as customers. But it does not reflect on company products and services so new
objectives was developed. The company vision states they want to be leading departmental group of Asia. But the current situation is
parkson is not able to expand business in countries like India, Japan, etc. very effectively. So it is not fulfilling current requirement. The
vision statement must focus on customer, employees and value. No parkson vision does not meet this criteria. The employees will not be
motivated by this.
Vision
To be Asia's leading departmental store group
Evaluation - it is an acronym that shows organisation objectives in effective way. Parkson provides a variety of products to
customers. With this they are able to attract large of customers. In this way they have gained market share in different countries.
Whether parkson is currently achieving mission or vision or not ?

Yes, it can be said that Parkson is able to achieve their mission and vision. They are expanding business in different
countries. This has enabled them to earn more profits and attract large number of customers.
SMART objectives
Every business uses this tool while developing objectives. This is because it helps in setting specific objectives so that it can
be achieved effectively. The SMART tool contains various elements. In this time bound refers to setting time scale for objectives.
Realistic helps in motivating employees.
Parkson also used this tool to set their goals and objectives. The mission statement of Parkson is to provide variety of high class goods
and services to people.
SMART objectives as below:
Element How does objective include this demand
Specific The objective is to expand business in other
countries.
Measurable The objective of Parkson is to expand business in
3-4 other Asian countries where there is less
competition in the market.
Achievable The company has investigated market economy of
countries that will helps them to operate there.
Realistic It has been evaluated that company is having
enough finance to open new stores.
Time bound Time scale for objective is 18 months
ENVIRONMENTAL ANALYSIS
While developing strategies it is important that environmental analysis is conducted. It will help in developing effective
strategies according to market condition (Richter and Torstensson, 2016). In this there are two aspects considered that are micro and
macro that is as follows :-

Macro analysis – PESTEL
Political –The political situation of Malaysia is stable as it is a democratic country. Also, government regulates rules and regulations
related to business, trade , etc. Parkson can operate in different Asian countries (Engert and Rauter, 2016). It can expand their
operations there. But threat will be that political change in Malaysia will highly affect Parkson as their major revenue is generated
from there.
Economic – But Malaysia is having a stable economy (Gallus and Frey, 2016). The inflation rate rise at very high rate but it does
not influence the retail sector. It is because Malaysia is a stable economy nation. With this Parkson can effectively operate there. On
the other hand change in Malaysian economy will affect Parkson profits.
Social - The culture of Malaysian people is very high profile. They live luxurious life. Their taste and preference changes as per their
needs. Parkson is able to fulfil their needs by providing them variety of products (Goetsch and Davis, 2014) It has created a distinct
image in the mind of people. Retail sector in Malaysia provide high quality products to people. But change in taste and need of people
will force Parkson to develop products. This can be a major threat for them.
Technological –. Technological advancement in retail sector has forced business to produce products by identifying needs of people.
Malaysia retail sector enjoys a great market share. This has enabled Parkson to reduce cost of their products and provide new services
to people. But change in this will highly affect Parkson as they have to install new tools and equipments. Also, they have to create
their own website to sell products.
Opportunities – by effectively analysing the external factors Parkson can develop proper strategies. It will help them to minimise the
impact of change in factor. With this they will be able to run their operations in smooth manner. Also, if strategies are properly
implemented Parkson can expand in other markets like US, European market.
Threats – external factors highly affects organisation growth. It is because business operates in those factors. Any change in any of
the factor will impact business operations to a great extent. It can restrict expansion of business.
Illustration 1: Scanning the Environment: PESTEL Analysis, 2016

