Analyzing Internal and External Environment of Waitrose using SWOT and PESTLE Analysis and Porter's Five Forces Framework
Verified
Added on 2023/06/17
|14
|3687
|182
AI Summary
This report analyzes the internal and external environment of Waitrose using SWOT and PESTLE analysis and Porter's Five Forces Framework. It examines the strengths, weaknesses, opportunities, and threats of the brand and evaluates the impact of competitive forces.
Contribute Materials
Your contribution can guide someone’s learning journey. Share your
documents today.
Strategy Enterprise and Innovation
Secure Best Marks with AI Grader
Need help grading? Try our AI Grader for instant feedback on your assignments.
Table of Contents Table of Contents.............................................................................................................................2 INTRODUCTION..........................................................................................................................3 TASK...............................................................................................................................................3 Analyze the internal resources and capabilities of an organization.............................................3 Examine the external environment of the business......................................................................6 Using Porter’s Five Force framework to evaluate the impact of competitive forces...................8 CONCLUSION............................................................................................................................11 REFERENCES.............................................................................................................................13 Books and journals:....................................................................................................................13
INTRODUCTION Waitrose is one of the famous supermarket in British administration.In 1904,it was founded as Waite, Rose and Taylor, later it shortened to Waitrose. In 1937, the company was acquired by John Lewis Partnership that is an employee owned retailer, which sells merchandise under the name of this company. Itwas headquartered in Bracknell, Berkshire and Victoria, London, UK. It is recognized as the eighth largest groceries retailer in the country. It has 332 shops, involving 65 “little Waitrose” convenience shops across the UK. It has allocated their business in over 52 countries(Alfayad, 2021).It owns royal warrant to supply spirits, wine and groceries to Queen Elizabeth II.The following report will analyze internal and external business environment as well as porter's five forces framework will be used in order to identify the impact of competitive forces. TASK Analyze the internal resources and capabilities of an organization. Business strategies defines a sum of competitive moves or actions that a company uses to strengthening its performance, attract customers, achieve organizational goals as well as to complete successfully. SWOT analysis helps to examine the strengths, weaknesses, threats and opportunities of business. In context of Waitrose, it is a management tool that enables it to benchmark its performance and competitive edge in the market. The following is the SWOT analysis to examine the internal environment of the brand: Strengths- One of the biggest strengths of the brand is that it has its own brand in order to sell its product with private label, which are mostly all of them faitrade or organic, free range, consisting their own products which encourage their new and healthy lifestyle of their consumers. The chosen company owns farms working with its farmers, suppliers and growers. It also ensures to maintain its business standards in safety, quality, animal welfare and environment across its chain of supply assisted by its own farm insurance schemes and inspections. A healthy bond with their farmers is also essential as it can guarantee that the goods will be reliable and expected. The chosen company shares a significant partnership with John Lewis, which advances the brand
image and reputation in the market(Areiqat,and et.al., 2021). This partnership also helps to diversify the risks. Diversification in product range would be helpful to achieve competitive edge in the marketplace. Weaknesses- There are several customers who have the perceptions that the chosen company as a retailer for few high earners and do not shop from the Waitrose stores. Various writers, independent analysist and newspapers also described as having “an upmarket image”. This kind of perception about the brand is very costly, resulting big loss of market. It is popular as one of the largest store which has 5.1% market share, but somehow, it is far behind the Tesco which has 27% shares of market. It is also struggling to compete with Lidl and Aldi. Opportunities- The chosen organization can opt for market penetration strategies to advances its sales and secure its market share in the nation. This can be attained by facilitating consumers with effective schemes and value for money(Battisti, Agarwal,and Brem, 2021). Additionally, further expansion of business at global level and franchise agreement is worth exploring. Threats- It has huge competitors in the market such as Tesco, Aldi, Lidl, ASDA, Sainsbury's, Morrison's, Iceland, Co-op and many more. All such companies heavily impact profits and market shares of Waitrose. VRIO Analysis Waitrose uses the VRIO analysis addressing the customer happiness and satisfaction, competitive benefits and value additions. The use of this framework has been very crucial for the company in determining the methods in which all the business operations corporate. The structure of VRIO have four issues that consist value, rarity, imitability and ability(Gobble, 2018). For chosen organization, it has been working vigorously to enhance its value of itsgoods and services. The VRIO analysis of Waitrose company mentioned at each point whether these resources could be enhanced to take comparative benefits: Valuable:
