Business Strategy Report: Lazada Group's Challenges and Strategies

This report provides a comprehensive analysis of the business strategy of Lazada Group, a leading e-commerce platform in Southeast Asia. It begins with an overview of the company, including its vision, mission, and objectives, followed by an examination of its market share. The core of the report delves into a SWOT analysis, highlighting the company's strengths, weaknesses, opportunities, and threats. A PESTLE analysis is then presented, evaluating the political, economic, social, technological, legal, and environmental factors impacting Lazada Group's operations. The report further assesses the company's resources, competitiveness, and competitive advantages, including an analysis of its key competitors. It identifies critical business issues, such as government instability and slow economic growth, and recommends a low-cost provider competitive strategy to address these challenges. The report concludes with recommendations for future growth and expansion, emphasizing the importance of strategic adaptation and market responsiveness.

Business strategy
4/6/2018
Lazada Group

Lazada Group 1
Contents
Introduction......................................................................................................................................2
Overview of company......................................................................................................................3
Market share................................................................................................................................3
SWOT analysis................................................................................................................................4
PESTLE analysis.............................................................................................................................5
Resources and competitiveness.......................................................................................................7
Competitors Analysis...................................................................................................................7
Competitive advantage................................................................................................................7
Business issues.............................................................................................................................8
Competitive strategy........................................................................................................................8
Conclusion.....................................................................................................................................10
Recommendations..........................................................................................................................10
References......................................................................................................................................11

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Introduction
Business strategy is the organization's working plan that helps the company in accomplishing its
vision, mission and objectives. The aim of the report is to demonstrate the issues that affect the
working of the company due to which they bring the changes in their strategies. The company
that has been selected for this report is Lazada Group. The issues faced by the company include
instability of the government that huddle expansion, slow economic growth, more reliance on
physical stores and many others. These issues are explained with the help of analysis of SWOT,
PESTLE and resources and competitive of company.

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Overview of company
The Lazada Group came into existence in the year 2012 and it is number one online shopping
and selling destination in Southeast Asia. The company has its presence in Indonesia, Malaysia,
the Philippines, Singapore, Vietnam, and Thailand. The company provides a platform to 1,
45,000 local and international sellers as well as 3,000 brands to serve their products to more than
560 million customers (Lazada Group, 2018). This company belong to the Internet industry
which is increasing day by day.
Vision
The vision of the company is to provide a convenient way to the customers to buy products from
local and international sellers with excellence services.
Mission
The mission of the company is to become leading online shopping and selling Destination
Company across the world (Juego, 2017).
Objective
The objective of the company in the coming years is to increase the presence and operating in a
maximum number of countries.
Market share
The below given image reflects the market share of the company in different countries where
they are operating their business which is highest in Vietnam.

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(Source: Wong, 2013)
SWOT analysis
Strengths  Lazada group offers the wide range of products which range from
customer electronics to households goods, fashion, sports and toys
equipment’s (Lazada Group, 2018).
 The company is focused towards delivering excellent customer
experience.
 The company offers different payment methods include cash-on-
delivery, comprehensive customer care and hassle-free returns to
their customers.
Weaknesses  The company doesn't have a brand presence while comparing it
with another e-commerce website.

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 Most of the customers don’t find the company reliable as the
company came into existence in the year 2012.
Opportunities  Lazada group has the opportunity to expand its business operations
in numerous countries.
 The company can add more products in their product portfolio
which will help the company in grabbing the attention of new
customers.
 The group has the opportunity to do tie-ups with more sellers.
Threats  The company has a threat from its competitors who have a physical
presence in the market of Southern Asia.
 The leading threat for the company is an increase in the number of
online hackers and theft which stops the customers to purchase
products online.
PESTLE analysis
(Source: Hutt and Speh, 2012)

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Political factors- Lazada Group is willing to expand its business in numerous market but due to
the government instability related to the rules and regulations the company is not able to expand
(Kotler, 2015). Moreover, there are some countries where the government welcome e-commerce
website which leads to the competition for Lazada Group.
Economic factors- There is a rise in the GDP of the ASEAN-6 from 4.4% in 2015 to 4.5% in
2016 which is quite less for the businesses. The below-given image reflects the GDP estimates
for the year which also reflects that profit opportunity for Lazada group is less (Maarja, 2018).
Social factors- Most of the customers are making a purchase of products through online mode
but there are many who believe in Brick and Mortar which affects sales and revenue of the
Lazada Group (Oxford Economics, 2016). These physical stores provide facility to customers to
negotiate with them.
Technological factors- The technologies include mobile internet, big data, and the internet of
things are improving in modernizing sectors and leads to the productivity across Southeast Asia.
Lazada group is making use of technology but not effectively which should be improved.

