Comprehensive Business Strategy Report: River Island Company Analysis

This report provides a comprehensive analysis of River Island's business strategy. It begins by examining the impact of the macro-environment, utilizing PESTEL analysis to assess political, economic, social, technological, environmental, and legal factors influencing the company. The report then delves into the micro-environment, including stakeholder analysis, to inform strategic management decisions. An in-depth analysis of River Island's internal environment is conducted using VRIO analysis to determine the company's strengths and weaknesses. Porter's Five Forces model is applied to assess competitive forces, including the threat of new entrants, bargaining power of suppliers and buyers, competitive rivalry, and threats of substitution. The report concludes with a discussion of strategic planning, incorporating various theories and models to devise a strategic plan for River Island, and critiques the information and data applying environmental and competitive advantages.

Business
strategy

Table of Contents
INTRODUCTION...........................................................................................................................3
MAIN BODY...................................................................................................................................3
P1- Impact of macro environment on the companies and their strategies.............................3
M1- Micro environment to inform strategic management decision.......................................5
P2 Analysis of internal environment of the company ...........................................................6
M2- Internal environment to asses strength and weakness....................................................9
P3- Porter's five forces model and include competitive forces of the company....................9
M3- strategies to take competitive advantages ....................................................................11
P4 Strategic Management Plan.............................................................................................12
D1- critique and interpret information and data applying environmental and competitive
advantages ...........................................................................................................................16
CONCLUSION .............................................................................................................................16
REFERENCES..............................................................................................................................17
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INTRODUCTION
Business strategy is the framework which is plan by the companies to achieve their
vision, objective, mission, competing successfully and optimizing performance with their
business models (Bıçakcıoğlu, Theoharakis and Tanyeri., 2019). Business strategies involves
marketing, sales strategies, information technology strategies, HRM strategies and sustainable
strategies.
This report will Take River Island company for this case study (The history within River
Island. 2013). It is highly street fashion brand and their headquarter is in London UK.
Vision- To be the best high street fashion brand.
Mission- To aim sustainable development of the company and ensure strong competitive
advantages through its product quality.
This report will analyse the impact of macro environmental on the River Island and their
strategies and it will add PESTEL analysis to explain the micro environmental influence on this
company (Lyneis, J. M., 2020). This report will analyse internal environment by using the
appropriate framework. It will also apply the porters five analysis to explain the competitive
forces on this company. This report will conclude all the forces of porter's five such as threats of
new entry, Bargaining power of suppliers, bargaining power of the buyer, competitive rivalries
and threats substitution. In the end of this report will apply the range of theories and model for
the devise strategic plaining for the River Island company.
MAIN BODY
P1- Impact of macro environment on the companies and their strategies
There are some macro environmental factors which impact on the companies strategies
and their profitability. It is important for the River Island company to analyse those factors and
make new strategies for the company (Chen, Eshleman and Soileau., 2017). The Best
Framework to analyse the macro environmental is PESTEL analyses which covers all the
factors such as Political factor, economical factor, social, technological, environmental and legal.
This framework will be helpful for them to analyse all the factors affect on their business
strategies.
PESTLE analysis of River Island
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Political factors
Political factors such as change in the government polices such as Taxes on the product
which increase their product price. It affect on the company's profitability and their growth. the
stability in the politics is no longer secure which keeps this company curious on growth and big
investment. It also affect on the companies strategies and it is important for the company to
make new strategies, so they can overcome from this issue. Political factor always an big factor
for the River Island company because they are operating their business on the global level and
every government have their own tax structure which affect the profitability o this company.
Economical factors
Economic factors such as change in the product demand can affect on the companies
strategies (RIVER ISLAND SWOT AND PESTLE. 2016). Demand of the products change with
the time when three is any situation in the country like inflation and deflation in the economy
of the country where River Island is operating their business and this can affect the strategies of
the River Island company (Gupta, Gupta and Gupta., 2019). They have to make new strategies
to develop their products which can satisfy the demand and needs of their customers. It is
important for them to develop their product and marketing strategies to take competitive
advantages.