Paraphrase This Document
Need a fresh take? Get an instant paraphrase of this document with our AI Paraphraser
Employees are valuable human resources for the company as they are highly skilled and trained, also their loyal to the company which aids company to be more productive. It delivers local food products. Brand reputation.Financial resources are valuable to the company as they are support combatting outer threats and assists in investing in external growth opportunities. Rarity: Financial resources are rare for the company as it is strong and it can be found only in rare companies. Local food products are not rare as these are easily available in the market but quality products are rare for the company(Do Vale, Collin-Lachaud, and Lecocq, 2021). Employees are rare for the company as they provide special training programs to improve their skills and knowledge which make business profitable.Brand reputation is rare for the Waitrose. Imitable: Employees of the chosen organization are not costly to imitate as found by the VRIO analysis. It is because other companies also provide training facilities for their employees to improve their knowledge and skills(Gupta, 2021). Financial resources are costly to imitate is found by the analysis. Financial resources have been acquired by the business through prolonged revenue over the past years. Local food products are not costly to imitate as found in the analysis. It can be acquired by its competitors very easily.The brand reputation is imitable. Organization:
Financial resources are very well organized to gain the value for the business. These resources are utilized very tactically to invest in the appropriate places, combatting threats as well as making use of opportunities. The company is highly organized its brand reputation(Huo, 2021) Employees are organized by the company as every functional department in the company is filled by the right knowledge and talent. Local food products for the company are well-organized. Examine the external environment of the business. Pestle analysis is a proven tool of management used to achieve a big picture of the external environment of the industry. It includes factors such as political, social, legal, economic, environmental and technological(Isckia,2021). In context of Waitrose, in order to know the impact of such factors on the business, the following is pestle analysis: Political factors: There are lots of political issues that have been faced by the company that led to the boosted market holds and ineffective results of the financial progress. One of the major issue was found in South Africa. In this regards, it has been found that citrus fruits that were produced by the business in South Africa led to the creation of different production levels, due to the differences in political issues of the nation(Hong and et.al., 2019). Moreover, the political issues have been solved by the company by providing healthy scheme of payments to the growers. Another issue raised in the UK is Brexit which results in financial crisis. However, the brand has a good image in the market so it was able to recover. Economic factors: It has been observed that economic stability of the Waitrose has been sustained in the past years as its financial stability facilitates them with the infrastructure to face the recession. It has been due to the strong financial stability of the UK and rigidity in their business strategies in order to continue manufacturing the foods superior quality in comparison with other retailers in the country(Kurt, and Yazıcıoğlu, 2021). Social factors:
Economic factors are stable in the country, the demand for the superior quality products was the initial demand for the citizen of the country and this has been positively fulfilled by the organization by providing finest products in the country(Jiaand Lin, 2020). It is found that it was the first organization which deliver organic products among the citizen of UK. Technological factors: These factors include and relate to modifications in technologies that may impact the business operations of the market and industry favourably or unfavorably. In context of Waitrose, these are research and development, automation and the amount of awareness related to technology that market owns(Lagorio, and Pinto, 2021) Legal factors: These factors affect the working environment of the chosen company such as health and safety laws, competition laws or workers’ laws. In UK, workers’ laws are highly regulated such that an organization has to abide by the sex discrimination, disability, pension laws, racial and many more. These laws in turn impact the business of Waitrose, so they have to formulate the policies in accordance to these laws(Xiaobin and Jiawei, 2021).For instance, in South Africa formulation of policies help farmers as they give education facilities, several medical benefits and many more. Environmental factors: These factors are often affecting the external environment of business. It involves environmental protection laws, energy consumption and waste disposal. The chosen company is majorly affected by these factors as they deal into vegetables and fruits which are in turn impacted by these changes(Lamey, and et.al., 2021). Hence, the company have to keep a close eye on environmental issues. Also, the company has reduced the energy consumption and try to source electricity from sources which are renewable in nature. It has been identified from the above analysis is that external environment factors are those factors which are beyond the control of business. There are some factors that drives change in the organization such as technology, competition, social conditions, economy, resources laws
Secure Best Marks with AI Grader
Need help grading? Try our AI Grader for instant feedback on your assignments.
