Strategic Analysis of Primark: External and Internal Factors

This report offers a comprehensive strategic analysis of Primark, a UK-based retail firm. It begins with an executive summary and introduction, then delves into a critical analysis of the external environment using PESTLE and Porter's Five Forces models, assessing their impact on Primark's strategic position and CSR activities. The internal environment is then examined through SWOT and Value Chain analyses. The report further explores Primark's CSR initiatives, discussing their pros and cons, and concludes with recommendations and implications for stakeholders. The analysis covers various aspects, including political, economic, sociological, technological, environmental, and legal factors, as well as internal strengths, weaknesses, opportunities, and threats, providing a detailed understanding of Primark's strategic landscape and its approach to corporate social responsibility.

Strategy
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EXECUTIVE SUMMARY
One of the most crucial processes in the present era is to decide appropriate strategies for the
growth and success of the organisation. With the help of appropriate and effective strategic
planning, company can make efficient decisions for accomplishment of its long term goal. For the
proposed study, Primark a retail firm of UK is taken into the consideration. Different methods has
taken for determining the CSR activities of the company. These methods include PESTLE analysis,
Value chain analysis, SWOT analysis, Porter's 5 force model and 7P's analysis. Along with this,
impact of different CSR activities on stakeholders of the firm has explained in the study. Different
recommendations has also added to the report on the basis of overall analysis.
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Table of Contents
EXECUTIVE SUMMARY..................................................................................................................2
INTRODUCTION ...............................................................................................................................5
1 Critical analysis of external environment and its impact on strategic position and CSR
activities of Primark. .......................................................................................................................5
2 Critical analysis of internal environment and their impact in strategic position and CSR
activities of Primark.........................................................................................................................8
3 Corporate Social Responsibility and their pros and cons ..........................................................14
4. Recommendations......................................................................................................................15
5. Implications for stakeholders.....................................................................................................15
CONCLUSION..................................................................................................................................16
References..........................................................................................................................................18
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Illustration Index
Illustration 1: PESTLE Analysis..........................................................................................................5
Illustration 2: Porter's Five Force Model..............................................................................................7
Illustration 3: SWOT Analysis.............................................................................................................8
Illustration 4: Marketing Mix.............................................................................................................11
Illustration 5: Increase in no. of Primark Stores.................................................................................12
Illustration 6: Value Chain Analysis...................................................................................................13
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INTRODUCTION
Strategy refers to a specific direction or scope which helps companies in achieving their
long term objectives. It is a plan of action which is developed by the organisations on the basis of
their short and long term goals. Various methods are used by the enterprises for external and
internal analysis. On the other hand, corporate social responsibility plays important role in the
welfare of the society which creates a good image of the firm (Wagner III and Hollenbeck, 2014).
For the present study, Primark Plc a subsidiary of international food, ingredients and retail
group is taken into the consideration. The file includes analysis of external environment and its
impact on strategic position and CSR activities. Along with this, report consists of internal
environment analysis, CSR activities and recommendations. It also includes implications for
stakeholders based on the overall analysis.
1 Critical analysis of external environment and its impact on strategic position and CSR activities of
Primark.