Social Factors
Customer value is another important factor for the River Island company, People like
to wear new trending clothes and follow new fashion. It is important for the company to add
value for the customers by providing products in the affordable prices (Helfaya and Moussa.,
2017). This can be possible through creating good relationship with the suppliers, the River
Island should improve their relation with their customers so they can add some value for the
customers in their products.
Vision- To be the best high street fashion brand.
Mission- To aim sustainable development of the company and ensure strong competitive
advantages through its product quality.
Technology help this company to take competitive advantages in the market (The
Fascinating History of River Island. 2020). River Island company has implemented new
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technology machines in their workplace to increase their productivity and their profitability.
When company bring new technology in their workplace than leaders and mangers of the
company have to make new strategies to provide training to the employees and make them learn
how to use new technology to produce better result for this company (Eskerod, and Larsen.,
2018). It is important for VRIO analysis them to implement new technology trends in the
company so company can show their presence in the market and gain competitive advantages in
the market. They are also having online shopping site where customers can order their product
and their delivery team will deliver their product at their home.
Environmental
Environmental factors also affect on the companies strategies because with the change in
the season people wear clothes according to the different seasonal conditions. In winter people
wear warm cloths and rainy reasons people wear raincoat etc (Auliandri And et.al., 2019).
leaders of the River Island company take decision for the company during the seasonal change
and make new strategies to sell their product to the customers. They have to bring different
clothes and new design for the customers, so they can attract customers by satisfying their needs.
Legal
If UK Government change tax structure then it can also affect on the profitability of the
company . During the change in the government polices leaders of the River Island company
also have to make new strategies to follow those police, and they also have to change in their
organizational structures (Pati, and Bandyopadhyay., 2017). It is important for the River Island
company to follow the governmental rules, so they can make good relationship with the
government and take advantages of the government composition polices.
M1- Micro environment to inform strategic management decision
Strategic decision-making are decisions made by the companies superiors according to
the companies mission and their vision. Superiors of the River Island company should analyse
the macro environment factors such as political factors, economic factors, social factors,
technological factors, environmental and legal factors so company can take competitive
advantages in the market (Du Plessis., 2017). Changes on these factors can affect the
profitability of River Island company and it can affect on the strategic management of the
company. They can take competitive advantages through analysing this factors properly and
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make proper strategies to run their business smoothly. PESTLE analysis can be used to identify
those factors and it helps to identify external factors which affect on the business.
Stakeholder analysis
Stakeholder analysis is the process of identify these people before the project begin:
grouping them according to their levels of participation, influence in the project. Stakeholders
of the company have huge impact of the company which makes important for the company to
give them importance more than anything. Here are stake holder of the River Island
Employees
Employees are important for the River Island who run day to day activities in the
workplace and make River Island company successful (Hernández and Garcia., 2018).
Employees have who work in the manufacturing area have to cover raw material into the fished
goods and some of the employees have to provide services to the customers at offline shop of
River island. They help company to achive their objectives by doing their work according to
the companies strategy.
Leader
leaders of this company lead employees to make vision of the company into reality.
Leader of the River Island company encourage employees to achieve goals and objective of the
company so company can be successful in their business. Leaders make strategy and take
decision for te company without leaders company can not achieve their goals.
Managers
Manager of the company manage very activity in the workplace and provide right
direction to employees. They manager every department of the River Island company and give
proper direction to the employees related to their task. Manager of the River Island company
make strategy for the company and take decisions according to it.
Investors
Investor of the River Island invest, and they get revenue from the company. They invest
in the company and company use their money to run their day to day activities. It is important
for the company to show the strategy of the company so they can gain their trust and they will
invest on the River Island.
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P2 Analysis of internal environment of the company
There are two models which help helps to analyse the internal environment and
capability of the River Island company (Pati, and Bandyopadhyay., 2017). It will also help
company to understand their strength and weakness in the market, so they can take competitive
advantages. These models are VRIO/ VRIN and McKinsey's 7s models.
VRIO analysis of River Island company
VEIO analysis is an analytical technique brilliant for the evaluation of companies
resource and it also helps them to take competitive advantages in the market. This tools are an
acronym from the initials of the names of the evaluation, values, dimensions, rareness,
limitability , organization. This has huge impact on the companies strategy and helps to create
opportunities for the company in the future.
