Business Strategy Report: Macro and Micro Environment of Ocado Group

This report provides a comprehensive analysis of Ocado Group's business strategy. It begins with an introduction to business strategy and its importance, followed by an overview of Ocado Group, a publicly traded company specializing in online retail and software development. The report then delves into the external environment, utilizing PESTEL analysis to assess political, economic, social, technological, environmental, and legal factors impacting Ocado's operations. A stakeholder analysis is also included. The internal environment is evaluated using SWOT and VRIO analyses to determine the company's strengths, weaknesses, opportunities, and threats, as well as its core capabilities. Porter's Five Forces model is applied to assess the competitive forces within the online retail market. Finally, the report discusses strategic planning theories and concepts relevant to Ocado Group, concluding with a summary of the key findings.

Business Strategy

Table of Contents
INTRODUCTION...........................................................................................................................1
LO1..................................................................................................................................................1
P1: Applying appropriate frameworks analyse the impact and influence of the macro
environment on a given organisation and its strategies..............................................................1
LO2..................................................................................................................................................5
P2).Analyse the internal environment and capabilities:..............................................................5
LO3..................................................................................................................................................8
P3).Porter’s Five Forces model evaluate the competitive forces:...............................................8
LO4..................................................................................................................................................9
P4).Theories, concepts and models, interpret and devise strategic planning for a given
organisation.................................................................................................................................9
CONCLUSION .............................................................................................................................10
REFERENCES .............................................................................................................................11

INTRODUCTION
Business strategy deals in process of formulation of actions and all the decision taken by
business in respect to achieve the organisational goals and objectives. Planning an appropriate
strategies in relation to activities which is considered with all department function(Sánchez-
Herrera and Donate, 2019). This business strategies are clearly attains the competitive position in
the market. A business objective without a successful strategic plan cannot be possible. Business
strategy relates with appropriate business plan which are necessary in developing and enhancing
the value of activities. Business strategy depends upon the cost strategy, service strategy and
differentiated products and focusing on the activities related to niche marketing strategies. Its
basically an structure of decisions and actions which the company will plan to attain its business
goals and objectives. Strategies depends upon a business operations, what the business requires
and needed to do in completion of its objectives and goals. Business strategy will be deliver
through by setting up of two way cycle, Empower with action-taking, by setting up of work flow
for executing strategy. The below report is based on a company Ocado group, which is publicly a
traded company that are working for online retailers in developing software for them. Its a public
limited company, they are internet retailer and deals in groceries and consumer goods having
headquarter in Hatfield, England,UK. Report considered with a topic framework and impact,
influence of macro and micro environment, porter five forces model and concept, theories for
strategic planning.
LO1
P1: Applying appropriate frameworks analyse the impact and influence of the macro
environment on a given organisation and its strategies.
Ocado group came into existence in the year 2000. The company started with 5 to 6
people in a single room office(Rehman and Anwar, 2019). Ocado Group is basically an
company which is publicly traded that develops software for online retailers in the international
market. They are considered with Ocado retail limited and Ocado.com which is relate with
Ocado British retail partner and online super market they are having the aspect of operating in
special company technology which is formulate by Ocado group itself. Having their Headquarter
in Hatfield,England,UK. Area in which this company serves is England, Wales, Spain, France,
Canada and other countries too, founder of this company is Jonathan Faiman. Services in which
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this company works are groceries and consumers goods. They are using official websites like
www.ocadogroup.com.
Vision
They are having the vision of providing with best quality product and services regarding
their dedicated online supermarket by proving them with unbeatable range, effortless experience
of convenience and fair value to their customers(Oldman and Tomkins, 2018) . By inducing with
activities of developing the unique way of doing online shopping through catering the customers
and develops the online software for retailers as well.
Mission
By revolutionise and enhancing the way of people in respect of their shopping online, by
giving them a unique way and way greener alternatives in buying the products or services to
traditional groceries shopping. Mission of this company rely on improving the online operations
and dealing of the retailer by adopting specific software programs for them in achieving their
goals and objectives regarding online retailing.
