Debenhams: Macro Environment Impact and Strategic Planning Report

This report provides a comprehensive analysis of Debenhams' business strategy, focusing on the impact of the macro and internal environments. It begins with an introduction to Debenhams, a multinational retailer, and highlights the influence of both micro and macro environmental factors on its business strategies. The report then applies the PESTEL framework to assess the political, economic, social, technological, legal, and environmental factors affecting Debenhams' operations. Further, it analyzes the internal environment using SWOT analysis to evaluate the company's strengths, weaknesses, opportunities, and threats. Porter's Five Forces model is used to evaluate the competitive forces within the market sector, and appropriate strategies are devised to improve competitive edge and market position. Finally, the report interprets and devises strategic planning for Debenhams, applying various theories, concepts, and models to produce a strategic management plan with tangible priorities and objectives, concluding with strategic directions, objectives, and tactical actions. The report emphasizes the dynamic and unpredictable nature of the business environment and provides insights for strategic decision-making.

The Macro-
environment

Table of Contents
INTRODUCTION...........................................................................................................................1
Task 1...............................................................................................................................................1
P1. Applying appropriate framework analyse the impact of the macro environment on a given
organisation and its strategies.....................................................................................................1
M1. Critically analyse the macro environment to determine and inform strategic management
decisions......................................................................................................................................4
Task 2 ..............................................................................................................................................4
P2. analysis the internal environment and capabilities of a given organisation using
appropriate framework................................................................................................................4
M2. Critically evaluate the internal environment to ass’s strengths and weaknesses of an
organisations internal capabilities, structure and skill set...........................................................6
TASK 3............................................................................................................................................7
P3. Applying portals 5 forces model to evaluate the competitive forces of a given market
sector for a given organisation....................................................................................................7
M3. Devise appropriate strategies to improve competitive edge and market position based on
the outcomes...............................................................................................................................9
TASK 4..........................................................................................................................................10
P4. Applying a range of theories, concepts and models, interpret and devise strategic planning
for a given organisation.............................................................................................................10
M4. produce a strategic management plan that has tangible and tactical strategic priorities and
objectives..................................................................................................................................13
D1. critique and interpret information and data applying environmental and competitive
analysis to produce a set of valid strategic directions, objectives and tactical actions.............13
CONCLUSION .............................................................................................................................14
REFERENCES..............................................................................................................................15

INTRODUCTION
Strategies are the plan and tactics that helps to achieve desire results on the other hand,
business strategies are long term planned actions that helps business to achieve set goals.
Debenhams is a multinational retailer company in the UK, they have departmental store in UK
and other country (Allen and et. al, 2020). Operations at global level is quite complex due to
contemporary business environment that is uncertain and dynamic, operations of the firm are
affected by the both internal & external environmental factors. Thus, the following project is
highlighting the influence of the micro and macro environmental factor on the business strategies
of Debenhams. Furthermore, the report is focusing on the appropriate business strategy for
improving competitive edge of the business by applying Porter's model in Debenhams. The
ultimate aim behind this study to formulate a business strategy by adopting a range of theories
and concept that will assist in formation of business strategy for the organisational goals and
objective.
Task 1
P1. Applying appropriate framework analyse the impact of the macro environment on a given
organisation and its strategies.
Debenhams also serve their customer in various countries through online shopping, they
have diverse range of product from beauty to home appliances and provide quality of service to
their customer. With having operations within home and outside of company, the macro
environmental factor influence the organisational working of Debenhams. Within a macro
environment, company like Debenhams can understand their role for establishing a strong
system within these macro environmental factor to assure the continuous development of the
organisation along with the improvement in the organisational efficiency. On the other hand,
micro-environmental factor is internal factor such as organisational culture, its stakeholder like
employee, customer and its investors could influence the business strategy in many ways in this
contemporary business environment (Baariu, Gathungu and Ndemo, 2020). Since, Debenhams
have a little control over their micro-environmental factors, but they cannot control or adopt any
control measure over the macro environmental factors, because they are unpredictable, macro
environmental can be better explained in a PESTEL framework for better understanding about
different macro environmental factors.
