Deliveroo: Business Environment Analysis for Strategic Expansion

This report examines the business environment of Deliveroo, a rapidly growing food delivery company. It begins by discussing the organizational structure Deliveroo should adopt, comparing flat and functional structures, and recommending the latter for its scalability. The report then conducts a PEST analysis for Deliveroo's potential expansion into Beijing and Cairo, evaluating the political, economic, social, and technological factors in each city. The analysis reveals that Beijing offers a more favorable environment due to strong economic growth, high internet usage, and supportive government policies. Finally, the report addresses the competitive environment Deliveroo faces, implicitly highlighting the need for strategic adaptation and market understanding for successful expansion. The report concludes that the functional structure is more suitable for Deliveroo's growth.

Business Environment

Table of Contents
INTRODUCTION...........................................................................................................................1
Assignment Tasks............................................................................................................................1
1. Organizational structure..........................................................................................................1
2. External environment..............................................................................................................2
3. Competitive Environment.......................................................................................................5
CONCLUSION................................................................................................................................7
REFERENCE...................................................................................................................................9

INTRODUCTION
There are many organizations that provide their customers with similar products and
services. These companies face diverse set of issues that affects the business internally and
externally (Abushaiba and Zainuddin, 2012). Firm can make changes in their operations and
solve the internal issues. However, organization do not have control over external factors . It can
just develop steps that can help management to reduce the impact of factors that affect
externally. In this context, it includes internal factors like employees, customers, suppliers,
organizational structure, culture, etc. On the other hand, external factors includes change in
technology, policies, climate, taste and preference of customers, etc. (Segatto, Inês Dallavalle de
Pádua and Pinheiro Martinelli, 2013). This report is about Deliveroo which is one of the fastest
growing company. It was founded in the year 2013 and is headquartered in London. Main aim of
this firm is to bring world's local restaurants into everyone's office or home. This report covers,
organizational structure that should be used by cited firm. Further, it covers PEST analysis for
two cities in which Deliveroo wants to expand their business. Lastly, it also includes competitive
environment within the market that is faced by Deliveroo.
Assignment Tasks
1. Organizational structure
There are different type of organizational structure that can be followed by Deliveroo.
Organizational structure can be determined as the process in which activities are coordinated,
supervised and tasks are allocated (Al-Swidi and Al-Hosam, 2012). To make the business
operation operate in a systematic manner. Below given are the tow organizational structures that
can followed by Deliveroo:
Flat organizational structure: AS per this organizational structure, there are few level
middle management among executives and staff. This type of structure enables the organization
to have effective interaction with all the levels. As per the start up organization, this structure is
high effective. Employees interaction is preferable as it helps to identify the issues that are faced
by them at different levels (Gurjar and Rathore, 2013). It does not clarify the type of roles and
responsibilities that workers would play. However, when any type of requirement is identified,
then management would convey it employees and they will perform that particular part of job.
There is a senior manager who will look after all employees and he/she will direct and guide
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them so that they perform their role in an proper manner. This enables to develop a strong
relation with each other and all know about how is the performance of all workers. Accordingly,
areas in which employees are identified easily and strategies are developed so as to overcome the
issues (Khanagha, Volberda and Oshri, 2014).
Functional organizational structure: In this type of organizational structure, management
develops different departments that work for various areas. In this context, it includes
departments like marketing, finance, operations, human resource, etc. Each of the department is
guided and controlled by a manager who would make use that the work performed by employees
is helping in achieving organizational goals and objectives. However, one of the main issue in
this structure is that workers do not have direct interaction with top management. All the head of
department are guided by top management (Johnson and Turner, 2015). All the decision are
given top management and it has to be followed by others. It takes time to implement the
changes or strategies that are given by top managers and information flows from top to bottom.
The department head has high experience and knowledge relation to his/her area. They make
sure that workers make use of their full potential towards the work given.
Among these two organizational structure, Deliveroo should make use of functional
structure as the firm is growing drastically and they are expanding their business at different
markets. In this context, they have to hire more and more employees so it is important for them
to make division as per different areas (Eikeland, 2014). With this respect, it can be stated that
for Deliveroo, functional structure will be favourable.
2. External environment
In accordance with the case, Deliveroo wants to expand their business. In this context,
two markets they will make their business expansion are China and Africa. More specifically,
cited firm will choose cities like Beijing and Cairo. These cities will enable to make their
business to grow. PEST analysis can be determined management tool that helps to assess macro
environmental factors (Grant, 2016). It enables the organization to make decision for their
business and to develop strategies that would reduce the risk. With this respect, below given are
the PEST analysis for these cities that will enable to know environmental conditions:
PEST analysis for Beijing:
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Political factor: There are many factors that affects the political factors. In this context, it
includes government regulations, legal issues, fiscal, monitory policies, etc. In Beijing both
informal and formal rules are adopted and it is important for any organization to follow them.
