Strategic Decision Making: River Island's Business Strategies Report

This report presents a strategic analysis of River Island, a UK-based fashion retailer, focusing on its strategic decision-making processes to improve product services and maintain a competitive advantage. The analysis includes an overview of River Island's business, its internal and external environment, and the application of tools like SWOT and PESTLE to assess its performance. The report delves into the company's strengths, weaknesses, opportunities, and threats, and evaluates the impact of political, economic, social-cultural, legal, and technological factors. Furthermore, it examines Porter's Five Forces model to assess the competitive landscape and discusses strategic capabilities and generic competitive strategies such as cost leadership, differentiation, and focus. The report concludes with strategic choices for marketing and competition, offering recommendations for River Island's future strategies.

Strategic Decision Making
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ABSTRACT
Strategic management for River Island to improve its product services are described that
affects organisation's effectiveness and its implementation. However, analysis of entity's
performance using SWOT and PESTLE are introduced by which further decisions can be made.
In this regard, strategies to be implemented for marketing and competitive strategies of
organisation are described through this assignment.
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TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................3
a) Internal and external environment analysis.............................................................................3
b) Enlargement of strategy...........................................................................................................6
c) Identification of strategic choices............................................................................................7
Conclusion.......................................................................................................................................8
Recommendation.........................................................................................................................9
REFERENCE.................................................................................................................................10
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INTRODUCTION
Strategic management includes systematic planning process to resolve uncertain changes
which takes place in the business. It requires forecasting and decision making tools so that better
decisions can be taken in the enterprise. . Organization formulates and implements strategy for
accepting uncertain changes like technological dynamics or sudden issues due to flexibility in the
competitive market. The present report is prepared on the basis of strategic decision making
process of River Island retail industry of UK.
Overview
It is a popular fashion, clothing and textile retailer which serves millions of consumers.
Company was mainly founded in year 1948 by Bernard Lewis. It has been noticed that business
firm is operating its worldwide operations from London based headquarter. Moreover, the report
will highlight the controllable and uncontrollable environmental factors and their effect on the
retail industry. In addition to this, it focuses on the company plans to sustain the position in
market and gaining competitive advantage for the enterprise.
a) Internal and external environment analysis
River Island identifies business environment through understanding of internal and
external factors. Internal factors helps in managing resources and analysing action plans for
better control over activities. Production and distribution of cosmetics and textile items are
recognized by retail firm on the basis of planning strategy. It helps to gain higher efficiency in
the terms of production (Kroon, Van and Timmers, 2013).
Pestle Analysis
On the other hand, elements which are beyond the control of business come under
external factors which have direct impact on goodwill of the organization. These include
political, sociology-economic, legal and technological elements. Political factors: - These factors involve tax rates and interest rates. Changes in
government policy might affect the monetary position of River Island. For example, UK
government has decided to increase the interest rates on loan amount then it will force the
retail firm to have decrease in loan process. If policies are not referred then it will create a
financial liability burden on business. (Strategic management, 2016). UK government
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relation with other nations also need to be consider because improvement in relation with
other nations will allow to gain better trade opportunities in international market. Socio-economic elements: - Economic profile includes financial and monetary terms
which are directly related to GDP. For example, increase in income level advances the
purchase power of citizens. It means demand of branded products of River Island will
also increase which will impact the sales and profit of organisation. On the other side, the
social values also influences the overall development of retail firm. For instance,
customers are nowadays demanding low prices products with good quality. If River
Island is not offering products as per such social need then it will affect the business
outcome. Social and cultural status of people which plays a significant role in influencing
purchasing behavior of buyers (Power, Sharda and Burstein, 2015). It is needed that this
element should be considered for making effective strategies for the enterprise. Values,
trends, cultures and social norms that affects the buying behavior of people and due to
that sales activities of enterprise gets affected. Legal and technological components: - River Island tries to produce good quality of
fashionable branded products. Therefore, it generates new ideas to make more qualitative
goods. Policies formed by government and other norms rights comes under legal
environmental factors business to long run sustainability of organization (Manski and
Neri, 2013). It is vital that legal guidelines given by government should be followed
properly. If business firm is not having reference of legal and values then it will affect the
licensing and other legal requirements of retail business. Other than this, changes in
technological aspects also affects the business development. For instance, company has
installed new machinery for better production but new technology has been introduced in
the market. In order to meet international standards the River Island firm will require to
reinvest on new machinery to have proper operations. It might delay the project or
increase the expense level.