Sub factors
Increase in competition- the is one of the factor that is affecting Parkson . In Malaysia many new and small business are emerging in
retail sector. They are giving stiff competition to Parkson. Moreover, they are providing products at cheap price so it has attracted
customers.
Advancement in technology- due to technological advancement many companies have changed their way of providing products and
services (Engert and Rauter, 2016). This has enabled them to increase customer satisfaction and retain them.
Change in laws- the laws and regulations related to trade and tariff of Malaysia can be change by government. This will directly lead
to affect the Parkson operations and business. Also, they will have to modify their expansion strategies. Besides this, any change in
this will enforce company to change their internal policies.
Future of Parkson in Malaysia
From the above analysis it can be said that Parkson might have to face stiff competition in Malaysian market. New and small
companies will emerge in retail market. Also, Parkson have to develop products as taste and preference of customer will change.
Moreover, they have to lower their price in order to retain their customers. So company must expand their business in new countries.
They need to analyse market situation and then develop strategies. On the other hand, country political situation is stable for Parkson.
As company is already having a strong market share in Malaysia (Trigeorgis and Reuer, 2017). This will not affect their sales and
profits.
Conclusion
Thus, it is concluded that Parkson should expand their business in countries like India where there are ample opportunities for
growth. Also, the situation of retail industry in Malaysia will be competitive in the future. Many business will emerge in this
industry. Besides this, there will be change in economic condition of country.
INDUSTRY ISSUES:
In this porters five force model is applied. It is a marketing framework that helps an organisation to analyse the competition
in the market. This model is explained as follows:-
 Threat of new entrants – The threat of new companies like Robinson is very high in retail sector as many new business has
emerged (Bergh and et..al 2017). Moreover, government has made regulations easy that has allowed new business to enter in
retail sector. This is the reason Parkson has lost the market share and customer base. Also, it has restricted the growth of
company in different countries.
 Threat of substitute- it refers to using of other products in order to satisfy the needs. People can use different products such
as cloths, footwear, etc. of other company to meet their needs. The possibility of threat of using substitute is very high in
retail sector. It has reduced the sales and profits of Parkson.

 Bargaining power of buyers- It refers to the position of buyer in the market. It states that more the number of buyers more
power will they have to drive down the prices. Parkson operates in entire Malaysian market (Engert and Rauter, 2016).
Hence, they can easily change the price of product. Therefore, Parkson must follow different pricing strategy that will help
them to maintain customer base.
 Bargaining power of suppliers- It refers to the position of suppliers in the market. It states that more number of suppliers
more power will it they have to drive down the prices. The suppliers supply raw materials to Parkson to produce goods. For
example like INTEL is supplier for chip for all laptop brands. Parkson operates in entire Malaysian market. to sell the
product. Instead, they have their own stores. So there is no chance that price of product is driven down by suppliers. But
distributors can affect price as Parkson purchase raw material from various distributors.
 Industry rivalry- It means the level of competition in the market. In retail sector the level of competition is very intense.
Competitors such as Robinsons, Senheng Electric, etc. (Trigeorgis and Reuer, 2017). It has increased because of new
entrants such as Mannings. This has forced Parkson to develop products in order to maintain their competitive advantage.
Sub factors
In retail there are variety of options that are available to customer, so people can use substitutes in order to fulfil their needs.
Thus, it is related to bargaining power of customer. They can force Parkson to lower their prices. In addition to this, similar situation
can occur with suppliers. They can also change their prices of raw materials that will affect the cost of products.
Another factor is high competition in retail market. There is intense competition in Malaysian retail sector. Due to this
Parkson has to operate in other countries. Large number of companies will enter in retail sector (Carroll, Primo and Richter, 2016).
They will target middle class people and provide products at low prices.
Future of Parkson in Malaysia
The above factors will affect the market situation of retail sector to a great extent. Thus, in order to deal with this situation
Parkson has to develop effective strategies. Apart from this, company can face challenge regarding high bargaining power of
customers so they have to change price according to the economic situation of nation.
Conclusion
The impact of above factors in retail sector is that many changes will occur. This will lead to creating large customer base
and providing them high bargaining power (Goldfarb and King, 2016). Also, rivalry among competitors will enable them to
implement competitive pricing strategy.
CAPABILITY ANALYSIS
It refers to the capacity or resources that specifies whether they are enough to meet the proposes strategy or not. This is done
by doing calculations and collecting data. For this value chain analysis is taken. Furthermore, Parkson has applied the premium pricing
strategy that has helped them to attract high class people. It has also provided them competitive advantage in the market in Malaysia.