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PESTEL analysis of Debenhams
PESTEL analysis is a scanning tool that helps the manager of Debenhams to get insight
about the dynamic and unpredictable macro environmental factor that influence business
strategies. Hence, implementation of PESTEL model in context to Debenhams has a strategical
approach to build strong system.
 Political factor
Debenhams has broad operations not within the UK but across other counties also either
physically or virtually through online. However, in the shadow of Brexit the organisations
observed so much up and down due to political implication. Moreover, due to the change in the
trade agreement, freedom to trade goods and service and capitalism on the market and human
resource is adversely affected the business of Debenhams due to excessive competition from EU
(Barik and Kumar, 2018). UK government passed an act in 2015 that decrease corporate tax;
hence, there are more rooms for profit margin with reduction of the corporate tax act enacted by
the government of UK. Moreover, Debenhams have organisational trading in other countries like
Denmark and French, there is political stability issue in these regions due to rising protest due to
enact of Brixit. Therefore, thriving tension pressure and political instability would limit the
growth in these countries.
 Economic Factor
Debenhams have been linked with various activities that are inklined to economic factors.
Economic factor like inflation rate, annual income rate of people of the country, government
intervention in the consumer service and GDP of the country. In context to Debenhams, have
adopted hedging strategy against the issue of currency fluctuation, primary reason behind
adopting this straggy is that major of its material are bought in US dollar. The hedging strategy
protect Debenhams from investing extra cost due to currency change by heeding their operations
for 12-18 months (Bezuhla, 2020). However, Debenhams contribute much into the GDP growth
not within the UK but also on other countries. Human resource are the crucial contributor in
firm’s goals and objective UK have low employment rate, thus Debenhams can acquire potential
taskforce their goals.
 Social factor
Debenhams has to deal with different social factors for their operational working. This is
because society's culture and manner of doing business impact the organisational culture
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strategies. Social factor such as values, believes, education, demographic knowledge. With rapid
growth of the digitalisation, companies are focusing on the e-commerce business (Chanson,
2018). There is extreme growth of online shopping. So in order to provide leisure experience in
shopping, Debenhams is focusing more on the smart phone user that are mainly youths globally
to increase their sales.
 Technology factor
Advancement in the information communication technology make it easier for the
Debenhams to operate in international level, technology upgradtion is fast disruptive factor that
influences the business strategies of the Debenhams. However, in Britain, there is high rate of
technological diffusion (da Silva and Castañeda-Ayarza, 2021). Therefore, Debenhams must
upgrade with the technological changes in order to have same technology which their competitor
like Tesco and Mark & Spencer have. However, retail market has changed globally and
consumer are demanding for new technologies. There is constantly improvement in the in-store
technology. Moreover, today everyone is using mobile for shopping through online, Debenhams
are making effective use of mobile technology by providing online shopping mode for their
customers.
 Legal Factor
Legal factor are various laws and regulations that a business have to obliged for its
legitimate operations. legla factors have to be followed by company to eliminate obstacles in
operations and trading. The employees of Debenhams get benefit from the legal laws of UK like
maternity leaves, minimum wage system, sick pay and many other policies which help
employees to be motivated to work for a longer period of time within the company (Dastjerdi
and Beni, 2019). The taxation policy of UK is also favourable for the company because
cooperate tax in UK is 19% which is lower than other countries.
 Environmental Factor
The environmental factor of UK is favourable to company except its climatic conditions
and pollution control which changes very frequently. The rate of natural event of storm and
floods in the country is high as compared to other countries. Pollution is another factor which
create negative impact on organisational workingt, On another hand environmental factors
provide benefit for Debenhams such as customer buying behaviour of UK is good, they prefer
qualitative goods and the population is willing to spend more on quality or products. Hence,
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environmental factors of UK are beneficial only when Debenhams analyse it perfectly before
taking any decision.