SWOT analysis
SWOT analysis identifies the strengths, weaknesses, opportunities and threats for River
Island. Thus, proper analysis of company's position is determined with the help of SWOT
analysis.
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Strengths
 Good brand image in the international
market.
 Wide range of stylish and branded
fashion products
 High level of customer satisfaction
(Bull and et.al., 2016).
 Sets strategies to adopt changes
Weaknesses
 Improper segmentation of men, women
and children clothes which impacts
market performance of River Island
 High turnover of workers due to dis
satisfactory facilities in the company
 Quality of cloths differ in context to
market segments
 More concentration on the fashion
products (Kazana and et.al., 2015).
Opportunities
 Producing attractive qualitative
services
 Apply the latest techniques for
implementation and analysis process
 Attractive advertising techniques to
pull consumers at a large scale
 Company can expand business in Asian
market
Threats
 Attraction or repulsion of buyers
towards goods and services
 Changes of needs for retail items in the
competitive market (Comino and
Ferretti, 2016).
 High level of competition may impact
performance
 Price determination of finished
materials
Porter's 5 forces model
Competition analysis can be effectually done through Porter's 5 forces model (Kolios, Read
and Ioannou, 2016). It is a useful tool that aids for assessing threats and opportunities that
company is facing in market. Supplier power: - Bargaining power of suppliers of River Island is low. It has been
noticed that number of suppliers are available in the market who offer same services so
company can have better bargaining with suppliers. If one supplier is not meeting
standards then management can switch to another one.
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 Buyers: - In addition to this, it can be said that bargaining power of customers is high
because the success of retail sector dependent over customers. River Island produces
services as per the actual market needs. Increasing in demand for clothing and textile
services impacts the company's performance (Smith, 2014). Therefore, consumer’s views
and perception towards products presents effectiveness of the retail industry. It is
necessary for company to have changes in products as per customer need so that better
satisfaction level can be maintained.
 Competition strategy: - Firm has positioned itself in the market in such a way that it can
face tough competition (Wall, 2014). Thus, evaluation of competition and manner in
which it is evaluated supports in assessing strategies adopted by rival firms. Sometimes,
River Island is facing issue of intense competition prevailing in the market as well as
location of firm in comparison to other retailers is also not that appropriate. So, it is
required to focus upon strategic plans to increase productivity and profitability. Threat of
competition is high because number of retail organisations are operating in the market.
Competitors like other retail sector entities as Iceland, Primark, John Lewis partnership
gives competition to River Island for sustaining in market which affects customer loyalty
and their attraction towards product services of the entity. It means management of River
Island need to focus on such values properly in order to deal with competition issues.
 Threats of new entrants: - Threats presents risk factors of River Island to operate
business activity (Matzler and et.al., 2013). Thus, it is needed to reduce risk factors by
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Illustration 1: Porter five forces model
(Source: Porter's 5 forces analysis, 2016)

strategic planning to sustain position in the competitive market. However, the treat of
new entrants is low because retail sector demands a high level of investment which might
be a critical task for new entrants. By having an identification of key aspects the issues
can be overcome.
Although, it is great tool to analyse the position of River Island in competitive market but
also it possesses some limitations such as imperfect research or misunderstanding between target
and action plan activities. Therefore, organization is required to be focused on weaknesses and to
reduce the same.
Strategic capabilities
In addition to this, it can be said that River Island is having a better opportunities in
regard to continuous development because of effective strategic options. It has been noticed that
stakeholders are having an effective involvement in the organisational practice. It allows to
improve the organisational performance in desired manner. Along with this, market image of
company is also highly impressive which allows to ensure that management is having sustainable
practice. By analysing the strategic strength the business firm can have continuous improvement.