PESTEL Analysis
It is a tool or method which is necessary for every business who are operating their
business activities in international market(Aldea, Iacob, and Quartel, 2018). It is basically the
framework used to analysis and monitor the macro-environment factors that will impact the
organisation in their long run . So to cope up with these external forces, organisation uses this
model which considered with political, economical, socio-cultural, technological, legal and
environmental factor which will going to be properly analysis by an organisation. In the context
of Ocado Group, as they are working internationally, this will leads to impact their operations
through external forces which are:
Political factor
This factor relates with what degree a government intervene in the business activities or a
economy, its basically the defines with what degree that the business will impact by the
indulgence of government. This will includes with government policy and political stability and
instability, taxation policy etc. In the context of Ocado group several political factors are:
 By the impact of Brexit on the food prices, this will leads to increase in the value of food
prices in attaining the customers across other countries.
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 By uncertainty of political factor this will impact the business of Ocado that will leads to
slowdown their investing value.
Economical factor
They are the determinants of a certain economic performances, this relates with economic
growth, exchanges rates, interest rates, consumers disposable income and unemployment related
rates. In the context of Ocado they are dealing in economic factors such as:
 By slowing down of economy through the pandemic situation of Covid-19, it will directly
impact on Ocado's business activities. As they will not attain their regular business
operation.
 By slowdown in economy, that will impact the business by experiencing the input cost
inflation because of the unavailability of resources.
Social factor
This factor relates with society norms, Customs and values of the population, beliefs and religion
in which company operates their businesses. This factor will impact the organisation by
population growth, age distribution, career attitude and other societal factor. Here are some of
the social factor of Ocado Group is that:
 By change in the consumer behaviour through focus on organics and healthy eating, this
will definitely impact the business strategies and operation of this online retailing
company.
 Efficient business model or structure will minimize the wastage of food.
Technological factor
This factor impact the operation of business through change in technology by technological
advancement, level of innovation and automation, researches and development factor. In the
context of Ocado Group they will impact in certain ways such as:
 By large number of data artificial intelligence and through automation which will help
retailers to increase the efficiency of operations.
 By having strong online interface, will enhance new alliances and customer experiences.
Environmental factor
This external factor deals in increasing scarcity of raw material, pollution, carbon footprint target
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which is set by government. In the context of Ocado group they are having some environmental
factor or forces is that :
 Investing in sustainable logistics for customer delivery will leads to provide growth to the
company.
 Commitment of organisation to maintain sustainability.
Legal factor
This factor relates with specific laws and regulation which are generally impact the businesses by
their approaches, copy right, patent laws with health and safety laws. There is a need to know
about what is legal and what not by the company. So here are some of the legal aspects which
will impact the organisation in long run.
 Strong compliances standards and audits for suppliers will maintain the operation
activities of the Ocado business.
Stakeholders analysis
Its a process of analysing the system and relates with potential changes to it as they are
relatively considered with relevant and interested parties(Aldea, Iacob, and Quartel,2018).
Parties who are willing to take interest in the business interests and process information
regarding the profits. This information is basically used to determine with how will the interest
of stakeholders should be addressed on appropriate project planning, policies, actions and
program. Here are the stakeholder model which will define the value of Ocado Groups in context
of business processes:
 Manage closely: Organisation will going to take interest in best possible manner through
giving them with surety on high interests rate. As this aspect is considered with high
power and highly interested peoples. In the context of Ocado group they are relatively
deals in interested on by giving them satisfaction of high induce profit.
 Keep satisfied: By putting extra efforts in giving them confidence to take interest in their
processes and this will going to be regular activities by the company. Here company tries
to inform the people by not getting them bored through their approach of messaging,
Ocado group attains this objective in quite effective Manner through provides with
necessary information by short clear messages. This aspect relates with high power and
less interested peoples.
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 Keep Informed: This process works when an organisation tries to put efforts to convince
their potential peoples by giving them confidence that everything is in control and no
major issues will arise. This interested people will assist the company in their business
operation and investment circulations. In the context of Ocado group they are work on
their interested peoples here the aspect will meet with low power and highly interested
peoples.
