BUS300: Strategic Analysis of Royal Mail Group - Report

This report presents a comprehensive strategic analysis of Royal Mail Group, evaluating its performance within both internal and external environments. The analysis employs tools such as PESTLE, Porter's Five Forces, and value chain analysis to identify key strategic issues, including the impact of eco...Read More

STRATEGIC
ANALYSIS

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................1
MAIN BODY ..................................................................................................................................1
Q.1 Three key strategic issues from far and near external environment and internal
environment of Royal Mail.........................................................................................................1
Q.2 Resources and key capabilities of Royal Mail along with the critical success factors. ......3
Q.3 Way in which the strategies address the issues using the three SAFe tests. .......................7
Recommendations for improvement...........................................................................................9
CONCLUSIONS..............................................................................................................................9
REFERENCES..............................................................................................................................11
Illustration Index
Illustration 1: Generic Model...........................................................................................................7

INTRODUCTION
Strategic analysis plays a crucial role in effective functioning of an organisation. It helps
in identifying the strengths and weaknesses held by the entity (Song, and Tsai, 2017). In
addition to this, it renders assistance in examining the external micro and macro factors that can
impact upon the business. With this understanding firms can gain competitive advantage. In the
present report, the significance of strategic management will be evaluated. Besides this, various
factors that can have impact on the effective business functions will be analysed. For this
examination some tools that will be used are PESTLE, Porter's five force analysis and value
chain analysis.
For the present undertaking, the entity selected for the analysis of strategies is Royal Mail
Group. The selected entity is a public limited company that was established 501 years ago in
1516. It is headquartered in UK and area served by the entity is worldwide. As per the financial
reports of 2016, the revenue of company is €9,776 millions with a net income of €273 millions.
The business of the entity raised by 8% between 2013 and 2017. However, as compared to the
other communication methods its growth in market is low. It is due to some issues either from
internal or external environments. In the present undertaking, all the internal and external factors
that can impact upon the entity will be analysed in this report. Further, some major issues of firm
will be identified and strategies will be prepared for their evacuation.
MAIN BODY
Q.1 Three key strategic issues from far and near external environment and internal environment
of Royal Mail.
There exist antithetic factors that impacts on the effectiveness of a business. These issues
can arise from different sources either they be external or internal to the organisation. In context
to the selected organisation, "Royal Mail" there are various challenges rising from far external
environment, near external environment and internal environment. All these issues can be
analysed by making use of the relevant assessment tools. For instance: Far environmental affects
can be analysed using PESTLE analysis. Similarly, micro and internal environmental factors can
be assessed by making use of Porter's five force generic model and Value Chain analysis (Song,
and Tsai, 2017).
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Firstly, in context to the impact of macro environmental factors, it has been analysed
with the PESTLE analysis that the selected company, Royal Mail is most affected with the
economical factors. There exists a lot of components involved in this segment that influence the
effectiveness of the chosen entity(Grant, 2016). Out of these elements, the major affecting the
Royal Mail involves GDP, growth rate, current interest rates, fluctuations in the prices of basic
resources utilised by the industry, variations in financial policies after Brexit, etc. However, it
should be recognised that the GDP has rose by 0.3% but still it is a moderate performance as
compared to the other years. It is because of the fact that the Brexit vote has not materialised in
an appropriate way.
It has been further observed that the pricing structure of petrol has always been a
concerned topic for the country. Royal Mail's operations are all reliant on the transportation that
further relies on the fuel and its availability. United Kingdom experiences major economical
fluctuations in context to fuel. It is because of the fact that a tremendous increment in the
consumption of fuel has been recorded over few years (Schutte, and Barkhuizen, 2016). Also,
the decreased interest rate is a major cause behind it. These variance are further harming the
overall system of the company by raising the problems of regular alterations in the business
strategies. This issue is strategic issue because the fluctuations in fuel prices can harm the
implemented economical policies and thus, the business value.