Valuable
Company is selling unique design street fashion clothes to the customers and process of
the clothes are affordable which provides value to their customers. They are having many
customers in worldwide because it is attracting young generation, and they are providing
varieties of the clothes and their design is unique (Yudiono, Wilopo and Iqbal., 2019).
According to the VRIO analysis of River Island company searches and development at River
Island company is not valuable resource. It is because development and researches are costlier
than the benefits it provides the innovation of the company. Researches and the development are
disadvantages for the River Island. It is important for the superiors of the company to make
proper suitable strategies for the company, so they can overcome from this disadvantage.
Rare
design of some fashion products are rare, and they do not found in other clothing company like
some of the products in male category have unique design and different as compare to the other
bg brands. It is valuable resource for the company because they are attracting young generation
recently have also launch their new shirts for the age group of 18 to 24 In male which has
unique and new design with options to choose colour. And also the Employees of this
company are rare resources because they are having skills to sell their products and they are
from long time. Company provide the training to develop their skills and motivate them.
Imitable
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the employees of the River Island are not costly to imitate. This is because other firms
can provide training to their employees to improve their skills and knowledge in this industry
and other companies can hire employees of the River Island by offering better salary (Auliandri
And et.al., 2019). They can also encourage employees to give their opinion on the companies
strategy, so they give their contribution in the company's success. This is also important for the
company to gain their trust because if they will recruit new employees then will need training
which can take time and money both.
Organisation
Resource of the company are used strategically to invest in the right market and the right
places. Distribution network of this company is not properly maintained so it is a disadvantage
for the River Island company (Das., 2016). Other companies are overtaking this company
because of this reason. They need to make proper strategy in their are some of the markets like
chine and Indian where company can create their own strength by investing in those markets.
McKinsey's 7s model of River Island
McKinsey's 7s model is mainly used to analyse companies design and their structure by
looking at this 7 elements – system, strategy, style shared value, staff and skills in order to find
the effectiveness aligned and allow companies to achieve their set objectives and their business
goals.
Strategy
River Island company is using competitive pricing strategies to take competitive
advantages in the market. This is important for them because level of the competition in fashion
industry is very high and this strategy is helping them to take competitive advantages. They are
also proving differentiation in their product, design of their product are unique, and they are
having their own designing team who provide new and unique design of their product which is
helping them to gain competitive advantages.
Structure
Structure of the River Island is very simple so it is easy for the companies superiors to
manage their employees and solve their problem they are using divisional,matrix which create
flow of communication . Employees can directly talk with the companies superiors and discuss
their problem. This is an strength of the company
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System
Companies quality management system run on the daily basis. Company focus to design
new product and maintain their quality, so they can provide quality products to the customers
and gain competitive advantages (Ariyani and Daryanto., 2018). It has huge impact on the
company and they are able to achieve customers loyalty according to their companies strategy.
shared values
Mangers of the River Island company provide equal wages and security to their
employees to share their value to them their focus is to increase the efficiency of their
employees. They also provide rewards to their employees when they give their best in the task.
Skills
In each group activities there are some skilful employees who monitor other's work and
help each other to get work done and achieve the goals of the business.
Style
Leaders of the River Island company are using democratic leadership style in which
employees can take participation in the companies decision-making. Leaders of the company
give higher responsibilities to the employees, so they can take higher position in the future
(O'Hara And et.al., 2017). This is helping them to motivate their employee and employees are
giving their best to achieve goals and objectives of the company.
Staff
Managers of the company provide training and development to their staff so they can get
chance to increase their efficiency and help company to take competitive advantages in the
market. Every single employees of the River Island are getting equal change to increase their
skills and develop new skills. Leaders of the company can use democratic leadership which can
have huge impact on the companies strategy.
M2- Internal environment to asses strength and weakness
River Island have strong workforce which helps them to achieve competitive advantages
in the market. Managers of the company provide them proper training, so they can achieve goals
and objectives. Company is also use competitive marketing strategies to provide products in
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affordable price rage. Some of their products are premium and customers are not able to but
those products which is weakness of this company, and they are also depended on the UK
market mostly. This is important for the company to make strategies to overcome from this
weakness.
