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):

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1. The Royal Mail Group except the Sundays and the bank holidays is capable of
delivering letters and parcels from Monday to Saturday across each of the address in United
Kingdom. This implies that a delivery person needs to visit each of the village road and street in
all the areas of UK on six days a week basis even when there is a substantial fall in the mail
volume.
2. The Royal Mail Group is capable of ensuring a parcel delivery up to 20 kg. This refers
to the ability of the company in delivering parcels and letters to most of the areas within the
country on a day-to-day basis.
3. The company is also capable of maintaining a network of the access points at specific
density. Royal Mail Group makes an effort in making at least a single collection of letter from
Monday to Saturday. This implies that servicing of the given network for collection on a weekly
basis regardless of the number of letters in each of the post boxes.
4. The company is also capable of meeting higher quality service targets that refers to the
delivery of close to 93 percent of first class mail within single working day and 98.5 percent of
second-class mail within three days of working. This ensures contributing to higher fixed cost
based due to the need for the timely delivery on a constant basis across UK. The company
however faces regulatory sanctions if there is a failure in meeting the higher quality standards.
5. Royal Mail Group is also capable of providing affordable service at uniform tariff.
This implies the inability of the company in more. Therefore, the revenues rose while serving in
the low cost urban areas must offset against high cost prevailing in the rural areas.

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2.A. 3. Grocery Industry and CSI
According to Nixon (2012), the proposed closure of the postal service has encouraged
companies like the Royal Mail Group Plc in setting services with small grocery stores that
enabled them in maintaining their service at a lower cost. This is because in recent times, the
company has incurred loss in its profits from £ 335 million to £ 212 million in terms of the cost.
This also had an impact on the shares of the company that came down from 568.2p to
4.86pc.Therefore, the company decided in providing mailing services to the stores even in the
rural areas.
In recent times however, the mail volume for the postal service has plummeted due to rise
in online coupons, e-mail and the electronic bill payment. As per figures, the mail volume
decreased by close to 25 percent compared to the last five years with projections showing
increasing rate of this decline (royalmailgroup.com 2018). This left the postal service agency like
Royal Mail Group in facing a tough time in terms of the cost structure given the history of the
labor contracts offering pension and health benefits and no provisions for the layoff. There were
even laws for restricting the abilities of reducing the frequency of the deliverables. However,
services provided to the grocery stores do not save the agency but help it in reducing the cost
while maintaining its services.
The Royal Mail Group however is one of the trusted and preferred postal delivery service
companies in CSI Brand Business Tracker in the survey undertaken between 2016 and 2017.
2. A. 4. Corporate Social Responsibility (CSR)
The strategy for business and the corporate social responsibility (CSR) of Royal Mail
Group shares the same goal of generating the sustainable value of shareholder. The CSR

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however remains an integral portion of the business model of Royal Mail Group
(royalmailgroup.com 2016). The CSR helps in supporting the business for delivering social and
economic benefits to the community, sustain active support of the employees and in managing
the use of the resources in a sustainable manner thereby ensuring carrying out the operation with
integrity.
2. B. Factors that Give Company Competitive Advantage
The resource and capabilities of the company enables Royal Mail Group in providing
advantages of Universal Service to the customers. Irrespective of whether the customers are
within UK, they benefit from the company’s commitment towards higher quality collection and
reliable delivery of the service. However, in the year 2013, Ofcom, the regulatory service,
mentioned that the postal service was not only affordable but met the needs of the business users
and the individuals (royalmailgroup.com 2014). The surveys undertaken by Ofcom, showed how
people recognized the social benefit received from Universal Service that included support
extended to the rural communities and in supporting the elderly population. This reflected the
difference in usage patterns amongst the households with post holding a significant importance
amongst users in the age group of 65, housebound and the disabled users and those people
belonging to the offshore and the rural areas. The wide societal benefits of Universal Service
enabled it to earn the status of VAT exemption on specific services and Royal Mail Group being
a Universal Service Provider was no different. However, the provision allowed the company in
delivering services at a reduced price to the users.
3. A. Evaluation of Competitive Strategies Addressing Strategic Issues