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Legal factors- It is essential for the Lazada group to follow rules and regulations related to the
minimum wage rate, labor laws, and many others.
Environmental factors- Lazada Group has to focus on the packaging of products, use of
renewable products and waste reduction to do business in a sustainable way (Hutt and Speh,
2012). In addition, the company should follow the regulations related to environment and
contribute to the conservation and protection.
Resources and competitiveness
Competitors Analysis
The competitors of the Lazada Group include Zalora, Reebonz, Shopee and many others (Owler,
2018). These competitors operate a business in the same market and are giving strong
competition to the Lazada group. The major competitor Zalora operates as an online fashion
retailer that provides beauty products, apparel, footwear and many other products (Owler, 2018).
Similarly, other companies are offering such products that lead the competition for the company.
Competitive advantage
The competitive advantage of the Lazada group is that the company has tie-ups with local as well
with the international sellers in Southeast Asia due to which company has a presence in the
market. Comparing with Amazon, it is not having a strong presence in the market of Southeast
Asia. Moreover, the company has strong ties with the Chinese e-commerce giant that is Alibaba
that helps the company in expanding and growing business in the market (Benzin, 2017).

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Business issues
The external factors reflect the issues due to which the company has to bring the changes in
business strategy. These issues include Social factors; the people of Southeast Asia generally
make purchase from the physical stores with whom they can negotiate which means they find
hike in the prices of Lazada Group, economic growth is slow which means no rise in purchasing
power, political instability, lack of presence in other countries are some which forces the
company to bring changes in business strategy.
Competitive strategy
It refers to as the long-term plan of a particular company so that they can gain the competitive
advantage over its competitors in the same industry. There are different types of competitive
strategy that can be used by the company such as low-cost provider, focused differentiation
strategy, broad differentiation strategy, focused strategy, and the best-cost provider strategy.
Considering the issues faced by the company it is recommended to the company to make use of
Low-cost provider strategy.
The objective behind the use of low-cost provider strategy is to sell the products at the lowest
price which is effective for the company to attract the customers. Most of the companies make
use of this strategy to earn low margins but high sales volume (Baroto, Abdullah, and Wan,
2012). Similarly, Lazada Group should make use of this strategy which makes the customer get
attracted towards the company and will add competitive advantage. This strategy will be
effective in Southeast Asia as this makes the people shift from physical stores to online sites to
purchase the products at low prices.

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The change in the strategy will impact the business of the company as they have to make their
sellers convenience to decrease their prices of product due to which ending of partnership takes
place which is a loss for the company. Moreover, the company will not be able to make high
profit which is a major risk.

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Conclusion
It can be concluded at the end that the business is facing many challenges due to external factors
in the market. These issues include instability of the government huddles expansion, slow
economic growth, more reliance on physical stores, more investment done by Alibaba and many
others are discussed in the report. Along with this, the report includes the business strategy that is
formed by the company after considering competitors and competitive advantage.
Recommendations
It is suggested to the company expand the business in countries where stability is present because
stability is essential for the smooth working of the business. The low-cost business strategy is
effective in attracting and retaining customers which will boost the business. It is recommended
to Alibaba to contribute in forming ties-ups with sellers who can offer the product at low prices.
The company should accept the payment through credit card also with a special delivery in rural
areas.

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References
Baroto, M.B., Abdullah, M.M.B. and Wan, H.L. (2012) Hybrid strategy: A new strategy for
competitive advantage. International Journal of Business and Management, 7(20), p.120.
Benzin, K. (2017) Singapore’s Next Competition: Lazada Vs Amazon [Online]. Available from:
https://www.redduckpost.com/singapores-next-competition-lazada-vs-amazon/ [Accessed on 6th
April 2018]
Hutt, M.D. and Speh, T.W. (2012) Business marketing management: B2B. South Western:
Cengage learning.
Juego, A.T. (2017) Lazada on a mission to spur e-commerce [Online]. Available from:
http://business.inquirer.net/226666/lazada-mission-spur-e-commerce [Accessed on 6th April
2018]
Kotler, P. (2015) Framework for marketing management. India: Pearson Education.
Lazada Group (2018) Lazada Group [Online]. Available from: https://www.lazada.com/
[Accessed on 6th April 2018]
Lazada Group (2018) Southeast Asia's No. 1 Online Shopping and Selling Destination [Online].
Available from: https://www.lazada.com/about-us [Accessed on 6th April 2018]
Maarja (2018) Southeast Asia Economic Outlook 2018 [Online]. Available from:
https://emerhub.com/insights/southeast-asia-economic-outlook-2018/ [Accessed on 6th April
2018]

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Owler (2018) Lazada Competitive Set [Online]. Available from:
https://www.owler.com/company/lazada [Accessed on 6th April 2018]
Owler (2018) Zalora Competitive Set [Online]. Available from:
https://www.owler.com/company/zalora [Accessed on 6th April 2018]
Oxford Economics (2016) Economic Insight: South East Asia Quarterly briefing Q2 2016
[Online]. Available from:
https://www.indonesia-investments.com/upload/documents/Economic-Insight-SEA-Q2-2016.pdf
[Accessed on 6th April 2018]
Wong, C.K. (2013) Is Amazon losing market share to Lazada in SEA? [Online]. Available from:
http://www.ecinsider.my/2013/07/amazon-losing-market-share-to-lazada-sea.html [Accessed on
6th April 2018]