and regulations, labour markets and many more.Hence, managers of the company required to identify the methods to face and overcome the changes effectively. Using Porter’s Five Force framework to evaluate the impact of competitive forces. Michael porter's five force analysis focuses on the external factors in an industry that influences the competition within it, but within the industry these competitions provide high profitability for the business. An organization needs to acknowledge the dynamics of the markets and industry with an aim to deliver tough competition in the marketplace. Porter explained the fiveforcesthatdrivescompetition,rivalryamongthepresentorganization,threatsof alternatives, bargaining power of suppliers, bargaining power of customers and the threat of new entrants(Li,and et.al., 2021).In order to evaluate the impact of competitive forces and to gain competitive benefits for the Waitrose, the following is using the Porter’s five forces model:
Level of competition:The first one in the analysis refers to the number of rivalries and their capabilities to undercut an organization. The large number of rivalries as well as number of equivalent goods and services they provide in the target market, the lesser the power of an organization. Customers and suppliers seek out competition if they are able to facilitate a better prices or deal(Majumdar,and Guha, 2021). In the supermarket sectors, the level of competition is very tough and high. With an intention to give tough competition. the chosen organization not only sells food and drink products but they are also focused on household and apparel products. Apart from this, it always tries to offer the quality goods and services that creates a differentiation among others. Additionally, it has been exaggerated by a lot of risk such as declining the value for the scope of specialization and devaluating of the brand.The level of competition is very high for the Waitrose as there are many competitors such as Tesco, Sainsbury’s and many more.Threat of substitutions:A threat is exposed to the organization when there are substitutes of their goods and services. Organizations that delivers products and services for which there are no close alternatives will have more influencing power to get the increased prices and fix in favorable terms(Wang and Zhang, 2018). In fact, there are no
alternatives for the foods and clothes. It will assist in making the treat for the alternative that are available in the industry. The main competitors of the chosen organization are Marks and Spencer's, ASDA, Tesco, Peter Jones. Tesco and ASDA launch a less affordable substitute which means that the threat of substitutes are very high.The threat of substitution is very high for the company.Threat of new entrants:The power of an organization is also affected by the force of new entrants into the target place. An industry with strong obstacles to entry is suitable for the current organization within the sector since the organization will be able to negotiate or charge higher prices(Melles and Drummond, 2020).The threat of new entrants is very low because of the requirement of massive capital investment for a successful chain store.Moreover, the retail and supermarket factors are also considered as the mature and new entrants in such markets is quite difficult.Bargaining power of suppliers:This factor addresses that how suppliers can run the costs of raw materials(Pei, and Guo, J 2021). If there are lots of suppliers in an industry than the organization has more bargaining power or vice versa.In retail industry, the bargaining power of suppliers is low due to the high availability of substitutes. The chosen company is having a high turnover which becomes the reason that customers purchase products from their stores. Additionally, the company also prefers to purchase raw materials instead of final goods in order to increase the profit margin for the business.The bargaining power of suppliers is low to moderate.Bargaining power of customers:It is one of the vital factor in the analysis which addresses the abilities of buyers to drive the prices of products lower. Whether the company has strong or smaller customer base, the buyer has more power to bargain on negotiate for the reasonable prices(Payraudeau and et.al., 2021). In the supermarket or retailindustrythebargainingpowerofcustomersisveryhigh.Thereishigh concentration of the customers that give the privilege to consume or taste new goods and services. The cost of switching the goods and services is very minimal that is why the alternatives are present in high number.The bargaining power of buyers is very high because there are many options available for them for which they can switch. Value Net Framework-
Paraphrase This Document
Need a fresh take? Get an instant paraphrase of this document with our AI Paraphraser