Currently, government is aiming at development and use of e-commerce. This is gradually
increasing the use of online purchases (Harmon, 2014). In perspective of legal framework in
relation to e-commerce is at early stage. In this context, the experience that government of China
has is little for topics like tax and intellectual property rights protection. However, the
regulations in relation with online selling is not proper but people prefer to maker consumption
through online. Further, there are favourable monitory and fiscal policies and so cited firm that is
Deliveroo will be able to make their business expand.
Economic factors: When compared with the economic condition of China, it has
gradually increasing (Rashid, Asif and Nicolescu, 2013). As the rate of GDP is high, local people
of Beijing are able to spend highly. This is favourable for Deliveroo. Further, the rate of interest
that is provided banks is very high. This enables people to get high rate of returns. Further, it is
also beneficial for cited firm as they will be able to make high sales as people will make use of
the services. However, there are situations in which the economy of Beijing gets affected due to
high property price and high inflation rate. In such situations the growth and sale of the firm will
get affected as local people will not be able to spend over the services that are provided to them.
Social factors: Demographic constantly changes and so cultural and social aspect play
vital role (Gillon, Brynjolfsson and Gupta, 2012). The type of lifestyle, population, religion, etc.
has high impact over the business. China has the highest population in the world. This is
beneficial for the firm like Deliveroo as more and more customers will make use of the services.
The rate of internet users are very high and when the population is high, then the rate of people
who will make use of the services will also be high and this will enable to build strong customers
base. As per the date there are about 420 million internet users and as per the culture of local
people they often shop online. With development of e-commerce, it has changed the way of
purchasing and it has also reduced the risk of online.
Technological factor: China is a market in which were changes in technology take place
frequently (Yu, Lumpkin and Brigham, 2012). People make use of new technology and this is
helpful to provide them high quality services. The internet users are safe as the technology that is
used in China is so advanced that the issue in relation with virus or hacking is less. People are
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safe and they can make use of the services. People develop negative perception over the services
if it is not effective or not safe. Due to advancement of technology, it also increases the risk of
over load so it is essential that Deliveroo provide services that do not make the web page slow
(Donaldson and Marais, 2012). This will enable to develop positive perception among customers
mind and this will be helpful providing high quality services.
Below given are PEST for Africa:
Political factor: These factor are highly influenced by government influence. There are
cases in which government of Cairo introduce new tax. In such situations the price of services
that Deliveroo wants to provide will increase. In this context, there are other fiscal and monitory
policies that affects the business negatively. In Africa, it is important that Deliveroo develop
strong relation with government so that they will not make frequent changes in the polices. When
rate of fiscal and monitory policies increases, then it increases the price of product and services
of the organization. Further, the policies that are followed at Cairo is favourable to make their
business expand. In addition to this, government supports businesses to make expansion and they
understand that it will help the country to grow (PEST Analysis of China. 2016).
Economic factor: There are many factors that increases the risk to make establish the
business at Africa. In this context, it includes issues like inflation and recession. If there is
situation like recession, then it will affect the business as people will not be able to spend on the
products and services. These factors have direct impact over the business. The economic
condition of Cairo is stable and it will increase in coming years. However, if the inflation rate is
high, then firm has to raise their price and this will affect the growth (Hopeniene, Railiene and
Kazlauskiene, 2015). Price can be determined as one of the main factors due to which people
develop negative perception. The economic condition to Cairo will be helpful for Deliveroo to
make their business run and to convey information about the services that are provided by them.
Social factors: Changes in taste and preference takes place frequently and it is important
that the organization understand them and make changes accordingly. Ultimate aim of any firm
to gain maximum profit and this is possible when they satisfy their customers needs and
required. In order to make their business expand at Cairo, they should understand the preference
of customers. The services that are provided by the firm will be favourable to make their
business expand (Pagani, 2013). Further, the population of Cairo is 9.1 million and this will be
helpful to develop strong customer base. Further, the rate of internet users are raising at an
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increasing rate and this will help to make the firm gain product. All these will be beneficial for
the organization as customers will make use of services and this way objectives and goals will be
attained (Huang, Lai and Chen, 2013).
Technological factor: Changes in technology take place frequently and it is essential for
organizations like Deliveroo to update or make use of new technology as it will help in providing
their customers with high quality services. Technological aspect of Cairo is increasing and
people do prefer to make purchases online. However, one of the main issue is related with
hacking and payment facilities and protecting personal information. There are cases in which
people do not prefer to provide their personal information and so it is important that Deliveroo
make use of applications that would help to make the personal information save and customers
feel free and safe (Nishitani, Kaneko and Komatsu, 2012). Further, different aspects that makes
the organization to provide their customers with high quality services should be implemented so
that business expansion is possible.