However, it has been critically evaluated from the above discussion that macro
environmental factors affects the business operations in many ways because a organisation has
little or few control over these factors and most of the elements of the external environment can
impact the firm but generally beyond its direct control and adversely affect the business
strategies. For instance, the impact of the Brixit can affect the supply chain and affect the
business strategies in the EU nations. Other than this, management have little control over these
factors. It has been critically evaluated that macro environmental factors brought both
opportunities and thereat for the business that would hamper the organisational strategies of the
firm.
M1. Critically analyse the macro environment to determine and inform strategic management
decisions
In context of Debenhams, PESTEL analysis is a scanning tool that helps the manager of
Debenhams to determine the external environment which impact on daily functioning of the
company. Moreover, determining macro-environment factor Debenhams can analyse its strength
and weakness in order to formulate competitive business strategies. From the above analysis of
macro environmental of Debenhams it is clear that technological factor is favourable to company
because UK is strong in terms of technology as they are developed country so they adopt new
technologies as soon as possible to counter market competition.
Task 2
P2. analysis the internal environment and capabilities of a given organisation using appropriate
framework
Internal environment consist of all those factors which occurs in an company and affects
internal operations of company and in contrast to this relevant frameworks such as
SWOT/TOWS can be used to determine the internal environmental capability of Debenhams .
Few examples of internal environment are management system, culture, organisational structure
of company. Company has to face loss because of internal environment errors which creates
conflicts within the organisation. Internal environment has many impacts on business (Golovko
and Kuznetsova, 2018). Inappropriate environment cause conflicts, employee’s demotivation,
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lacking behind in completing task on time, indiscipline and many other causes which pull
company downwards in their operations and in their success whereas favourable internal
environment helps company to lead the market. In context of Debenhams internal environment
impacts company in many ways and some are explained below-
Strength-
 Debenhams has good culture and flat
organisational structure which is the
biggest strength and this help them to
work smoothly within the organisation
and it also helps in gaining more
goodwill.
 Their product differentiation makes
them more stronger than other
companies by providing different kind
of products (Kawecki, and Nowack,
2019).
 Debenhams have strong distribution
channel which help them to transport
their goods from one place to another
very easily.
 Debenhams execute new projects
successfully which help them to grow
faster. Debenhams provide good services to
their customers which help them to
gain more goodwill for the company.
Weakness-
 Unique selling proposition of
Debenham is not clearly defined which
gives a negative image in their
customer’s eye.
 Debenhams did not cover all customer
segments in market due to which they
lack behind in presenting themselves
globally popular (Idris, and Rahman,
2018).
 They are not good at demand
forecasting because they are not
focusing on feedback of customers.
 The representative company invest less
in research and development
department which impact company in
negative way because of this reason
they are lacking behind to analysis
whether their product is made
appropriately or not to meet customers
needs.
 Debenhams are not able to handle the
force created by new entrances in
market and because of this they lack
behind to capture small market shares
in niche categories.
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Opportunity-
 By manufacturing new products which
is trending in today's scenario is the
biggest opportunity for Debenhams.
 Using advanced technology to increase
the quality of product will help the
company to attain more customers and
earn more profit.
 Investing more in new and advance
technology help them to fulfil customer
need by preparing good quality of
commodities.
 Adopting a different method like a
unique mobile app for online purchase
of Debenhams products only with free
delivery charges makes their business
more popular. By making alliances with overseas
companies, Debenhams can mitigate
the risk associated with political factors
and can help in smooth functioning of
business operations.
Threat-
 Shortage of skilled workforce in some
countries is another threat for the
mentioned company.
 High prices of raw material create
impact on higher prices of finished
goods which results in switching of
their customers to other brands
(Khodyakova, Mitin and Khukhlaeva,
2018).