The value net model explains that competition and cooperation between companies are both desirable and necessary when conducting business. This framework explains and examine the behavior of various players within the industry. In this framework cooperation is needed to boost the advantages to all competitors where as competition is required to categorize the current advantages among suchcompetitors.In case of Waitrose, to produce a framework it is supportive to consider the five elements of players, added value, rules, tactics as well as scope:Players:It is the first step in which organization should determine its competitors or players in the relevant industry or game that it operates in. These players include suppliers, customers, competitors and complementors. External players who are not the part of the game should also be focused(Pflaum and Gölzer, 2018).In case of the chosen organization, it must examine each and every player to determine the potentiality for the future strategic alliance.Added value:It explains what each player in their particular role can deliver a potential alliance. The company conducting this model should also be determined the value it delivers through competitive advantage or USP.Rules:Each game and industry has its own regulations as well as rules and these can hinder the growth and development of abusiness.In case of Waitrose, it can find the players who can remove some of these barriers through collaboration and partnerships Tactics:Competitive organization is dynamic, complicated as well as uncertain game. Most of the organizations also use strategies or tactics to influence the behavior of other players in thegame(Xu, Bo, and Chen, 2021). Scope:By its nature, games are not static entities. Businessman should always be prepared for the scope that can shrink or expands according to the market conditions or its fluctuations. CONCLUSION It has been concluded from the report is that business strategy involves a set of actions which helps company to gain long-term objectives for the business. The report is mentioned with different tools to analyze the internal and external environment of working. In order to analyze
the external environment, Pestle framework is used which involves factors such as political, economic,andtechnologicalandmanymore.SWOTanalysishelpstoknowtheinner capabilities of the business. Porter’s five forces framework consists with five forces that are competition, bargaining power of customers, bargaining power of suppliers, threat of substitutes and threat of new entrants. This will help to gain the competitive benefits in the industry.
REFERENCES Books and journals: Alfayad, F.S., 2021. The Impact of Bank Performance Towards Technology and Marketing StrategyonOmni-ChannelAdoptioninSaudiBankingSector.Cuadernosde Economía,44(124), pp.33-41. Areiqat, A.Y., and et.al., 2021. ARTIFICIAL INTELLIGENCE AND ITS DRASTIC IMPACT ONE-COMMERCEPROGRESS.AcademyofStrategicManagementJournal,20, pp.1-11. Battisti, S., Agarwal, N. and Brem, A., Creating new tech-entrepreneurs with digital platforms: meta-organizations for shared value in data-driven retail ecosystems. Do Vale, G., Collin-Lachaud, I. and Lecocq, X., 2021. Micro-level practices of bricolage during business model innovation process: The case of digital transformation towards omni- channel retailing.Scandinavian Journal of Management,37(2), p.101154. Huo, J., 2021. Supply chain coordination. InAdvances in theory and practice in store brand operations(pp. 211-253). Springer, Singapore. Isckia,T.,2021ASTUDYONAMAZON:INFORMATIONSYSTEMS,BUSINESS STRATEGIES AND e-CRM A STUDY ON AMAZON: INFORMATION SYSTEMS, BU... Kurt, M.M. and Yazıcıoğlu, O., 2021. Competitive strategy selection in retail E-Commerce using IF AHP & TOPSIS methodology.Journal of Intelligent & Fuzzy Systems, (Preprint), pp.1-21. Lagorio, A. and Pinto, R., 2021. Food and grocery retail logistics issues: A systematic literature review.Research in Transportation Economics,87, p.100841. Lamey, L., and et.al., 2021. Retail service innovations and their impact on retailer shareholder value: Evidence from an event study.Journal of the Academy of Marketing Science, pp.1-23. Li, X., and et.al., 2021. Analysis on the Current Scenario of Succession in Small-to-Medium- SizedEnterprisesinMainlandChina:Succession,InnovationandInternational Transformationin Family Firms.Succession and Innovationin Asia’sSmall-and- Medium-Sized Enterprises, pp.163-200. Majumdar, S. and Guha, S., 2021. Introduction: In Search of Business Models in Social Entrepreneurship—Concepts and Cases. InIn Search of Business Models in Social Entrepreneurship(pp. 1-11). Springer, Singapore. Pei, F. and Guo, J., 2021, March. Transformation Path of Fresh Food Enterprises’ Supply Chain in theNewRetailEra——DoubleCase Study Based on Baiguoyuanand Daily Youxian.InTheInternationalConferenceonCyberSecurityIntelligenceand Analytics(pp. 567-573). Springer, Cham.
Secure Best Marks with AI Grader
Need help grading? Try our AI Grader for instant feedback on your assignments.