 Monitor: By monitoring these people by not bothering them through their excessive
communication process. This will leads to bring effectiveness in the mind of people to
take self interest in the company by initiating what will be the new opportunities will
arise in investing this company Ocado. Here the aspect relates with low power and less
interested people. Ocado group will regularly ensure about these people in making them
interested towards the business approach of this online retailing company having aspects
of dealing both customers and stakeholders with official platform.
LO2
P2).Analyse the internal environment and capabilities:
Internal analysis are important aspects which have to follow by every organisation
working internationally to compete with their same industry type(Kitsios and Kamariotou, 2019).
In context of company like Ocado because of their online retailing channel they have to be more
concern about the operations through analysing their internal environment. By determining
SWOT model and for working on capabilities they will go for VRIO analysis so here these
models are:
SWOT Analysis
It is considered with strategic process to plan something better by analysing the internal
aspects of the business by determining strength, weaknesses, opportunities and threats which will
be occur in the organisation(Hsieh, Ma and Novoselov, 2019). In relation to compete in
international market business will go for this model. The main objective of this model is to aware
the organisation for all their factors which involve in making any business decisions. So here are
the SWOT analysis of Ocado group:
Strength
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 As this online retail industry working through catering customer and business with
internet having with strong technology platform leads to attain with strong position into
the market.
 They are having strong partnership with some brands like Morrisons, Carrefour and
waitrose.
 Ocado deals in competitive pricing and wide range of groceries on offer.
Weaknesses
 They are depends upon revolving credits related facilities and debts, operation part in
Ocado rely on credits.
 They are dealing in single market frame and relatively quite small scale considered the
overall Groceries market of UK.
OPPORTUNITIES
 By expanding their business model in other lucrative markets of Europe, this will leads
their operations in large and customers will get more aware through this expansion.
 By investing in online technologies more, this will enhance capabilities and competitive
advantages too.
 By taking approval and license of robotics enabled automated warehouse platform.
Threats
 By Brexit there is a rise in economic slowdown which will leads to reduce in consumer
spending , this will affects their online business operation.
 They are competing with the large online retail giant like Amazon fresh.
 Due to more intense pricing across groceries related retail sector, this will leads to
minimizes the margins on product.
VRIO Analysis
This model will determine each of its internal resources one by one in relation to find
whether they provides with sustained competitive advantage (Cubas‐Díaz and Martinez Sedano,
2018). This model will also determine at each phase to find out whether these resources can be
improved in relation to provide with greater competitive advantage. So here are VRIO Analysis
of Ocado Group is that:
Valuable
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 This analysis defines that VRIO financial resource of Ocado Group are highly valuable in
relation to their dealing in financial aspects. This resources will actually assist them
through investing in external opportunities that will arises, also by handling the future
threats quite easily.
 According to the analysis of VRIO approach, their local food products maintaining the
valuable resource due to their highly differentiated products. This will also attain the
customer reach towards product much high.
 This model shows that Ocado is having with high value for its distribution network, this
will attain the objective of reaching as many customers as they can.
Rare
 The financial resources of this online retail business are found to be rare, as per this
model its define that strong financial resource are handled by only few companies.
 Their local food products are considered to be not rare which is identified by the Ocado
group VRIO analysis. These products are easily provided by their other competitors. This
shows that competitors can use this product in the same way as this Ocado company will
perform.
 Distribution network of Ocado group considered to be rarest resource, competitors would
have to induce with lots of investing and time to come up with best network of
distribution.
Imitable
 Financial resources of Ocado group are quite costly to imitate, these resources been
acquired by the company through achieving profits over the years. Newly entrants and
competitors have to deal in similar kind of profits for longer time period.
 Local food products are not costly to imitate , this aspects can be achieved by their
competitors If they investing sufficient amount in research and development.
 High cost are induce in imitate of distribution network like Ocado, because this has been
attain by this business through over the years, competitors have to put significant amount
in it.
Organisation
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 The financial resources of Ocado group are well organised to attain the value as
determine by the VRIO analysis. They are using resources in quite significant manner
strategically to invest in right place.
 The distribution network of Ocado are better organised, they are suing this network
channel to reach out to its customers in large by taking care of the availability of the
products in every outlets.