Value chain analysis – It was given by porter that consists of different activities that are related to each other. These activities include
both primary and secondary (Trigeorgis and Reuer, 2017). In primary production, sales and distribution and in secondary finance,
human resource, etc.
Value chain activities Description Performed by Parkson Does it create value?
Inbound logistics It includes all activities that are related to input that is raw
materials like fibre for cloth. In this it includes control, handling,
etc. of raw materials. Parkson purchase raw materials from many
suppliers like Intel. So it is having a strong network and proper
infrastructure to store products. (Goldfarb and King, 2016).
Raw materials supplied from
suppliers
Yes - It helps in providing high quality
raw materials to produce goods.
Operations- It refers to the operations that are performed daily in organisation.
In retail sector many products are produced. So business have to
effectively decide several operations. Parkson also performs many
operations like developing software. They mainly focus on
maintaining the quality of products.
Production of goods and
providing services to customers
Yes it helps in providing high quality
goods to customer and increasing their
satisfaction.
Marketing and sales This is the main operations that is performed by organisation. It
refers to selling of product and creating awareness in the market.
Parkson also focus on providing high quality products and services
to customers (Goetsch and Davis, 2014). Company aim on
increasing sales and awareness in the market.
Advertising and promotion Yes it helps in attracting large number
of customers and increasing sales and
profits.
Services In this after sales services are provided to customers like free
delivery
After sales services Yes it helps in retaining them and
creating loyal customers.
Supporting services
Technological
development
It is related to change in technology that directly impact process,
methods, etc. Parkson is developing website that will help in
providing products online. So it has installed the latest software
like cloud computing and applications
Taking customer feedback and
solving their problems
Yes Technology supports in creating
market awareness by developing
effective marketing strategies. Also, it
helps in lowering the cost of product.
Human resource
development
In this several activities are performed such as hiring, employee
development, training, etc.
Selecting skilful and qualified
candidates and providing them
job opportunities. (Richter and
Torstensson, 2016)
Yes effective training is given to them
that helps in increasing their
performance.
Firm infrastructure The activities that are included in this are finance, planning,
accounting, etc.
Functional organisation structure
and attractive outlet in different
location.
Yes an effective communication
between employees and management
are valued.
VRIO model
Value chain activities Valuable Rarity Inimitable Organisation
capability
Competitive
consequences
Inbound logistics Yes No No Yes Temporary
Operations Yes Yes No Yes Sustainable
Marketing and sales Yes Yes Yes Yes Sustainable
Services Yes No Yes No Sustainable
Technology development Yes Yes Yes Yes Sustainable
Human resource management Yes No Yes Yes Temporary

Infrastructure Yes Yes No Yes Temporary
VRIO analysis – This analysis helps in evaluating the company resources in order to identify competitive advantage. It consists of
value, rareness, imitability and organisation.
Value – it means resources are included that can bring value to the product. Parkson uses advanced technology in bringing value ton
their products. With this new features are included in products that attracts people. Besides this, they are having high skilled
employees that provide services to customers.
Rareness- In refers to the resources that are used by competitors are included. The competitors is using website to provide goods to
customers. This has helped them to compete in Malaysian market. But Parkson is not having any website.
Imitability- it means that resources that can not be obtained by competing business. Competitors are not having advance and latest
technological tools through which products are developed. This is the reason they are not able to develop high quality products and
attract customers.
Organisation- it means that what resources can be used by organisation in proper way. In this Parkson can use technological
resources to develop website. Parkson can use different software and applications that can help in developing website. It will also help
in solving customers problems so that satisfaction can be increased.
Strengths and weakness of parkson
Strengths – Parkson is having a good and positive image in the market. This has enabled them to gain more competitive advantage
(Goldfarb and King, 2016). Also, Parkson provides a high quality products to their customers. They have successfully built high
class customers. Parkson is having strong brand name in different market. Company is able to earn and generate huge profits. Also,
Parkson is having a strong customer base in Asian countries.
Weakness - the major weakness of Parkson is they only target high class customers. So they are not able to built large customer base.
It has affected their growth and expansion. Another weakness of Parkson is they have to face stiff competition from companies like
Isetan and Carrefour. So this has restricted them to earn huge revenue (Carroll, Primo and Richter, 2016)
KPI benchmarking Parkson vs Robinson vs Senheng Electric
KPI – it refers to the key performance indicators that helps the company to gain competitive advantage in the market. With this
indicators company develop a separate brand image in the market. It also helps in setting a distinct image in the minds of people. The
KPI indicators of Parkson is as follows :-
 High quality products - Parkson provide high quality products to high class people. This has helped them to create a distinct
image in the Malaysian market. With this they have attracted a large number of people and created strong customer base. It
has enabled them to create distinct image from competitors.