Among both the cities, most favourable country in which cited firm should select for
business expansion is Beijing. As the economic condition, policies that are imposed by
government, social and technological factors are favourable. The rate of population is high and
so the services that people will make use will be high as well. Further, the economic condition
that is GDP rate will raise increasingly. Further, the rate of internet users when compared with
Africa is also high so that services provided by Deliveroo will be highly used. This will enable
to develop strong customer base (Bansal and Hoffman, 2012).
3. Competitive Environment
It is a competitive world and there are organizations that provide their customers with
similar products and services. In order to conduct competitive analysis, it is possible with the
help of Porters five forces. It is a powerful tool to know where strength lies for the business. In
addition to this, it also enables to know current competitive position (Porter generic strategies.
2016). As per this model, there are five forces that affects business operation. In this context,
below given are he Porters analysis done for Beijing:
Suppliers Power: as per the services that are provided by the firm. It is important that
they have interaction with hotels and restaurant in Beijing (Segatto, Inês Dallavalle de Pádua and
Pinheiro Martinelli, 2013). There are many hotels and restaurant in Beijing and this way it can be
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stated that the power of suppliers is high. However, it is essential to have marketing skills so that
Deliveroo will be able to develop contract with other hospitality sector and provide them with
materials or product that could be delivered. There should be strong relation with buyer and
seller so that delivery of services can be done on or before time. There are more than 60 hotel
and restaurants in Beijing so it can be stated that the suppliers power is high and this is a type of
opportunity to Deliveroo.
Buyers power: There are the customers or people who can make use of the services that
are provided by the firm (Borzillo, Schmitt and Antino, 2012). In this context, the total
population of Beijing is 11.51 million among which more than half make use of internet. This
shows that the buyers power is high. With this respect, when Deliveroo will deliver their
services, then they just need to make sure that they provide their services at high quality. The
quality can be provided by making sure that delivery is done on or before time. This way strong
customers base can be delivered and firm will be able to meet their objectives. All the threats
faced by service user should be identified and changes should be made accordingly.
Threats of substitutes: The threats of substitute in this sector is high as there are hotels
and restaurants who provide their customers with home delivery (Beckmann, Hielscher and Pies,
2014). This is a type of issue that firm can face. Moreover, there are also cases in which
organization may not take up their services of Deliveroo. This is because organization think that
the services that are provided would not let them to gain profit. In other words, it would affect
their business operations negatively. The threat to substitute can also raise due to increase in
price. There are situations in which hotels and restaurant ask for more profit from the benefits
that cited firm has earned (Kuratko, Hornsby and Covin, 2014). This becomes an issue that firm
face and it affects the operations related to business.
Threats of new entrance: This is a type of online organization that make sure that food
product like dishes that are provided by the firm are delivered to customers home. The entrance
of new business in the is area is high. In recent years, there are many organizations that has been
developed around the worlds for online business. This is because, people are understanding the
making use of and providing online services. In this context, it can be stated that the threat of
new entrance is high. With this respect, it is important for the Deliveroo to make sure that they
make frequent changes in the services with the help of which they will be able to attain
competitive advantage (Forsgren and Johanson, 2014).
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Rivalry: Currently, there are not many organizations which provide their customers with
similar products. From this context, Deliveroo should make develop trust and confidence so that
people start to make use of services provided by them. With this respect, it can be stated that the
competitive rivalry is low. This is a type of opportunity that cited firm has because the rivalry is
less so firm most of the people will make use of the services that is provided by Deliveroo. In
case there would have been high rivalry, then customers would prefer to make use of the services
that are provided to them of high quality (Harmon, 2014).
CONCLUSION
As per the findings, it can be stated to gain maximum profit, it is important that
organization understand their customers needs and requirements. Below given are the SWOT
analysis of Deliveroo:
Strength:
 Skilful and highly trained employees
 Deliver their service on or before time.
 Special discount offers are provided
 No shipping charges.
Weakness:
 Services are limited as products are
provided as what hotels and restaurants
provide.
 There are many hotels that have do
included to make use of online services.
Opportunities:
 Many potential markets in which
business can be expanded.
 More different range of products can be
provided online.
Threats:
 Easy new entrance of businesses
 Government interference
 People who do not made use of online
purchase.
From the above conducted SWOT analysis, it can be stated that firm will be able to
perform effectively due to low competition. Further, cited firm should conduct market research
before entering into new market as it will enable to know the taste and preference of customers.
Moreover, changes can be made towards the services and this way customers can be satisfied. In
addition to this, from the above analyse it can be stated that establishing business win China will
be effective. More specifically, Deliveroo can start their operations from Beijing. Slowing when
people will get to know about the services provided by the organization, then they can reach out
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to other cities in China. Further, the entrance of new business is easy so management of
Deliveroo should make use that they provide their services at high quality. This will enable to
develop positive perception among customers mind and it will also help in developing strong
customers base.
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