Mothercare PLC Strategic Review: PESTLE, SWOT, and Financial Analysis

This report provides a comprehensive strategic review of Mothercare PLC, a global retailer specializing in products for infants, children, and expectant mothers. It begins with an introduction to the company, including a profile, and a segmental analysis of its product offerings across clothing, home & travel, and toys. The report then delves into external factors using PESTLE analysis, examining political, economic, social, and technological influences, followed by a competitive analysis using Porter’s Five Forces model. A SWOT analysis is presented to identify the company's strengths, weaknesses, opportunities, and threats. The report further explores Mothercare's business model, corporate strategy, and financial performance, including an analysis of financial statements and identification of financial risks. Critical evaluations of different strategies are discussed, and the report concludes with a summary of findings, including potential alternative strategies for addressing financial issues and improving business performance.

Company Strategic Review
Table of Contents
2) Introduction to the Company 2
2.2 Company Profile 2
2.3 Segment Analysis 4
3) PEST and Industry Analysis 7
3..1 PEST Analysis of Mothercare plc 7
Political factors 8
economic factors 8
Social factors 9
Technological factors 9
Competitors Rivalry using Porter’s Five Forces Model 10

3.2 SWOT Analysis of Mother care Pl c 15
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4) Business Model 17
5) Corporate strategy 18
6) Summary Analysis of financial statement 19
7) Financial risks of the Company and the risk management methods currently used 21
8) Critical Evaluation of different strategies 22
9) Summary 24
References 25
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1
1) Introduction
The motive of this report is to review a company with global operation. The selected
company for this report is Mother care Pl c which is a British retailing company which
specialize in offering products for infants, children and expectant mothers. The purpose of
the project is to review the business performance of Mother care Pl c company. It also
emphasizes on presenting the financial performance of firm and value provided by
organization to its stakeholders.
This report includes a brief company profile of Mother care PL C and also a analysis of the
company’s financial position and evaluations of major financial risks faced by the
company. Moreover, financial Analysis, and analysis of different financial strategies has
been included. Project has included various models such as PESTLE analysis , five porter

analysis in order to judge the effectiveness of industry in which company is operating.
Assignment will have focus on using important models in order to identify the strategies
used by Mother care Pl c for improving financial performance and dealing with complex
situations. It will also include evaluation as well as comparison of financial statement by
using profitability and liquidity ratios. Study will further include critical discussion on
growth strategies which can be adopted by Mother care PlC in order to develop business.
The project will also include conclusion or a summary of findings of the analysis. It will
also have focus on identifying the alternative plan or strategies to deal with financial issues
in business.
2) Introduction to the Company
This report is a strategic review of Mothercare Plc with its global operation. This
report will help to identify the strengths and weaknesses of Mothercare Plc which in
terms help to take the future movements towards the business growth of the
company.
Additionally, this report will discuss the external influences for the company with the help
of PEST analysis and also will discussed the competitor rivalry with the help of Porter’s
Five Forces model.
Furthermore, the discussion of the company’s business model and the current risk
management methods will be discussed. Key financial risk which the business take will be
analyzed.
2.2 Company Profile
Mothercare plc is a global retailer for parents and young children. Our iconic brands have a
long history as specialist UK retailers, with Mothercare opening its first store in 1961 and
Early Learning Center in 1974. Both brands resonate well with customers the world over.
Across their UK and International businesses, now they have c.1,300 stores across more
than
50 countries, offering a range of products from both Mothercare and Early Learning Centre.
In
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the UK, Mothercare and Early Learning Centre products are sold through the Group’s own
multi-channel (in-store and online) retail operations and via a smaller wholesale operation.
Internationally, the Group’s products are sold through its Franchise Partners’ retail stores
with a small but growing online presence and a fledgling wholesale business for territories
where they do not have Franchise Partners (mothercare, 2017).
Source: http://www.mothercareplc.com/who-we-are/our-vision-and-strategy.aspx
1. Mothercare Plc’s aim is to be the leading global retailer for parents and young
children. Early Learning Centre (ELC) became one of their greatest achievement which
started to function in June 2007. ELC is one of the key step they took to achieve their
target along with their vision. Their objective is to develop exciting and innovative own-
brand products under both Mothercare and Early Learning Centre brands (UKEssays,
2015). Internationally, otheir Franchise Partners operate across four regions – Europe,
Asia, the Middle East and Latin America. Our Franchise Partners operate through 1,150
stores and have c3.0 million sq.ft. of retail space (as at 25th March 2017). Mothercare
stores, both in the UK and across their International markets, use a variety of formats to
serve the needs of the needs of customers. This varies from the smaller shop-in-shop
format to mid-sized high street store to the larger out-of-town or larger store in a mall.
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We work to ensure each store fits the needs of their customer based in that particular
territory (Mothercare, 2017).
Vision of the company-The objective of Mother care Plc is to become a global retailer for
parents and young children.
Mission-The company intends to offer online services to its customer. Its mission is to reach
wide number of customers through use of technology. Another mission of organization
is to drive online customer retention as well as personification.
Objective of company- The purpose of the firm is to deliver innovative as well as quality
services to parents and young children. Another objective is to enhance customer experience.
It also intends to invest further in digital offering, improving customer experience on website.
Goals – The business goal is to increase sales as well as profitability within six months.
2.3 Segmental Analysis
Source: http://www.mothercareplc.com/who-we-are/our-product-ranges.aspx
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Figure 2.3.1 Segmental Analysis