External environment includes those outside factors which can affect the functioning and
working if the organisations. For analysis of external environment of Primark following methods
are used:
PESTLE Analysis:
 Political Factor: As per the view of Zalengera and et.al., 2014, “For getting success and
growth it is important for the organisations to follow the laws, regulations and policies
properly in their working environment” (Zalengera and et.al., 2014). With reference to
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Illustration 1: PESTLE Analysis
Source (PESTEL Analysis, 2016)

Primark, it follows all the laws and regulations of UK government in its operations and
functionalities properly. On the other hand Srdjevicand et.al., 2012, have stated that “On the
most important policy in present time is regarding environment safety and security. It is
essential to maintain a clean safe atmosphere for the welfare of society and nation”
(Srdjevicand et.al., 2012). In favour to this, Primark is following the policy and its energy
consumption is sourced against the green power generated by British sugar. Economic Factor: According to the Nieves-Colon and et.al., 2014, “Proper analysis results
to understand the marketing growth, profitability, loss, number of sales, etc of the
companies. This helps in identifying whether the enterprise is growing or declining in the
market” (Nieves-Colon and et.al., 2014). In reference to this, Primark had opened over 12
stores in 2008 and now it has moved its business to whole Europe. This represents that
company is continuously growing and getting success. On the other hand, the merchandise
used by the organisation is low priced which is affected by unstable economy. Primark also
get affected due to unemployment and low purchasing which somewhere impacts on its
sales and profitability. Sociological Factors: Šommet, 2013, has said that “With the development of the firms, it is
also essential to work for the society and its people. This enhance popularity, brand image
and market position of the companies” (Šommet, 2013). With respect to this, Primark
conducts various activities for the social development and it has received several awards for
it, These include retailer of the year, the best retailer of the year in UK, etc. Technological Factors: According to the Kolios and Read, 2013, “With the change in time,
technologies are also changing and updating. Those things which were hard to achieve in
past are now easy to access and control due to advanced techniques” (Kolios and Read,
2013). In favour to this, Primark is using online website which allow customers to purchase
products of their choice. Along with this, company has signed deal with BSE management
system which provides facility of Entropy software. Environmental Factors: According to the Fisher, 2015, “It is prime responsibility of the
organisations to take care of their environment. Due to the increasing global warming and
adverse climate conditions some companies are working for improving it” (Fisher, 2015).
With respect to it, Primark is conducting different campaigns such as use of paper bags
rather than plastic, recycling them and using eco friendly things.
 Legal Factors: As per the view of Xingang,, Jiaoli and Bei, 2013, “Local laws of the nation
impacts on the working and functioning of the companies. Any change in laws and
regulations waste the time, money and resources of organisations” (Xingang,, Jiaoli and Bei,
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2013). With respect to it, Primark is following all the laws and policies such employment
act, national minimum wages act, data protection act and many more.
Porter's 5 Force:
 Threat of New Entrants: According to the Sevkli and et.al., 2012, “Power of the
organisations in market are affected by the ability of individuals to enter into their market
because it increases competition” (Sevkli and et.al., 2012).With respect to the Primark, the
risk of new entry is very low due to high cost of set-up. Power of Supplier: Pesonen and Horn, 2013, have stated that “For analysing the power of
suppliers, company needs to identify their number, uniqueness of their products or services,
strengths, control over it, cost of switching, etc” (Pesonen and Horn, 2013). In favour to this,
Primark has low risk regarding suppliers due to their less bargaining power. Along with this,
there is no single big supplier in the list of company. Power of Buyer: Görener, Tokerand Uluçay, 2012, have asserted that “It is essential to
determine the power of buyers to drive prices down and for this, enterprises need to analyse
their number of buyers, their importance, cost of switching, their preferences, etc” (Görener,
Tokerand Uluçay, 2012). With reference to this statement, Primark has high risk due to the
competitive market and no switching cost. Competitive Rivalry: Luc, 2016, has concluded that “For improving the market position and
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Illustration 2: Porter's Five Force Model
Source (Porter's Five Forces of competitive position analysis, 2013)

attracting more customers it is essential for the firms to keep an eye on their competitor's
strategies” (Luc, 2016). In context to this, the risk of competition is moderate for the
Primark due to less number of low price retailers with same range of products or services.
 Threat of Substitutes: Schneider, and Schmidpeter, 2012, have declared that “Availability of
substitutes in market affects the sales and number of customers. If it is easy to find alternate
product then the threat of substitution is high for the companies” (Schneider, and
Schmidpeter, 2012). In favour to this statement, Threat of substitutes for Primark is
moderate because there are very less number of retailers that have similar products.