In context to analyse the key issue from the micro environment, the most effective tool
that can be used is Porter's five force generic model. According to this tool, there are five key
forces that drives a business. These forces are bargaining power of buyers and suppliers,
competitors, new entrants and substitution (Fan, and et. al., 2017). Out of all these forces, it
has been observed that the selected organisation, "Royal Mail" is suffering most with the threat
of substitutes. This factor is highly responsible in decreasing the overall business value of the
entity by decreasing its sales. In the present era of digital advancements, the traditional mailing
system is getting outdates. It is also because of the fact that the mail service of the entity requires
more time to reach the recipients. In this fast late modernity period, amazing advances in the
communication sector are observed. There exist various method used by the people such as
emails, social media platforms, calls, SMS, etc. These alternatives are regarded as way more
better than that of traditional mails. There are certain reason behind this. First of all, the time
consumed in sending message to recipients is less, secondly these tools render ease of effective
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interaction. However, it should be recognised that still the formal conversations are made via
letters (Grant, 2016).
In order to analyse the key issues in the business strategies it is highly required by the
organisations to assess the internal factors of the entity. In order to analyse the internal
environment, Royal Mail can take assistance from the value chain analysis (Atighechian, and et.
al., 2016). There are various models that can be used for this assessment however, it should be
noted that the selected tool covers all the internal aspects of business by analysing the different
departments of companies (Schutte, and Barkhuizen, 2016). According to this, there are some
activities of an business that adds value in the final product or services rendered by the firm.
They can be further categorised into two categories depending upon their significance. They are
primary activities or support services. Primary activities involves Inbound Logistics, Outbound
Logistics and Marketing and Sales. Whereas support services encompasses of Infrastructure,
Technology Development, Human Resource Management and Procurement.
In context to the selected firm, the major issue has been observed in the business
environment of the organisation. It has been found that the Royal Mail is based on bureaucracy.
There are extremely strict policies implemented in the entity that are further regarded as the "red
tape". Royal Mail does not satisfy the customer's individual situation (Goldfarb, and King,
2016). The rationale behind this are the rigid standard policies and procedures that are solely
designed to maintain its highness. Thus, in this order, customers and employees seems it very
difficult to get their expectations approved. Further, the entity does not admits this is their
lacking point rather they believe that this rigidity is essential to sustain with their royal highness.
These deeds also makes people believe that the services of the entity will surely be inferior that
further results in decrement in the company sales. This, in turn, affects the overall business
value of Royal Mail.
Q.2 Resources and key capabilities of Royal Mail along with the critical success factors.
Resources and unique capabilities of selected organisation
Privatisation of companies generally impacts upon its independence, but in case of
selected firm Royal Mail it is reverse. It has been observed that even after the denationalisation
the chosen firm is having legal obligation to deliver letter in the entire country. The quality of the
services provided by the entity is superior and can not beat by the major competitors. It is also
because Further, the biggest thing which is in favour of the cited firm is it's brand image. The
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organisation is the oldest and existing since 501 years (Wheelen, and Hunger, 2017). Below are
some major roles that are played by the entity which brings effectiveness in its operations are as
follows:
Letters: In context to the services of the letters, the company ensures the effective delivery on
time. They further aims on maintaining high quality services that can boost the satisfaction of
customers. The marketing mail revenue is highly focused by the Royal Mail (Fan, and et. al.,
2017).
Customers: The chosen firm understand their customers as their key assets. Their loyalty is the
major goal to be gained. However, it should be recognised that the rigidity of rules somewhere
harms the customers expectations but they are taking various actions to gain the trust of
consumers. They have also taken an initiative of roll-out improved IT capability which will
improve access to products and services. Also, this addition will assist in gaining better visibility
of the mailings and improved customer data (Goldfarb, and King, 2016).
Besides all these deeds, the Royal Mail is also working on the development of account
management techniques to bring effectiveness in the financial operations of the entity. This
addition will reduce the number of errors in day to day operations. Consequent to this, the losses
will be deducted and cited establishment will experience more profitability.
Critical success factors of the industry
Critical success factors or CSF are essential for an entity to achieve its organisational
goals and objectives. In context to the present organisation, these success factors involves the
effectiveness of the services. The companies belonging to this industry should perform their
assigned tasks within an stipulated time period. Delivery of he letters should be on time. Also,
customers are required to be provided with the quality services (Fan, and et. al., 2017) Also,
they should follow all the legal obligations associated with the transportation, shipments, etc. In
addition to this, the industry can ensure success if it develops its market on the basis of needs and
demands of the people. These are those action phrases that should be performed well to achieve
the mission, objectives and goals of the business.