Internationally, their Franchise Partners operate across four regions – Europe, Asia, the
Middle East and Latin America. Our Franchise Partners operate through 1,150 stores and
have c3.0 million sq.ft. of retail space as at 25th March 2017, (mothercare, 2017).
Performing a market segment analysis is key for converging company’s marketing efforts on
the most promising groups of likely customers and clients. Whether the company is
launching a new venture or are running an existing one, knowing what kind of people
business is targeting and how to reach them is necessary for success. You may have an
extraordinary product or service, but if you're not getting it directly in front of the people
who need it, your venture will struggle (Brookins, 2017).
Source: http://www.mothercareplc.com/who-we-are/our-product-ranges.aspx
Product ranging of Mothercare Plc offers clothing & footwear with children’s ranges from
entry price offering mums everyday value to the more premium Little Bird and Baby K
ranges and Blooming Marvellous, maternity range; Home & travel which includes
pushchairs, car seats, furniture, bedding, feeding and bathing equipment; and toys mainly
for babies. All product ranges are supplemented with ranges from carefully selected third
parties. Mothercare Plc is selling their products through multi-channel retail and wholesale
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Figure 2.3.2 Product Analysis

operations in the UK and through franchise operations across their International markets in
Europe, the Middle East and Africa, Asia and Latin America (Mothercare, 2017).
CLOTHING & FOOT WEAR:
Clothing and foot wear products of Mothercare Plc offers product range from infants and
children age of 0-10 years and maternity products for mothers and the products for
mothersto-be. According to Mothercare’s Annual report (2017), they have delivered, target
of 20% of clothing ranges in the ‘best’ category compared to 11% three years ago, while
continuing to innovate with new collections. This is a good sign that they have already
reached the 20% of their target market. In FY2016/17, Mothercare Plc’s sales and margin
were impacted by unseasonable weather during the first half of the year and their planned
warehouse changes which reduced the flow of stock to store for an eight-week period
(Mothercare, 2017). This is one of the major reason of sales reduction in 2016 and also it
has direct effect to the year
2017’s sale. Uncertainties will occur in every business and the situation controlling process
might need to spend more on indirect expenses sometimes.
HOME AND TRAVEL:
In 2017 Mothercare Plc have introduced 13 new brands, with 81% of options now in the
‘better’ and ‘best’ category. They are also market leaders in travel and nursery furniture with
26% share in pushchairs; 24% in car seats and 30% in nursery furniture (Mothercare, 2017).
Conferring to Annual report (2017) of Mothercare plc, home and travel products include, car
seats, buggy and pushchair systems, bedding, soft furnishings and furniture, bathing
products, high chairs, feeding products and baby monitors amongst other products. These
are both own brand and third party branded products.
TOYS:
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Toys operates mainly through the Early Learning Centre brand. The focus over the last few
years has been on investment in product innovation to develop ranges that encourage logical
thought and dexterity through touch, textures and shapes (mothercare, 2017).
Mothercare Plc has enhanced margin over the last year, with the result that at the start of the
year, they sold 70% of our product at full price. Unseasonable weather impacted the sales
margin at the first half of the FY 2016 and largely impacted the sales of 2017 as well
resulting in higher markdown and their planned warehouse infrastructure change reduced
the flow of product for eight weeks over the summer. Despite these challenges, they made
good progress in the second half, finishing the year with margin up 54bps, with 60% of our
product at full price. They also continue to focus on improvements in pricing architecture,
with 20% of our clothing and footwear now in the ‘best’ category as well as growing
product exclusivity for our customers (Mothercare, 2017).
Source created by the Author
From the above figure (figure 2.3.3), it has assessed that revenue generated by UK stores are
comparatively higher over the international operations. However, profit generated by
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Figure 2.3.3 segmental analysis & global foot print