From the above analysis, it is determined that Primark is using effective strategies for
gaining competitive advantages. Along with this, different corporate social responsibilities are being
conducted by the firm for the welfare of society. It is organising campaigns for keeping
environment clean, safe and secure. It needs to conduct more CSR activities for getting recognition
at global level. There are some issues for the company in the field of political, economic and legal
factors which can be improved by time to time market analysis. On the other hand, there are large
number of customers who like to purchase products from Primark only. This represents that
position, popularity and brand image of the company is effective among the public.
2 Critical analysis of internal environment and their impact in strategic position and CSR activities
of Primark.
Internal environment includes number of employees, their performance, behaviour,
organisational culture, working conditions, management, mission statements, etc. For the internal
analysis of the Primark following methods are being used:
SWOT Analysis:
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Illustration 3: SWOT Analysis
Source (SWOT Analysis, 2016)

Strengths:
As per the view of Görener, Tokerand Uluçay, 2012, “Strengths represents the benefit an
organisation have for building competitive advantages” (Görener, Tokerand Uluçay, 2012). With
reference to it, Primark provides “on trend”, fast fashion products at low prices to the customers.
Along with this, it offers a wide rage of products which includes children, women and men's wear,
accessories, hosiery, home wear, confectionery, etc. Along with this O'Shea, and et.al., 2013, have
stated that “Companies are using social media for increasing their number of customers by
informing them about the various products and quality services” (O'Shea, and et.al., 2013).In
context to it, Primark is active on social media and posts time to time about its achievements,
products, new offers, etc on Facebook, Instagram, Twitter, Google+ and Pinterest. It helps company
in saving money on promotional activities due to use of word of mouth strategy and social media
strategy.
On the other hand Korschun, Bhattacharya and Swain, 2014, have argued that “Nowadays
CSR activities work as strength for the organisations as it helps in making good and effective image
of them among the public and government” (Korschun, Bhattacharya and Swain, 2014). With
reference to this, Primark support various charity programmes such as cotton connect, Betterware,
New Life, Ethical trading initiative, Solidaridad. These are performed in ethical and environment
friendly manner. In addition to all, company is making B2C and C2C relations with the help of
different features on their website. “Primania” helps the firm in increasing the involvement of their
customers with the brand.
Weaknesses:
According to the Aguinis and Glavas, 2012, “Weaknesses shows the area of improvement
and ignorance for strengthen the market position. It makes company to use effective measures for
removing loopholes” (Aguinis and Glavas, 2012). With reference to this, Primark has some
weaknesses which it needs to improve. These are lack of relaxing atmosphere in store with poor
customer services, lengthy queues and untidy store. This sometimes dissatisfy the customers and
make them to switch. In contrast to it, the size of store is very large and is attractive which
sometimes overwhelms the potential customers but lack of proper services makes them dissatisfy.
As per the view of Darmawan, Putra, and Wiguna, 2014, “Customers believes that high
price represents the high quality of products and low price shows low quality of goods and services”
(Darmawan, Putra, and Wiguna, 2014). In favour to this, low price of Primark products impacts
negatively on the buyer's mentality. They link low price of products with the low quality and style
which affects sale of company. On the other hand, customers are unable to purchase products of
their choice online due to some technical issues. On the other hand, due to the lack of proper budget
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Primark is unable to provide digitally advanced store to its customers as compare to the Topshop
and Oasis.
Threats:
According to the Fearne, Garcia Martinez and Dent, 2012, “Threats represents the obstacles
and challenges organisation is facing. It can be due to various reasons such as bad debt, poor quality
of products, etc ” (Fearne, Garcia Martinez and Dent, 2012). With respect to this, Primark has some
threats which includes supermarkets which are providing ultimate convenience, low prices and
strong brand trust to the customers. Along with it, competing brands which are investing large
amount on promotional campaigns, TV advertisements and celebrity endorsement such as
boohoo.com. On the other hand Hollensen,2015, has identified that “It is essential to for retail
companies to follow the latest trends and fashion for attracting more customers” (Hollensen,2015).
