Corporate Strategy of Royal Mail Group Plc: Strategic Analysis Report

This report provides a detailed analysis of the corporate strategy of Royal Mail Group Plc, focusing on three key strategic issues: intense competition in the postal market, the declining mail market due to e-substitution, and cultural challenges within the organization. The analysis includes a macro-environmental assessment using PESTEL factors and a micro-environmental analysis with SWOT and Porter's Five Forces. The report identifies the company's unique resources, such as its extensive workforce and universal postal service, and unique capabilities, including service delivery. It examines factors contributing to its competitive advantage, such as price and quality service, and evaluates the extent to which the organization's competitive strategy addresses its strategic issues. The report also provides suggested improvements regarding environmental considerations, stakeholder management, and feasibility, concluding with recommendations for enhancing Royal Mail Group Plc's strategic positioning.

Running head: CORPORATE STRATEGY
Corporate Strategy
Name of the Student:
Name of the University:
Author Note:

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Executive Summary:
The report gives an overview of the corporate strategy of Royal Mail Group Plc. The company is
known for the delivery of postal service across the United Kingdom. The report commences with
an introduction about the company. There is identification of the three key strategic issues and
the strategic capabilities of the organization. There is also discussion about the firm resources
along with the identification of key factors that results in competitive advantage. In the report,
one can also find suggestions for improvement with respect to environment, stakeholders and
feasibility.

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Table of Contents
1. Three Key Strategic Issues..........................................................................................................3
1.1 Macro Analysis:.....................................................................................................................6
1.2 Micro Analysis:......................................................................................................................8
1.3 Industry Analysis:..................................................................................................................8
1.4 Competitive Analysis.............................................................................................................9
2. A. Resources and Key Capabilities of the Organization..........................................................10
2. A. 1. Unique Resources..........................................................................................................10
2. A. 2. Unique Capabilities......................................................................................................10
2.A. 3. Grocery Industry and CSI..............................................................................................11
2. A. 4. Corporate Social Responsibility (CSR)........................................................................12
2. B. Factors that Give Company Competitive Advantage...........................................................12
3. A. Evaluation of Competitive Strategies Addressing Strategic Issues......................................13
3.A.1 Environmental..................................................................................................................13
3. A. 2 Stakeholders...................................................................................................................14
3.A.3 Feasibility.........................................................................................................................14
Figure 3: Value Chain Analysis of Royal Mail Group..................................................................15
B. Suggested Improvements..........................................................................................................15
Conclusion:....................................................................................................................................16

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References:....................................................................................................................................17
Appendix:......................................................................................................................................20
6.1 PESTEL...................................................................................................................................20
6.2 Porter’s Five Forces.................................................................................................................20
6.4 Links between Resource, Capability and Advantage..............................................................21
6.5 Value Chain.............................................................................................................................21

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Introduction:
The report aims at providing an insight into the corporate strategy of Royal Mail Group
Plc. It is a subsidiary of Royal Mail Plc and is responsible for operating courier and postal
service in United Kingdom. The company had its establishment in the year 1516. The company
is responsible for mail collection and the delivery of services across United Kingdom. The letters
deposited are in either a wall or pillar-box taken to the post office or collected in bulk from
various businesses. Royal Mail Group Plc makes sure that the letters are delivered every day
except the bank holidays and the Sundays at the uniform charges across all the destinations of
UK.. The company puts forward public service and operates as either a public corporation or a
government department. According to the Postal Service Act of 2011, major portions of shares of
Royal Mail plc were floated in the London Stock Exchange in the year 2013. The government of
UN initially tried to retain close to thirty percent of the stake of Royal Mail but sold the
remaining shares in the year 2015. The report here helps in identifying three key strategic issues
faced by the organization supported by the fact why they seem to be strategic. The report also
discusses the key capabilities and the resources of the firm along with identification of the key
factors that results in the competitive advantage of the company. The report also identifies how
the competitive advantage helps in addressing the strategic issues along with putting forward
necessary suggestions for improvement.
1. Three Key Strategic Issues
First Key Issue: The Royal Mail Group Plc faces a tough competition in the postal
market after the act of complete liberalization in business of express packaging (Pooler 2017).
The primary competitors in parcel delivery were Deutsche Post, Track and Trace (TNT), and

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certain airlines provided the express packaging service. The issue is a strategic one since the
growing competition badly hit the revenue expectations of the company thereby sending the
share prices down to the lowest level. The shares of the postal delivery service fell by 4.5 percent
and closed down by 3.43 percent at close to 450 P. In other words, the company had a weaker
performance in the delivery of the parcels that led tighter cost control and higher focus on the
letter business so that it achieves a profit forecast of a full year. In fact, the intense competition
led the parcel revenue to come down by one percent and volume to go up by one percent.
Figure 1: Market Data of Royal Mail since Floatation
Source: (Groom 2013)
Second Key Issue: The declining mail market led to the commissioning of a review. The
total mail volume for Royal Mail decreased by close to two percent compared to the preceding
year. The reason for this has been the e-substitution that involved the businesses in offering the
customer with alternatives of traditional forms of mail that included texting through mobile
phones and e- bills (Rodriguez, Soteri and Tobias 2018). The government therefore made an
announcement on the review of the postal service market of UN in the year 2007 that led to an
underlying uncertainty inside the mailing market. Some service were removed with a publication

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of a long awaited report in the year December, 2008 that mentioned either to modernize or
decline postal services based on the policies for maintaining universal postal service. The issue
remained a strategic one since close to 87 percent of the mails initially sent via Royal Mail now
sent via digital communication thereby reducing the profitability of the company. This also
reduced the efficiency of the UK economy in safeguarding jobs in times of the financial down
turn. The losses faced by Royal Mail also led to the widening of the pension deficit. The
introduction of the European data laws also led to the reduction of letters sent. The new law
made it difficult for the companies in sending unsolicited mails to the customers. This led to the
slipping of the company’s profits from £ 335 million to £ 212 million in terms of the cost for
overhauling parts of business.