Mothercare Plc from UK operations in the year of 2016 & 2017 was negative. On the other
side, such retail firm is achieving suitable margin or return from global operations.
3) PEST and Industry Analysis
3..1 PEST ANALYSIS OF MOTHERCARE PLC
Aside from the company’s internal resources and industry factors, there are several other
macro-economic factors that can have a profound impact on the performance of a company.
In particular situations such as new ventures or product launch ideas, these factors need to
be carefully analyzed in order to determine how big their role in the organization’s success
would be. One of the most commonly used analytical tools for assessing external macro-
economic factors related to particular situation is PEST Analysis (Contributor, 2013).
POLITICAL FACTORS
➢ Political stability: Mother care is a globally diversified business which operates
their stores in a dozen of countries in the form of franchise business. So, each of the
country has varied amount of political solidity. Normally the political factors have a
great influence in the business structure of each country. Thus, there must be numbers
of difficulties to adjust the business in different countries. Such businesses need to be
alert on the changes of the countries political firmness. This will affect the marketing
strategies and other business plans. The political factors have direct effect on business
operations and system. Some political variables are, regulation for company operating
in different industries formed by political parties etc. In context of MOTHER CARE
PLC, business entity does not have to face the issue as it is operating in diversified
segment. Favorable political situation in the country has provided firm an opportunity
to expand business operations.
➢ Risk of military invasion: Military incursion will sometimes ruin the business
environment could be the huge loss for the international investors like Mothercare
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franchisees and from this there will be a direct impact on the sales growth and
profitability of the company. So the industry average would be reduced and it might
affect the financial basis of the Mothercare.
➢ Pricing regulatory mechanism highly influences the level of customer service.
➢ Product requirements and other mandatory requirement in the retail sector.
➢ Anti-trust laws relating to retail activities has direct and significant impact on the
business system and organizational growth.
ECONOMICAL FACTORS
➢ UK economy is growing after the recessionary period so Mothercare plc also need to
forecast the sales growth according to the economic situation of the UK and other
international regions they are operating the business.
➢ Decrease in Inflationary tendencies have both positive and also negative impact on
retail firms. In a positive way , it would ease the market growth of the company so as
sales growth. The whole industry would have positive impact on this which could
improve the other rivalry businesses which in turn some time negatively effect
Mothercare Plc. Increasing the number of competitors would reduce the customers
and force to review the pricing strategies of the company.
➢ Mothercare Plc has 1300 stores in more than 50 countries. Considering the same it
can be presented that global economic conditions also have significant impact on
the firm’s operations.
➢ Economic Variables have direct impact on the firm financial performance as well as
stability. It also has great influence on the buying power of organization, due to
which company may face difficulty in fulfilling the requirement of operations which
may further lead to comprise in quality of products that will result in high level of
customer dissatisfaction. Ultimately it will have adverse effect on the sales as well as
profitability.
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➢ The Mother care enterprise does not have to face such issues as its is following
the strategy of diversification.
SOCIAL FACTORS
Social factors plays important role in success of every organization. Some of social variable
include trends, culture, etc. These variables have direct and significant impact on demands of
products or services by customer in the market. As Mothercare Plc. Is offering diversified
products as well as services , these factors have littler impact on the business growth.
➢ Changes regarding falling birth rates and small family size have greater influence on
the operations of Mothercare Plc. The reason is their target market is infants,
children and expected mothers. This would affect the whole industry as there should
be sales reduction possibilities.
➢ Varied living standard or pattern of individuals would have great impact on the
globally operating businesses like Mothercare Plc. Social wealth condition of the
countries varies from each other. So, the pricing strategies and the quality of
products will influence the profit margin of the business.
➢ Attitude and education level of the society would have a great impression on the
business.
TECHNOLOGICAL FACTORS
➢ Considering the significance of internet shopping and convenience aspect Mothercare
plc offers products or services to the customer via online means. This factor has
supported business entity in delivering quick and quality products as well as services
to client.
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