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Relation between the capabilities of Royal Mail Group and success advantages
The quality services of the Royal Mail will help in assuring the attainment of satisfaction
of customers. This trust will then help in increasing sales of the firm. In addition to this, the
capability of the firm, to handle large sized orders will be utilised by various people and other
entities. There are many things which are transported. However, it should be recognised that
sometime the size creates hurdle in this shipments. Hence, the ability of selected organisation to
deliver large size products will help it in standing out of the queue (Håkansson, and et. al.,
2016)
The investments made by the entity for the enquiry offices will help in improving the
experiences of the customers. This will later increase their trust for the Royal Mail. Consequent
to this, the organisation will observe rise in the profitability. In addition to this, the expansion of
local collect network is also a great initiative that the company is taking. This will improve the
reach of customers to the enquiry offices of the Royal Mail. The firm is further building on it's
operational performance by assuring effective strategies for all the identified lacking factors.
This will boost the performance of the people working there. Besides this, the implementation of
effective account management techniques that the losses of the firm will be reduced ensuring
more profitability (Dickson, 2017). In this way, the capabilities of the Royal Mail will help in
introducing these mentioned advantages.
Porter Generic Strategy of Royal Mail
According to Porter's generic strategies, there are three approaches that an organisation
can select top boost it's market value. These tactics helps in gaining competitive advantages. On
the basis of this benefit, business value can be expand. These are as follows:
Cost Leadership: It is the most effective method that Royal Mail Group can use to gain the
advantages over the key competitors. There are two methods of achieving this. The first is to
increase profits by reducing the cost associated with the resources. This is to be done while
charging industry average prices. The other way that Royal Mail can use to attain cost leadership
is to increase it's market share through charging low prices of the services (Jui, Trappey, and Fu,
2016). However, it should be recognised that it is suggested after making reductions in the
development costs.
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Differentiation: According to this theory, Royal Mail is suggested to produce such services
which are different from other and looks more attractive than those of the competitors. For this,
the entity should pay attention on the development and innovation of the services (Groves, and
Cape, 2016). It should be recognised that the entity is already rendering high quality services to
its customers. Also, the marketing and sales unit of the firm is effective in attaining business
objectives.
Focus: Entities which selects focus strategy as their tool are concentrated on the niche markets.
They focus on understanding the key needs and dynamics of those market places. Also,
customers within those places are examined to identify their needs. They are of two types namely
cost and differentiation depending upon the situations of the organisation.
The selected organisation is highly recommended to follow differentiation strategy. It bas
been observed that there is low completion in rte market and consequent to this, the buying
power is already low. However, to increase the market sales Royal Mail is suggested to develop
some innovative services to gain competitive advantage (Wheelen, and Hunger, 2017). The
suggested strategy for differentiation is the addition of digital and highly advanced systems that
can simplify the consumer and organisational procedure. Also, it will help in reducing the
manual errors.
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Source: Royal Mail Group, 2017
Q.3 Way in which the strategies address the issues using the three SAFe tests.
SAFe Test:
Strategies Suitable Acceptable Feasible
Changing the overall business policies timely. Yes No No
Making market research teams to analyse the
fluctuations regularly.
Yes Yes Yes
Providing digital platforms to customers. Yes No Yes
Improving timings associated with transportation Yes Yes Yes
Changing the rigid policies of the company Yes Yes Yes
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Illustration 1: Generic Model

Replacing existing bureaucratic leaders and
managers.
No No Yes
Issue 1: Impact of economical factors on business:
Strategies- 1. Changing the overall business policies timely.
2. Making market research teams to analyse the fluctuations regularly.
With the help of SAFe test, it has been observed that out of these strategies the most
appropriate that should be chosen by the Royal Mail to address the impact of economical factors
on business is developing effective market research. This will assist in achieving the daily
updates as per which the entity can make business decisions reflecting the suitability. Further, as
this technique is beneficial for all stakeholders thus it is acceptable also. In context to feasibility,
it is way more easier than developing new polocies in every few months. This research is thus
economically and timely feasible too. It has been found suitable, feasible and acceptable. On the
other hand, alterations in the complete financial policies are not possible to conduct. It is because
of the limitation of resources such as time and money (Groves, and Cape, 2016).