 Debenhams is operating its business in
many countries. Value of currencies are
different in different countries. Hence
they have to suffer from currency
fluctuations as well as unstable political
conditions of many countries in which
they operate their business.
 Debenhams mostly focuses on
providing good quality of products
whether the price goes high because of
this threat they have to shut down their
most of the stores in other countries.
(Kong and et. al., 2021). Critically evaluation of the business position of Debenham
As per the evaluation of the internal capability of the firm, Debenhams has high brand
image in the eyes of customers in market. This will help them to explore various marketing
opporutnities while forming its business strategies. Other than this if company made alliances
with foreign companies, Debenhams can rationalize the risk associated with political factors and
can help in smooth functioning of business operations. However, company is lacking behind in
making appropriate planning for financial analysis and because of this only they have to face
unwanted and unexpected
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M2. Critically evaluate the internal environment to ass’s strengths and weaknesses of an
organisations internal capabilities, structure and skill set
Internal environment evaluation tool helps Debenhams to identify its strength and
weakness in regards to organisational internal capabilities. It has been observed that there are
many internal factors which affects business strategies of Debenhams such as relationship
between management and employees, organisational structure of company and etc. Moreover
data gathered from internal environmental evaluation support Debenhams to develop strategical
business planning and to carry on business objectives smoothly. Debenhams core strength is their
skilled employees with greater knowledge of customer service.
TASK 3
P3. Applying portals 5 forces model to evaluate the competitive forces of a given market sector
for a given organisation
Portal 5 forces is a framework to analyse the competitive factors of a company in market.
This model further helps to lead the market by understanding competitive strategies and helps to
compete with other companies in market. Portals 5 forces is helpful to companies for surviving
in market and it is also useful in initiating for new and innovative ideas for attaining customers
and suppliers and to analyse effect of new entrance on company. Evaluation of porters 5 forces
of Debenhams are explained below-
Threat of new entrance-
This factor consists of entry of competitors, entry of mentioned company in new markets
and etc. In context of Debenhams, they have tough competition because UK has easy entry
policies of any organisation. Hence, more entries of companies means more competition with
some different competitive strategies of other companies which is not good for Debenhams.
Entry of new companies allow Debenhams customers to switch their preference to other
companies which reduces total number of Debenhams customers (Lin and et. al., 2020). To
overcome this factor Debenhams can introduce new products and modify their competitive
strategies on timely basis so that new entrance of any organisation could not affect them and by
changing competitive strategy on regular basis will confuse their competitors to analyse
Debenhams strategies.
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Threat of substitutes-
Sometimes consumers switch to other products because these products are cheaper in
prices than original product because these products have similar features and characteristics and
this kind of goods are called substitute goods. Availability of substitute goods affect the business
because Debenhams competitors who produce substitute goods set the lower prices than
Debenhams products and their customers and suppliers switch their preferences to other
companies. Substitute goods automatically enters in market when a company becomes famous
and Debenhams is one of the most liked and preferred brands of customers (Mihajlović and
Raguz, 2018). In case of Debenhams their brand image is high. Therefore, substitute goods will
not affect a lot to company. But every obstacle should be remove. So, to overcome this threat,
Debenhams must focus on services which they are providing to their customers because there are
many substitute goods but there is no substitute of services because services are heterogeneous in
nature which means services are not same. Modifying their products on regular basis based on
customers demand and allowing discounts and other offers is also a good strategy to save
themselves from substitutional threat.
Bargaining power of suppliers-
This factor consists of total number of suppliers and their behaviour toward specific
company. There are many Suppliers of Debenhams which are presented across the country, but
recently their most of the suppliers are switching their services to other companies by providing
their raw material to other companies instead of Debenhams because Debenhams is not
providing suitable prices for the raw material provided by their suppliers and because of this
reason their competitors such as John Lewis and Mark & Spencer take benefit and offer high
price to Debenhams suppliers. To overcome this issues company must take some measures like
offering some good offers which is in favour of both suppliers as well as in favour of company to
make supplier loyalty more stronger (Mir and Mir, 2019). Company must build good relationship
with their suppliers and with other suppliers also so in case of shortage of suppliers they switch
to other suppliers immediately.