Cost measures are not properly employed which affects the strategic capabilities. It is necessary
for organisation to have impressive analysis of measures so that issues can be resolved.
Appropriate information about customer needs also allows to have better opportunities because it
assist in product development.
b) Development of strategy
River Island makes strategic plans to make industry's position strong in the competitive
market. Including this, it also proceeds in decision making stages to maintain as well sustain
qualitative products in the market (Kolodner, 2014). Further, River Island does planning to
reduce risks as well for developing activities to positively influence the business operations. It is
vital that systematic and organized approach should be used for formulating action plans for the
enterprise. By having an appropriate learning about the planning stages the management of River
Island is considering effective development of strategies. In order to have effective development
of strategies the business firm mainly focuses on the identification of needs. Without having
information in regard to specific needs the decisions cannot be taken into account. Along with
this, needs must be identified in desired manner with proper information about strategic options
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available. After this, the options are being selected for implementation so that issues can be
resolved.
Generic Competitive Strategies: - The strategy is related to determining profitability of
River Island. It is a technique to balance sustainability for long term stability of organization.
Furthermore, retailer can take advantage of competition in two forms, that is, low cost and
differentiation. These two tools present the market position of clothing wear and fashion
products like cosmetics and beauty items. Cost leadership: - I. Cost determination at low scale increases demand and high
productivity of the resources. Clothing products can be sold at reasonable price rates so
that more number of consumers should purchase commodities offered by enterprise. In
this, River Island must focus on factors that allows to manage cost in appropriate manner
so that overall outcome can be advanced. Differentiation: - Industry seeks to mix one or two characteristics in products to make
them more qualitative as well as unique. Hence, addition of unique substances in fashion
items offered by River Island leads to increase the demand (Kolodner, 2014). Different
variety of textiles and clothing wear for all age groups is also one of the benefits.
Division of goods and services as per determined goals remains beneficial for the
strategic planning and due to this systematic utilization of services occur in the
organization. In this, River Island must focus on improvements in products that might
help in creating unique identification in the market. By having continuous improvement
in the process such measures can be taken into account.
 Focus: - Retail industry focuses on both the factors, that is, cost and differentiation to
achieve effective position in the competitive market. It proceeds to segmenting and
positioning technique for proper management and application of the pull strategy (Kim
and et.al., 2014). Along with this, River Island need to improve the performance on the
basis of specific measure so that company can focus on diverse development. For better
performance improvements the company must design strategy to have specific
development.
Concept of strategies for maintenance is a great idea to improve strategies and to strongly
focus upon the action plans. It can be critically analyzed that River Island faces issues during
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promotion of services and in gaining sustainable value in the market (River Island, 2016).
Therefore, organization is required to set systematic strategic decision making process to adopt
changes and produce high quality items to achieve maximum level of customer satisfaction. By
having an effective consideration of diverse measures the River Island is having continuous
development. It also allows to have better performance development so that goals and objectives
can be accomplished. Moreover, company must have specific consideration of needs on the basis
of market trends. Afterword’s, the selection of tools can be taken into account for sustainable
opportunities.
c) Evalution of strategic choices
Management process to achieve objectives involves evaluation of activities (Hollensen,
2015). It is beneficial to control over excess and add extra quantity or quality to reduce deficits.
River Island develops strategic decision making process as Generic competitive strategy which
analyses potential of the firm and its produced items value. Further, next step is to recognize the
difference between actual and standard position. It generates ideas to control over excess and
increasing in less quantity of production. It is done by SAFe analysis. In addition to this, it can
be said that by having a proper understanding of key measures in respect to strategic choices the
overall performance has been advanced. Improvement in standards has allowed to maintain the
sustainability. In order to have analysis of performance the balance scorecard has been
employed. It has informed that collective work is highly impressive which assist in meeting long
term goals. Moreover, existing performance of business is being analysed on the basis of
standards set out in balanced scorecard.
