An Analysis of Business Strategies for Dixons Carphone's Growth

This report provides a comprehensive analysis of the business strategies employed by Dixons Carphone. It begins with an introduction to the company and its background, followed by a situational analysis that includes internal and external environmental assessments, and Porter's Five Forces. The report examines the effects of the merger between Carphone Warehouse and Dixons, assessing the impact on the combined entity. Furthermore, it explores potential growth strategies using the Ansoff matrix, offering insights into market penetration, product development, market development, and diversification. The report concludes with a summary of findings and recommendations for future strategic directions. The report considers factors such as political and economic environments, technological advancements, and competitive landscapes to provide a holistic view of Dixons Carphone's strategic positioning and growth prospects.

Running head: BUSINESS STRATEGIES FOR GROWTH
BUSINESS STRATEGIES FOR GROWTH
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1BUSINESS STRATEGIES FOR GROWTH
Table of Contents
1. Introduction..................................................................................................................................2
1.1 Background of Dixons Carphone..........................................................................................2
2. Situational analysis of the organization.......................................................................................3
2.1 Internal environmental analysis.............................................................................................3
2.2 External environmental analysis............................................................................................5
2.3 Porter’s five force................................................................................................................10
3. Effects of the merger undertaken by Carphone warehouse and Dixons....................................13
4. Possible growth strategies of the organization (Ansoff matrix)................................................14
5. Conclusion.................................................................................................................................16
References......................................................................................................................................18

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1. Introduction
The assessment of the market environments and the capabilities of the organization assist
the same in developing strategies for supporting sustenance. Paul, Sankaranarayanan and
Mekoth (2016) opined that the different strategies that are created by the organizations assists
the same in developing the resources and capabilities of the same while operating in diverse
international markets. The marketing and expansion related strategies of an organization are
dependent on the assessment of the demand that is encountered by the same. The strategies assist
an organization in developing the competitive growth of the same while operating in a market
facing divergence. On the other hand, the development of the existing processes assist an
organization assists the same in adhering to the specific demands of the customers. Therefore,
the purpose of undertaking the discussion is to assess the diverse range of strategies that are
implemented by Carphone warehouse and Dixons, which has contributed to their success and
growth related factors.
1.1 Background of Dixons Carphone
The concerned organization Dixons Retail plc was a consumer electronics retailer in
Europe. The business offered a variety of electronic goods propositions while adhering to the
diverse range of demands of the customers. The diversity in the line of product offerings helped
the business in upholding the efficiency of the operations while operations in diverse markets.
On the other hand, prior to the merger Dixons held 530 outlets in UK and Ireland and 322 stores
in Northern Europe (Dixonscarphone.com. 2019). The revenue stream of the organization prior
to the merger was £8.213 billion (2013) and after the merger was £ 10,525 million (2018)
(Garside and Farrell 2014). Again the net income of the organization diminished to £166

3BUSINESS STRATEGIES FOR GROWTH
million (2018) from £168.1 million (2013) (Dixonscarphone.com. 2019). It has affected the
growth of the business after the merger with emergence of diverse range of issues. The
concerned organization undertook a merger, worth £3.8 Billion, with Carphone warehouse in
the year 2014 (Garside and Farrell 2014). The Carphone Warehouse Ltd. is a British mobile
phone retailer, which held over 2,400 stores across Europe prior to the merger. The operating
income of Carphone prior to the merger was £ 57.1 million (2013) whereas the net income was £
4.2 million (2013), which clearly portrayed the lack of profitability of the venture
(Dixonscarphone.com. 2019). The merger helped Carphone in enhancing the rate of operations.
However, there are considerable issues that are faced by Dixons Carphone after the merger.
Therefore, the concerned organization must take steps to develop suitable strategies for
enhancing the rate of profitability and sustenance of the same.
2. Situational analysis of the organization
2.1 Internal environmental analysis
Strengths
 Strong brand recognition
 Wider geographical presence
 Frequent innovations in the line of
products and services (Kasemsap
2016)
Weaknesses
 Declining per unit revenue
 High rate of staff turnover in the
organization
 Maximization of the cost of labour
 High cost of replacing skilled
employees
Opportunities Threats

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 Minimization of cost relating to new
product launches and promotions
 Local collaborations
 Maximization of innovativeness
through continuous learning
 Expansion in the developing nations of
Asia
 US-China trade war, Brexit and
economic volatility in the markets
(Becherer and Helms 2016)
 Existence of huge number of
competitors
 Shortage of skilled employees
 The diminishing rate of Operating
income of the business has affected the
capabilities of the same in making
investments related to the R&D
operations
The assessment of the internal environment of the concerned organization has helped in
developing an insight on the capabilities and competencies that are encountered by the same.
The assessment of the strengths and weaknesses has helped in delineating the internal
capabilities and competencies that might be faced by the concerned organization post the merger.
The strong brand name of the concerned organization and the enhanced rate of innovations in the
line of propositions have helped the same in maintaining the efficiency of the operations in
adherence to the changing preferences of the customers (Castaldo et al. 2016). On the other
hand, the wider availability of the propositions in wider geographical regions has helped the
organization in extending the operations in different markets.
However, the declining per- unit revenue of the organization has affected the
uninterrupted flow of operations while adhering to the changing preferences of the customers.