P3- Porter's five forces model and include competitive forces of the company
Porter's five forces
Threats of new entrants
Requirement of the capital in this industry is very high so it's makes difficult for the new
entrants to set up their business in clothing industry. Capital expenditure is also very high
because of the very high researches and development cost (Ge, and Li., 2019). This all factors
create threats for the new entrants. This has positive impact on the companies strategy because
they have to make proper strategy for the financing of the company. To overcome from this
problem River Island company can use the collaboration strategies in which they can
collaborate with the other brand.
Bargaining power of suppliers
Numbers of the suppliers in which River Island company operates their business has law
compared to the buyers. It means the (supplier) of River Island company have very less control
on the prices and it makes the bargaining power of the suppler a weak force. This has impact
on the River Island company and they can buy raw material in low prices. Company have to
make the good relationship with their supplier to take competitive advantages in the new market.
Bargaining power of Buyers
Bargaining power of the customers are very high because there are many other brands in
this industry who are selling all type of clothes to the customers (Auliandri And et.al., 2019).
They are having options to choose other brands as well so bargaining power of the buyer is very
high This impact on the company profitability customers have choice to go with the other brand
who give the product in low price range. To stay in the competition they have to bargain with
the customers and provide them products in, low prices. Company can use the competitive
pricing strategy to provide satisfaction to customers, and they can also gain the loyalty of the
customers.
Threats of substitute products
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There are very few substitute products are available in the clothing industry but company
is proving new designs in their clothes which is helping River Island company to make profit
and achieve high growth in the market (Nguyen, 2017). It is important for the operational team
of the company to develop their product, so they can take competitive advantages. This has
huge impact on the company and company because they need high research to develop their
product and create differentiation. River Island company is bringing new product design in the
market which will help them to overcome from this threat.
Rivalry among Existing forms
There are very few competitors have huge market shares in the UK company can take
competitive advantages in this industry because they are having good financial resource and
skilful employees who are providing them competitive advantages in the clothing industry.
Impact from the rivalry is very low on the River Island company so they can take competitive
advantages in the market because of few competitors in the market.
Bowman's strategy clock
There are 8 positions of the Bowman's strategy clock -
Low price and low added value
In this strategy River Island company have to keep the price of their product very low as
compare to the other competitors. It helps to take competitive advantages.
Low price
The companies following this strategy of the Bowman’s Strategy Clock often produce
large quantities of the products plus their products are valued in the target market. The various
and possible price wars are fought between the competitive brands in this position which is
impacting on their strategy which makes important for the River Island to look for this issue
and make good relationship with the supplier to add more value in their product (Haight and
et.al., 2019).
Hybrid
This strategy can help River Island company to add some value in their products and
offer those products on the regular basis.
Differentiation
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This strategy is important for the company to take competitive advantages. They have to
make their product different from the other products .
Focused differentiation
In this strategy River Island company will focus to make high quality products, and they
will sell them in the high prices. In this strategy company focus on the customers who are
enabled to buy luxury products from them (Sitinjak, Pramawijaya and Gunawan, 2018). This
strategy will allow them to increase their probability in the market and they can show their
presence in the market.
Risky high margins
In this strategy companies increase their prices higher and it is risky strategy because
customers of the River Island will look for the other companies quality product which they can
get in similar prices.
Monopoly pricing
In this strategy companies offer specific types of products they are the only ones offering
the specific type of product in the market (Crapis and et.al., 2017). And as a result, there is no
fear of the competition, and they are the only one determining the price of the product.
Loss of market share
In this strategy companies sell their products in fewer prices just to stay relevant and
competitive in the market and the mind of the customers. This strategy is mainly used by the
brands who have less market shares in the target market.
Recommendation
River Island company should use Bowman's strategy clock strategy This is effective for
the company and they can use it to analyze the competition in the market an where they are
standing so they can improve their strategies through the Bowman's strategy clock model and
take competitive advantages in the market where they are operating their business and achieve
higher growth.
M3- strategies to take competitive advantages
It is important for the company to use new strategies which can help them to achieve
competitive advantages in the market (Haight and et.al., 2019).. They should look to
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