SAFe analysis stands for suitability, acceptability and feasibility evaluation. Checking of
performance indicates comparison between actual productions and must be systematic and
appropriate. (Burchett and et.al., 2015). At first, during determination of stages, opportunities
and advantages are recognized then acceptance of changes is done. This tool provides an
effective medium for assessing suitability, acceptability and feasibility. Existing performance of
business can be analyzed and it will aid for taking strategic decisions for the enterprise.
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 Suitability: - In this process, River Island focuses on economic portfolio and business
environment. Overall performance of strategic planning actions occurs and suitability of
action plan that is formed by organization is done.
Recent strategic plans are preceded by retail industry to face competitive strategy and build
existence in cut throat competitive market (Yuan, 2013). With the help of tool as suitability finds
monetary scale at the growing level. . It analyses that the company more focused on the fashion
and clothing items but did not emphasize on textile area so imbalanced occurred between action
plans. Therefore, industry is required to grab opportunity to balance and resulted to create
positive environment. Current strategic plans of the organization are effective and supporting in
gaining required objectives and goals of enterprise. Acceptance: - Suitability defines about effectiveness of business strategies and suitability
of action plan is defined. Thus, acceptability of positive and negative factors helps in
reaching the goals of the organization. It involves attitude and perception of buyers
towards items and it aids for accessing needs and preferences of consumers.. In addition
to this, River Island accepts dynamics which emerge during transaction activity.
Stakeholder views and market research are recognized to face high competition and
attract users at the maximum level (Dan, 2014).
 Feasibility: - Evaluation of cash flow such as monetary profile as forecasting and
decision making process for future trend is obtained here. It is necessary to present
clothing and textile products supplement and profit earning capability of the firm. Funds
including investment and sources to allocate finance and time required for implementing
the strategy is identified. . Feasibility of strategy and decision taken by management are
assessed and evaluated and it supports for taking final judgement (Power, Sharda and
Burstein, 2015). River Island makes strategic plans to face competitive market and
sustainability of products value. Therefore, feasibility plays a great role in taking
advantage of opportunity that is available for the enterprise and it aids in taking strategic
decisions in the enterprise.
Hence, manager and analyser of River Island identifies strategic action plans to accept uncertain
changes and provide qualitative items to people with satisfaction (Matzler and et.al., 2013).
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SAFE analysis provides an effective medium for assessing suitability, feasibility and acceptance
of decision taken by enterprise.
Analysis Summary
On the basis of above study it can be said that River Island is focused towards number of
strategic options so that better opportunities can be attained. It has been witnessed that factors
involve tax rates and interest rates. Changes in government policy might affect the monetary
position of River Island. It indicates that overall learning in regard to sustainable development
indicates that company consider risk as critical factor during strategies formation. Along with
this, company faces issues in regard to funds which creates a negative impact on overall process.
Industrial view also need to be referred properly so that long term opportunities can be attained.
Consideration of diverse environmental values allows River Island to have continuous
development.
Barriers to application
In addition to this, it can be said that there are various potential barriers which might
affect the overall development of business activities. It might be possible that due to lack of
resources the designed frameworks and activities cannot be employed in appropriate manner.
Other than this, if business firm like River Island is facing an issue in respect to the financial
conditions and cash flow then it will also impact the overall development and application.
Improper management of funds is critical factor that creates a sustainability issue in business.
However, there are few aspects which can be considered properly in order ensure about issues.
By having an effective analysis of current performance the better strategies can be framed in
order to overcome issues. Budget control system analysis is also beneficial for organisation to
consider so that issues can be resolved in desired manner. It allows to improve the overall
performance on the basis of key standards.
CONCLUSION
Strategic decision making for facing competition and attaining sustainability of products
is considered here. Environmental factors include controllable and uncontrollable factors which
are analysed to present River Island performance in the competitive market. Moreover,
management process to achieve strategy obtains strength, weaknesses and additional influential
market research equipment of the entity. The report provides effective manner to do optimum
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