 Market share - the market share of parkson is very large in Malaysia. It provides them benefit to expand business in
different countries. Due to this competitors are not able to compete with them. An effective market share allows company to
earn and generate high revenues.
 Customer services- Another KPI of parkson is customer services. They provide high quality and various types of services to
their customers. With this they are able to increase their satisfaction and retain them. Also, company has developed loyal
customers. It has enabled them to build strong customer base in Malaysia.
 Variety of products – Company provide a variety of products to customers. These products include fashion, furniture,
electronics, etc. With this customer have choice to choose from them. It has allowed parkson to attract people. Due to this
parkson is having more customer base than their rivals.
KPI benchmarking- it is a method followed by company to set a benchmark through which they will be able to retain their
customers. Also, with this company is able to measure the performance of activities in the market with competitors. Parkson has also
set a benchmark of their KPI indicators in which they will be focus on customer services and sales. It will enable them to gain more
market share in Malaysia.
 In this parkson have set a benchmark to gain 23.3% market share till 2025. for this they are developing effective strategies.
This benchmark is set because in recent times parkson sales is declining rapidly.
 Another benchmark set by company is to increase sales by 19.4% so that more profits can be generated. The company aims
to achieve this by expanding business in different Asian countries.
1) Sales
0
1
2
3
4
5
6
7
8
9
10
Year
Million units

From the above chart it can be stated that Parkson is giving a tough competition to Robinson. In recent years Parkson is sales
has declined. Their sales are also decreasing in Malaysia. Besides this, it can be said that in 2015 sales of Parkson was low as
compared to Robinson. But in 2017 it sales grow at stable rate. They have attracted customers effectively.
2) Increase in market share
From above chart it can be concluded that Parkson has gained more market share in 2016 and 2017. This is due to developing
products and attracting large number of people. Robinson is growing rapidly in retail market in Malaysia. This has affected parskon
growth. Also, Senheng electric is giving intense competition to both companies.
PROPOSED STRATEGY
In order to develop proposed strategy it is necessary to conduct internal and external environment analysis. This will help in
identifying the weak areas and improving it. It includes SWOT and TOWS analysis.
Swot Analysis:
Strengths Weakness
0
1
2
3
4
5
6
7
8
9
10
Year
Million per year