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3.A.1 Environmental
The Royal Mail Group remains not only committed and responsible but also understands
and manages the impacts and embeds the principles of sustainability in the way of doing
business (royalmailgroup.com 2010). As one of the key postal operator of UK, the company also
recognizes in having a significant role in the wider sustainability agenda. The company therefore
builds its approach based on the five primary objectives that includes:
1. Ensuring an effective structure of governance structure in place for driving the
company towards its ambition
2. Developing partnerships and engaging with the employees, stakeholders and customers
and for delivering a lasting change.
3. Avoiding and reducing the negative influence across the value chain and adding
economic, environmental and social value.
4. Adapting the businesses to the influence of the climate change
5. Ensuring continuous improvement of the approach towards sustainability through the
review of strategy
3. A. 2 Stakeholders
Royal Mail Group is a business focused on the stakeholders. As the provider of Universal
Service, the company has the ability of delivering to close to 30 million addresses by operating
six days a week. The company belongs to the part of the social fabric of UK. The stakeholders
who remains vital in defining the company’s success and the ongoing sustainability of the

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business includes the local communities, consumers, government, businesses, charities,
suppliers, NGOs and media associations(royalmailgroup.com 2018).
3.A.3 Feasibility
The feasibility of Royal Mail Group is determined by its value chain that helps in
analyzing the internal activities of the firm and acts as the differentiation advantage to the firm
that on improvement can provide a competitive advantage (royalmailgroup.com 2010). Some of
the key facts include:
1. It delivers and processes close to 71 million items across 28 million addresses for the
lowest price. The company had a network of close to 12000 branches of Post Office that serves
close to 20 million people. Besides the company’s European and domestic parcel business
handles close to 400 million parcels.
2. The company also produces and designs special products and stamps for celebrating
vital occasions.
3. The company now close to 700,000 cars, home insurance facilities and 2000 installed
ATMs that are free to use. Royal Group is also one of the leading suppliers of foreign currency
in the UK market with close to 25 percent share of the market. The company also issues close to
one million policies of travel insurance along with facilities like savings, credit cards, mortgages
and cash to the debit cardholders of UK.

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Figure 3: Value Chain Analysis of Royal Mail Group
Source: (Rothaermel 2015)
B. Suggested Improvements
The initiatives undertaken for improvement with focus on cost are as follows:
 Improvement of the efficiency in the logistics network via use of telemetry
 De layering of the management structures
 Reducing the number of air and road routes
 Reduction of facilities and ensuring the fact that the company has an accessible delivery
of office network across UK
 Ensuring continued progress of the progress efficiency in using shared delivery of
resources for collecting mails from lower volume post boxes
 Bringing down the cost in the central functions

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The initiatives undertaken for improvement with focus on technology and improvement
 Rolling out newer personal digital assistant (PDA) technology in the core network
 By introducing newer functionality to the newer postage service by making it easier and
quicker in buying online postage and printing of the address labels
 Through the development of the shipping solution on a global scale through usage of the
cross border capabilities
 Allowing customers in printing delivery and the return labels with the help of the mobile
phones at the customer service points
Conclusion:
To conclude one can say that, Royal Mail Group represents one of the affordable and
most trusted mailing service providers of UK. The report conducted an extensive analysis of
Royal Mail Group and explained the findings that indicated the strategies that the company
implements that provides it with an advantage and edge over the competitors in the courier and
mailing service industry of UK. The research also indicates that the service put forward by Royal
Mail Group is somewhat superior to the competitors and it covers a greater geographical area
compared to the competitors.

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[Accessed 23 Aug. 2018].
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Appendix:
6.1 PESTEL
It is a strategic method of planning for reducing the threats of a business. The framework
involves examining the political, economical, social, technological, legal, and environmental
factors that will help the firm in gaining important advantages. The advantages help in
developing the idea for the product development, product launch, strategies for content
marketing and other factors that helps in increasing the success of the company. In other words,
the PESTEL framework provided Royal Mail Group with a deeper understanding of the
business.
6.2 Porter’s Five Forces
Porter's Five Forces represents a tool for analyzing the competition faced by Royal Mail
Group. The five forces of Porter are derived from the economics of the industrial organization
that ensures determining competitive intensity and the attractiveness of the industry based on the
profitability. In other words, Porter's Five Forces acts as a vital tool that shapes the competition
within the industry in which Royal Mail Group operates. The competitive rivalry determines the
strength of the competition and the threat of substitution determines the extent of using the
different services and products.
6.3 SWOT
SWOT analysis represents techniques of strategic planning used for helping an
individual or an organization in identification of strengths, weakness, opportunities and threats
and is related to project planning or business competition.

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6.4 Links between Resource, Capability and Advantage
The resources represent the assets controlled by a firm used as the inputs to the various
process of the organization. The capability represents the ability of the firm in combining,
developing and using the resources for the creation of the competitive advantage.
6.5 Value Chain
Michael Porter developed the value chain that represent a higher-level model for
describing the process through which a business receive raw materials, adds in value to raw
materials through different processes for the creation of a finished product and then selling it to
the customers.

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