LO3
P3).Porter’s Five Forces model evaluate the competitive forces:
This model relates with analysing the competition of a business by determining the
threats which can affect the business process and their operation(Cardoni, Kiseleva and
Lombardi,2020). This approach is basically depends upon the external forces which will impact
the business and helps business to determine their strength and weaknesses by this model process
so here are the porter's five forces model which will impact the organisation in their online
segment are as follow:
Threat of new entrants: New entry of firm in online retail industry brings innovation, new
techniques of doing things and put impact on online retail company like Ocado through lower the
price of products,by new value proposition to the customers, reduction in costs by their
competitors will put pressure on Ocado. This company has to manage all the these challenges.
By innovating products and services. By this new customers will attract through their innovative
products strategy. Through building capacities and spend money on research and development.
Bargaining power of suppliers:
Most of the companies in the retail industry purchase raw material from numerous suppliers. In
case of this threat suppliers can decrease the margins of Ocado group which can be earn by this
company. Strong suppliers can demand for higher cost onto their raw materials to Ocado in retail
field. The higher suppliers bargaining power is that it lowers the profitability of retail. By having
efficient supply chain process with multiple suppliers. By experimenting on products through
different raw material will lead to generate substitute for raw material.
Bargaining power of the Buyers:
Buyer want to buy the best offerings available in the market by paying minimum price for it, this
will put pressure on the company like Ocado on their profitability. If the customer base is
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relatively smaller and more stronger of this company the higher is their bargaining power of the
customers and higher ability to seek for better offerings. This company can tackle by this threat
through, by building a large customer base. By innovating new products into the market.
Threat of substitute product or services:
If a similar customers need fulfil by the new product and services in different ways company
profitability will suffers a lot. Threat of substitute product is high if they are offering a value
proposition on their products uniquely different from current offers of the company. Ocado can
handle this threat by being service oriented rather than product oriented, by increase the
switching cost in relation for the customers.
Rivalry among the existing competitors:
If the rivalry among the existing players in industry are more, then it will drive down the prices
and will impact the overall profitability. This company are competing with quite tough
competitors. By developing the sustainable differentiation, this company can handle threat of
competitors.
LO4
P4).Theories, concepts and models, interpret and devise strategic planning for a given
organisation.
As this online retail company works on the principle of catering their customers through
the online channel by operating in official website. Organisation needs to work on the strategies
which will benefits them in future growth of the business(Braun, Latham and Cannatelli, 2019).
In the context of online retailing industry like Ocado Group as they are working on the platform
of providing with unique software which are required by the other online retailers. So by
considering Ansoff model Ocado will determine the strategic planning which will assist them in
future business operations.
Market Penetration
This approach is basically considered with by analysing how to sell more of the product
and services online to the existing customers by interacting with online platform. In the context
of Ocado group they will change or active their websites more on appropriate hours through
knowing when will be the customer active and use their website by analysing on regular basis.
By showcasing the product more on online basis.
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Market development
This process relates with how to enter into new market in relation to the businesses
processes. In relation to the company like Ocado they are continuously working on considering
search intent for providing with online services in different market. By putting effort sin
knowing market trends which are going to be follow and currently follow, proper study in online
market, provide s Ocado with more benefits.
Product and development
This aspects involves with product and services development, how an organisation will
going to attain opportunities by working on products through innovative ideas. By using cheaper
manufacturer with new product development having an approach of improved quality will going
to be beneficial for online retailing industry like Ocado. By gathering feedbacks from customers
and respond them in quick manner(Bhattacharyya, 2020) .
Diversification
It relates with the process of moving into new market with having features of new
products and services. By increasing the sales with existing customers. In the context of online
company Ocado they are working on websites by involving lots of other benefits to their
customers and updating their site for new experience to their customers.
CONCLUSION
It has been concluded from the above report is that every organisation needs to make sure
about their internal as well as external forces which will impact their business operations. By
different approaches of models like SWOT and PESTLE analysis will assist the organisation in
making strategical plans for future operation more effective. By knowing their capabilities
through analysis by VRIO model, organisation will get to know about the performances in
relation to its competitors. In making business more effective organisation will have to determine
the threats which will impact them, by work on porter's five forces model.
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