In context to this statement, The showrooming trend is one of threat for the Primark because
customers still like to browse in stores rather than purchasing online. In addition, there are many
brands which are offering higher quality of products or services to the people at equally low prices.
Opportunities:
As per the view of Sharan and et.al., 2015, “Opportunities refer to the set of circumstances
which makes possible for the organisations to achieve competitive advantages and sustainable
growth by implementing something new and effective” (Sharan and et.al., 2015). In context to this
statement, Primark has various opportunities with the help of which it can improve its market
position and brand image. These opportunities include development and improvement of website on
the basis of design, product offering, improvement in current features, etc. On the other hand,
company can sign up to the messaging apps for enhancing interaction with the consumers. With the
help of apps like Snapchat, firm can provide behind the scene footage to the users for influencing
them. In addition, Primark needs to develop its own app for promoting new products, providing
simple access, notify users about offers and increasing brand awareness.
Sturgeon and et.al., 2013, have concluded that “With the help of innovation and creative
strategies companies can influence customers to purchase their products” (Sturgeon and et.al.,
2013). With reference to this, Primark has opportunity to implement cafe or food hall for the
customers such as parents, friends, co-workers, etc. Along with this, company has opportunity to
enter into emerging markets such as BRIC (Brazil, Russia, India and China) or MINT (Mexico,
Indonesia, Nigeria and Turkey) with the help of digitally oriented business model for business
expansion and diverse customer recognisances.
7P's Analysis
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 Price: According to the Thompson and et.al., 2013, “The product always represents a good
value for money but it does not mean it should be cheap or low price. Different strategies are
used by the companies while deciding price of their products or services” (Thompsonand
et.al., 2013). In context to it, Primark uses low price for its quality products. Product: Primark.com, 2014 has stated that “The company offers different range of products
and stockings from a baby, women and men” (Primark.com, 2014). With respect to this,
Primark follows catwalk trends in which it quickly produces large quantity of attractive,
fashionable and trendy products.
 Place: According to the Wagner III and Hollenbeck, 2014, “Companies can increase their
reach to the different customers by using online channels far beyond their store abilities”
(Wagner III and Hollenbeck, 2014). There are 275 stores of Primark in 9 countries of
Europe.
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Illustration 4: Marketing Mix
Source (MARKETING THEORIES – THE
MARKETING MIX – FROM 4 P’S TO 7 P’S, 2016
)

 Promotional Strategy: As per the view of Barney, 2012, “With the help of different
promotional strategies such as TV, radio, celebrity endorsement, print advertising, etc
companies can influence customers to purchase the products” (Barney, 2012). In context to
this, Primark only uses word of mouth, social media strategy for promoting its brand. People: West, Ford and Ibrahim, 2015, have declared that “People strategy is one of the
important element of the marketing mix with the help of which enterprises can satisfy their
employees and customers both” (West, Ford and Ibrahim, 2015). In favour to this, Primark
is improving its customer service and providing different rewards to employees for their
effective performance. Process: Schilke, 2014, has identified that “Process used by the companies for producing
the products and delivering them to the customers is also an important part” (Schilke, 2014).
With reference to it, Primark uses following steps for its products: Inspiration, Development
and Planning, Production, Shipping & Delivery and in store. Products shipping from Asia
takes approximate 6 weeks and in-stores they are highlighted using POS and window
displays (MARKETING THEORIES – THE MARKETING MIX – FROM 4 P’S TO 7 P’S,
2016).
 Physical evidence: Rothaermel, 2015, has said that “All the services of the companies
include some physical evidences for making the experience of the customers
memorable”(Rothaermel, 2015). In context to Primark, it is using attractive stores,
packaging, décor, etc as physical element.
Porter's Value Chain Analysis:
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Illustration 5: Increase in no. of Primark Stores
Sourcec (Primark strategic marketing plan. 2014)