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The diminishing rate of revenue streams has affected the capabilities of the organization in
strengthening the R&D operations of the same (Castaldo et al. 2016). On the other hands, the
growing cost of labor in the different markets has affected the capabilities of enhancing the
operations through recruitment of skilled employees. Again, the higher cost of replacing the
skilled employees due to the maximized rate of staff turnovers has affected the capabilities of the
organization in continuing with the efficiency in the propositions.
The opportunities and threats that are assessed as a part of the SWOT helped in
identifying the diverse range of strategies that might be undertaken by the concerned
organization in order to facilitate the smooth functioning of the systems. In this relation, the
concerned organization might undertake steps to initiate local collaborations with different
supportive organizations. The collaborations will be assisting the concerned organization in
maintaining the effectiveness of the expansion related strategies of the same. On the other hand,
the concerned organization might also take steps to expand in the Asian developing countries
which will assist the business in minimizing the operations cost due to higher supply of skilled
workforce and lower wage rates (Ramanathan, Subramanian and Parrott 2017).
However, the concerned organization faced different issues relating to the US- China
Trade conflict and the imposition of Brexit, which has affected the capabilities of the same in
undertaking expansion in the different economies (Grimmer et al. 2017). The lack of skilled
employees and staff turnovers has also affected the capabilities of the concerned organization in
maintaining the efficient of the operations. On the other hand, the lack of sufficient operating
income has affected the capabilities of the organization in enhancing the R&D operations of the
same, which challenged the competitive edge of the business.

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2.2 External environmental analysis
Political
 Political stability in most of the
countries where the concerned
organization operates has helped the
same in maintaining the efficiency of
the operations in accordance to the
needs of sustenance. The political
stability of the nations has helped the
concerned organization in developing
efficient links with the dealers and
suppliers.
 Free trade policies assisted the venture
in continuing with the expansion
related objectives of the same in diverse
economies. The free trade policies and
minimization of the taxation rates
assisted the business in developing the
activities while adhering to the growth
related needs (Bhatt and Bhanawat
2016).
 Lack of government intervention in the
operations of the venture has helped the
concerned business in improving the

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processes while adhering to the
requirements of the same related to
sustenance.
Economic
 The volatility of the European markets
has affected the capabilities of the
concerned organization in developing
policies in support of its sustenance.
 It has been forecasted that the GDP of
the EU will reach to $23 trillion by the
end of 2019 (Jones, Borgman and
Ulusoy 2015). It will be assisting the
concerned organization in maximizing
the scope of target customers for the
offerings of the business. The enhanced
affordability of the customers will be
assisting the concerned organization in
locating potential buyers for the
offerings.
 The concerned organization might
make use of the leisure related interests
of the consumers in order to position
their offerings. On the other hand,
Cheung et al. (2016) stated that the

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Social
leisure based requirement of the young
generation is growing by 6% per year
with the infusion of latest technologies.
It will be assisting the concerned
organization in attracting the attention
of the potential buyers towards the
offerings that are made by the same
 Yu, Tullio-Pow and Akhtar (2015)
stated that UK’s population is mostly
comprised on the youthful generation
and millennials. The concerned
organization aimed at developing their
products for the millennials. Therefore,
the growing population of the
millennials will be helping the
concerned organization in generating
sufficient revenue from sales related
activities.
 The development of the infrastructural
facilities in UK has helped the
concerned organization in developing
the operations of the same in
accordance to the demand that is faced

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Technological
by the same.
 It has been reported that 90% of the
adults in UK has access to internet
services and are active internet users
(Fecht, Hackethal and Karabulut
2018). The growing rate of internet
penetration in the markets has helped
the concerned organization in making
the target audience aware of the
propositions that are made by the
organization. On the other hand, it
has been noted that more than 79% of
the UK population are active on
different social media platforms
(Sachdeva and Goel 2015). It will be
assisting the concerned organization in
minimizing the cost of promotions
through the utilization of the social
media platforms while gaining
maximum level of exposure.
 The Paris Climate Agreement might
affect the capabilities of the concerned
organizations through stringent policies

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Environmental
relating to environmental conservation
(So et al. 2016).
 Stringent regulations that are developed
by different environment protection
agencies might affect the capabilities of
the concerned organization in
upholding the efficiency of the
operations.
Legal
 Laws relating to data protection (Data
Protection Act 2018) might restrict the
capabilities of the organization in
utilizing the information of the
consumers for developing the existing
processes of the business (Jones,
Borgman and Ulusoy 2015).
 The HSWA (Health and Safety Act
1974) provided the organization with a
list of activities that might be
undertaken by the same with the
purpose of ensuring the safety and
security of the employees working for
the concerned organization (Alic, Agic
and Cinjarevic 2017).

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2.3 Porter’s five force
Threats of new entrants
Weak force
Strong force
 The existing regulations in the markets
support the new entrants. On the other
hand, the threat of switching taste and
preferences of the customers might
affect the capabilities of the concerned
organization in retaining the loyal
group of customers (Kasemsap 2016).
 The enhanced amount of initial
investments that might be required by
the new entrants for creating a strong
competitive force against the concerned