 Parkson is having a good and positive image in the market
(Richter and Torstensson, 2016). This has enabled them to
gain more competitive advantage.
 Also, Parkson provides a high quality products to their
customers. They have successfully built high class customers.
 Parkson is having strong brand name in different market.
 Its major weakness of Parkson is they only target high class
customers. So they are not able to built large customer base.
 Another weakness of Parkson is they have to face stiff
competition from companies like Isetan and Carrefour. So this
has restricted them to earn huge revenue.
Opportunities
 Parkson can expand in other markets like US, European
market.
 Parkson can also merge with small companies and start their
business as venture capital.
Threats
 The major threat is rise in price of products.
 Also, customer taste and preference can change frequently
(Gallus and Frey, 2016). So they can switch company to fulfil
their needs.
TOWS Analysis:
Threats
 During decline in economy customer might feel that
Parkson products are expensive.
 Also, customer taste and preference can change
frequently. So they can switch company to fulfil their
needs.
Opportunities
 Parkson can expand in other markets like US, European
market.
 Parkson can also merge with small companies and start
their business as venture capital.
Weakness
 Its major weakness of Parkson is they only target high
class customers. So they are not able to build large
customer base.
 Another weakness of Parkson is they have to face stiff
competition from companies like Isetan and Carrefour
(Simon, Fischbach and Schoder, 2014).
Strengths
 Parkson is having strong brand name in different market.
 Also, Parkson provides a high quality products to their
customers. They have successfully built high class
customers.

In this Parkson can follow the Ansoff matrix that will help in developing effective growth strategies. It is explained below:-
Market development- it refers to strategy in which a firm focuses on expanding their business in other markets. Generally, this is
implemented in order to grow and develop at global level. As Parkson has expanded their operations in Asian countries, they can
focus on other nations like India, China, etc. where vast number of opportunities exists. With this Parkson can attract a large number
of customers. Also, they can earn huge profits.
Product development- in this strategy company expands their operations by developing products in existing market (Carroll, Primo
and Richter, 2016) This is done by identifying needs of people and then producing products. Basically, company follows this strategy
by doing market segmentation. As Parkson belongs to retail sector they can develop variety of products. This will enable them to
attract people of different segments. Along with this, Parkson can provide more services to customers. It will help in increasing their
satisfaction and retaining them.
Diversification – it is s strategy that refers to expanding in new market with new products. Basically, it is followed by large
companies who operate at global level. Parkson can follow this strategy as it will help them to expand in various developing countries
(Simon, Fischbach and Schoder, 2014). By this Parkson will be able to compete with International retails brands.
STRATEGY EVALUATION
It is very important to evaluate and control strategy that is been developed because it helps in achieving goals and objectives
in specific time period. The strategy can be evaluated by using a particular method that is described below :-
Suitability- It means that a strategy must be suitable enough so that it can help Parkson to attain its goals. Suitability is also refereed
to developing strategy by identifying threats and opportunities (Bergh and et..al 2017). For Parkson market development is suitable as
it will help in expanding business at global level. Also, Parkson is already having a strong brand image so it will be easy for them to
implement the strategy of market development. It will help company to increase their presence at global level.
Illustration 2: The Ansoff Model

Acceptability- it means that strategy must be accepted by everyone in organisation. Parkson should also be able to convince
stakeholders so that strategy is accepted. Without the acceptance of stakeholder strategy can not be implemented. Also, stakeholder
gives suggestions on how goals can be achieved. They help in implementing strategy by communicating with suppliers, customers,
etc. market developing is the best strategy that can be implemented. It is because it is less risky. Parkson strong brand image may
attract people from different market. The acceptance from stakeholder can be gained by showing them the benefits of this strategy
(Engert and Rauter, 2016). It can be ensured that it will help in increasing profits. With this Parkson market value will increase.
Feasibility – it means that in order to implement strategy there must be adequate resources available. These resources include,
financial, human resource, etc. thus, in order to implement market development, Parkson must have skilled workforce and huge funds
(Gallus and Frey, 2016). This strategy is feasible enough for Parkson. It is because they are having skilled workforce and strong
financial position. Also, this strategy will enable organisation to increase customer base. There sales will rise resulting in increase in
profits.
CONCLUSION :
This report concludes that there are many factors that can affect business growth and development. It depends on business
how they react to it and what strategies are followed to minimise its impact. In this internal and external environment of Parkson is
discussed. In internal porter's five force model and SWOT analysis is done. This will help in evaluating the competition in the market.
Also, strategy is developed to give an insight on how Parkson can grow and develop in different market. At last it is studied that how
strategies are evaluated so that goals and objectives set are achieved effectively.