Bargaining power of buyers-
It includes the total number of customers of a specific company and their behaviour
toward that company. Customers must be loyal for a company for companies benefit.
Debenhams has more than 19 million customers which is not less and their customers are brand
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loyal too, they did not switch to other brand because the quality which customers want is
provided by Debenhams. Hence, this threat does not impact upon company. The behaviour of
customer is to purchase best quality of goods and services in minimum price availability in
market. Debenhams provide discounts and offers to their customers to attain customers loyalty
and to gain more customers (Otieno, Ogutu and Pokhariyal, 2019). To increase total number of
customers of Debenhams, they must introduce new varieties of products and to modify existing
one on regular basis. Reduction in price is also a good strategy for attaining more new customers.
The company must focus on service providing facilities because nowadays customers are more
attracted toward those companies who provide good services with their products.
Rivalry among the existing competitors-
competitor rivalry includes total number of competitors and strategies of competitors
which affects operations of a company. In context of Debenhams, they survive in a very
competitive industry. Their strongest competitors are Marks & Spencer, John Lewis and many
others whose competitive strategies are impacting negatively upon Debenhams. Hence, this is
one of the most sensitive factor for mentioned company, a little irresponsibility in analysing
market competition can cause a big loss to company like loss of consumers.(Tagliabue, 2021).
To overcome this factor of strong competition in market, Debenhams must invest more in
research and development department to analyse the market demand of customers. Secondly, the
company must has to notice and record their competitor’s strategies and rectify their own
strategies according to their competitors strategies. The representative company must hire
experienced employees for analysing competitive factors for their company.
Appropriate strategies in context of Debenhams using porters model
It has been critically eventuated that after applying porter's 5 model, company can
consider generic strategies to improve business competitive advantageous strategies based on its
market position. Generic strategies are used to develop competitive edge strategies, in context of
Debenhams differentiation strategies of creating unambiguously enviable products and services
and also cost focus strategies to gain market competition over its other competitor so that
company can minimise the bargaining power of the supplier
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M3. Devise appropriate strategies to improve competitive edge and market position based on the
outcomes
From the evaluation of the Porter's 5 model, it has been derived that Debenhams are
operating in highly completive market, thus management should focus on competitive strategies
to put its competitor under its neck. However, Debenhams has high probability of new enterer
but they had scattered long roots in UK market so they are no fear of new enterer. In Debenhams,
they have to make strong strategies to overcome the threat of bargaining power of suppliers and
rivalry among existing competition. They adopted strong relationship supplier strategies to retain
faith or loyalty of their suppliers in order to avoid shortage of inventory to fulfil market supply &
demand. Whereas bargaining power of buyers and substitute products did not have much impact
on Debenhams because they have adopted lower price strategy as compare to monopoly price
and it also offer attractive offers to customer to get competitive edge over its substitute company.
TASK 4
P4. Applying a range of theories, concepts and models, interpret and devise strategic planning
for a given organisation
Strategic planning consists of future oriented activity which is to define in advance by
analysing various factors and choosing the best strategy which is beneficial for an organisation.
Some of the models and theories in context of Debenhams are explained below
Ansoff Model- Ansoff Matrix has helped many marketers and executives to find out the
risk inherited in growing their business. There are four strategies which are explained by the
Ansoff for effectively expansion and growth of business. These four strategies which are
discussed as underneath: Market Penetration:- In market penetration, company tries to grow and expand its
business or operation using the existing offerings (products or services). Gaining profit
from existing product in existing market are consist in market penetration. In context of
Debenhams, they are already performing well in this segment by providing good quality
of products. Another way for growth in this strategy is to increase productivity to meet
the demand of customers on time (Yang, Geng and Feng, 2020). Hence, Debenhams
already considered this strategy in market.
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