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Figure 2: The Decline of the Shares of Royal Mail Inc
Source: (Curry 2018)
Third Key Issue: The culture acted as one of the key strategic issues faced by Royal
Mail Group Plc. In recent times, the company not only lacked providing the customers value for
their money but consistency in higher quality delivery from every member of the company.
Royal Mail Group also did not have the flexibility or the freedom in defining prices based on the
real costs. However, the implementation of the flexibility could make the company succeed in
the newly competitive environment (royalmailgroup.com 2018). The competitors of Royal Mail
Group had already targeted the business mail so the company in order to survive required
undertaking competition with them on a price as well as the service basis for keeping its
universal service in business.
1.1 Macro Analysis:
Political:
Political factors of a country have a key role in determining the factors that influences
long-term profitability of Royal Mail Group Plc (royalmailgroup.com 2018). However, for
achieving success within a dynamic industry, it is necessary for the organization to analyze the
political stability, the risk of the military invasion, level of the corruption and interference and
bureaucracy. United Kingdom represents a successful nation as per application of the rules of the
law, effectiveness of the government, control of the corruption and the quality of the regulatory
authority
Economic:

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The Royal Mail Group Plc can use the inflation, growth rate and the economic indicators
of the industry for determining the trajectory of its growth within its own sectors. However, UK
in this respect experiences a robust growth with the highest growth rate recorded at around 3.8
percent during the year 2000 (Cairncross 2013).
Social:
According to Ervik and Linden (2013), the shared attitudes and beliefs of the people play
a vital role for the marketers of the company in understanding the customers of a particular
market. However, in this context, UK has a higher dependency ratio and therefore there is much
difficulty in maintaining the standard of living due to the shrinkage in the workforce.
Technology:
A firm like Royal Mail Group Plc should not only undertake technological analysis but
also consider the speed of the technological disruption as it directly influences the profitability of
the business. UK, however, experienced advancement in technology with the introduction of the
broadcasting, digital and telecom networks (De Prato and Simon 2014).
Environmental:
Environmental standards or norms vary across markets thereby affecting the profitability
of the organization. Therefore, before making an entry into the newer market it is necessary for a
firm like Royal Mail Group Plc in carefully evaluating the environmental standards. Eberlein et
al. (2014), the government of UK played a vital role in developing the European environmental
standards for promoting sustainable development strategy that put forward a management

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structure for ecological, social and economic development of European Union thereby enabling
integration of environmental directives to other policies.
Legal:
A firm like the Royal Mail Group Plc should consider the legal framework before making
an entry as it might help in defining the competitive edge of the firm. In this context, UK has a
strong legal framework. The country however, made changes in the labor law that put across
various provisions for the benefit of the workers like minimum wage, combating discrimination
and the paternity and the maternity benefits (Larcker and Tayan 2015).
1.2 Micro Analysis:
SWOT Analysis:
Strengths
1. Offers diverse products
2. Wider customer base
3. Renowned brand with a rich heritage
4. Employees over 150,000 employees
Weakness
1. Stricter regulations influences the efficiency
of the organization
2. Usage of emails for the purpose of
communication led to the decline in the
profitability of the business

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Opportunities
1. Have strategic tie ups with the E-commerce
firms
2. Conduction of knowledge transfer session
about the brand
3. Expansion into other countries like the
continent of Europe
Threats
1. Presence of private level e-commerce
companies
2. Liberalization of the postal service
3. Involvement of the millennial in using postal
services
1.3 Industry Analysis:
Porter’s Five Forces
Threat of the New Entrants:
According to Van, Parker and Choudary (2016), the new entrants in the Industrial Goods
and Services brings in innovation, newer means of doing things and putting pressure on the
Royal Mail Group Plc through the reduction of cost, lower strategy for pricing and providing
newer value propositions to customers. The firm can however tackle the threat of the newer
entrants through innovation of newer services and products, through building the economies of
the scale that enables it in lowering the per unit fixed cost and through spending money and
building capacities in the research and the development.
Threats of the Substitutes:
According to Afuan (2014), Royal Mail Group Plc can however handle the threat of the
substitutes by undertaking service orientation rather than the product orientation, by

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understanding the need of customers instead of considering what he/she buys and by enhancing
switching cost for customers.
1.4 Competitive Analysis
Competitive advantage of the Royal Mail Group lies in its price and quality service. The
company offered the best quality and price to its customers (Crozier 2016). Besides, Royal Mail
Group also changed their organizational strategy thereby offering various services. Further, the
prices and the strategies of the company are quite beneficial in both the short and the long run
thereby giving the company an edge over the competitors.
2. A. Resources and Key Capabilities of the Organization
2. A. 1. Unique Resources
The Royal Mail Group is the key provider of Universal Postal Service in UK providing
services six days a week. The company also believes in maintaining a single price across 29
million addresses across UK. The company is one of the largest and operates in very challenging
environment. However, the key resources of the company are its employees that define the
success of the company. The company employs close to 159,000 people and remains committed
in preserving the trust of the employees (royalmailgroup.com 2018). Thus, the commitment of
the employees has made it possible in satisfying the need of maximum number of customers
thereby helping Royal Mail Group in attaining a competitive advantage.
2. A. 2. Unique Capabilities
The key points include (royalmailgroup.com 2018):