Issue 2: Threat of substitutes by digital advancements:
Strategies- 1. Providing digital platforms to customers.
2. Improving timings associated with transportation.
As per the SAFe test, it has been observed that out of the mentioned strategies to address
the threat of substitutes, Royal Mail should selected improvement in the timings of
transportation. It has been found that rendering digital platforms will completely destroy the
virtue of the firm. Henceforth, it can not be accepted (Wheelen, and Hunger, 2017). On the other
hand, improvements in the lacking factors can lower down the threat of substitution of business.
The suggested strategy fits in all the elements of SAF.
Issue 3: Bureaucratic environment of business:
Strategies- 1. Changing the rigid policies of the company.
2. Replacing existing bureaucratic leaders and managers.
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From the SAFe test that has been performed to analyse that either the strategies address
the issues or not, it has been observed that in order to improve the bureaucratic environment of
the entity, Royal Mail should change the extreme rigid policies. The other strategy chosen for
this issue is the replacement of existing leaders. However, it should be recognised that there is no
surety that the upcoming managers will not perform in bureaucracy. Also, this replacement can
raise the situations of conflicts in the organisation. On the other hand, the strategy of altering the
rigid policies fits in all the criteria. Firstly, they will change the internal business environment.
Also, these policies highly affects the employees and customers which are the major stakeholders
of firm. replacement of these rules are thus acceptable too. As the entity can bring them without
much efforts so it fits the feasible criterion too (Groves, and Cape, 2016)
Recommendations for improvement
There are numerous tools that Royal Mail can make use of for reducing the business
challenges that are being faced by it. It has bee identified that the technical lacking factors can be
filled with the development in this sector only. For this, the entity is suggested to introduce new
digital equipments that can increase its profitability. In addition to this, to ensure appropriate
development of the services, the Royal Mail is recommended to perform effective market
research and development techniques.
CONCLUSIONS
Strategic management of an organisation plays a very crucial role in maintaining its'
effectiveness. However, for achieving this management, it is necessary to perform an overall
analysis of the firm to identify all the internal and external factors that can impact upon its
business value. In the present report, all the macro and macro factors are studied for the selected
organisation. On the basis of the results of these examinations, some key issues are drawn out.
Further, to evacuate this challenges, strengths of the entity has been identified. Moreover,
effective strategies are suggested in this report to deal with the identified issues.
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REFERENCES
Books and Journals
Atighechian, G., and et. al., 2016. Are Macro and Micro Environment Affecting Management of
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Dickson, P., 2017. The Role of Strategic Analysis in Operations. Strategic Analysis in
Support of International Policy Making: Case Studies in Achieving Analytical
Relevance. pp.111.
Fan, Y., and et. al., 2017. Service strategy to improve operational capabilities in the
public sector. The Service Industries Journal. pp.1-23.
Goldfarb, B. and King, A.A., 2016. Scientific apophenia in strategic management
research: Significance tests & mistaken inference. Strategic Management Journal.
37(1). pp.167-176.
Grant, R. M., 2016. Contemporary Strategy Analysis Text Only. John Wiley & Sons.
Groves, P. and Cape, S., 2016. Case Studies in End-to-End Delivery Competition. In The Future
of the Postal Sector in a Digital World (pp. 121-136). Springer International Publishing.
Håkansson, N., and et. al., 2016. Improvement of animal welfare by strategic analysis and
logistic optimisation of animal slaughter transportation. Animal Welfare. 25(2).
pp.255-263.
Jui, C. W., Trappey, A. J. and Fu, C. C., 2016. Strategic analysis of innovative laser interference
lithography technology using claim-based patent informatics. Cogent Engineering. 3(1).
p.1240054.
Schutte, N. and Barkhuizen, N., 2016. The Development of a Strategic Leadership
Competency Measure for Public Sector Leaders–A Pilot Study. Development.
2(3).
Song, J. and Tsai, W., 2017. January. Performance Consequences of Seeing Opportunities in
Competition: The Role of Industry Analysis. In Academy of Management
Proceedings(Vol. 2017, No. 1, p. 14606). Academy of Management.
Wheelen, T. L. and Hunger, J. D., 2017. Strategic management and business policy. pearson.
Online
Royal Mail Group, 2017. [Online]. Available through: <https://www.royalmailgroup.com/about-
us/our-strategy>
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