SWOT analysis for Dixons Retail PLC - Essay Example

?SWOT analysis for Dixons Retail PLC Table of Contents SWOT analysis for Dixons Retail PLC Table of Contents 2 Introduction 3 Methodology  4 Findings & Analysis 5 SWOT Analysis 5 Strengths 5 Weakness 7 Opportunities 8 Threats 9 Conclusion 9 Recommendation 10 References 12 Appendix 14 Annexure 1: Questionnaire 14 Introduction In the age of growing competition, it has become essential for firms to analyze their internal environment. This is because the aspect of globalization has increased competition in the market by leaps and bounds with organizations using various strategies including predatory pricing to capture markets and thwart off the competition in the market. It has therefore become very important for business organizations to analyse their internal environment so as to generate optimum advantage of the opportunities offered by the market. It also helps an organization to use its internal strengths and external opportunities in an attempt to take care of the weakness in its internal environment. One of the most common and useful tool to analyse the internal environment is the SWOT analysis. SWOT is an acronym that implies the Strengths, Weakness, Opportunities and Threats faced by an organization. The strengths and weaknesses come from the internal environment and the Opportunities and threats emerge from the external environment of an organization. The present study would analyse the business strategies of Dixon Retail Plc especially its internal strengths and weaknesses and external opportunities and threats so as to generate competitive advantage in the market. The analysis of the internal environment assumes significance as it determines the competitiveness of an organization in the market. Retail giant Dixon Plc is the largest electronic goods retailer across entire Europe. The company was incorporated in the year 1937 in the United Kingdom. Over this long period the company has made significant strides to emerge as the largest retailer in its industry segment with its network of stores spanning 13 nations across the length and breadth of Europe and providing employment options to approximately 38000 individuals. The company apart from Europe also has operations in 13 other nations. The total number of stores as on date is about 1200 with the company being the market leader in UK and four other nations. The company has a considerable number of brands under its umbrella that are extremely popular with the target market audience. The product categories available in its stores include electronic consumer durables like computers to cameras and other such devices offering a complete package for all electronic goods under one umbrella. The company has a bricks and clicks model of retailing under which it sells its products through physical stores as well as through the online channel. Dixon has a dedicated online web portal that helps it to provide e-commerce business channel and increase its market penetration and also offer greater convenience to the customers of the organization. The company is listed on the bourses of the London stock exchange where its stocks are actively traded. The immense size and growth of the company can be realised from the fact that it is now presently being listed under the prestigious FTSE 250 index making it one of the topmost companies of UK and Europe (Dixon Retail, 2011). The following sections would analyse the internal strengths, weaknesses of the organization along with an analysis of the external opportunities and threats using the SWOT analysis tool. Methodology  The research methodology used for conducting the SWOT analysis involves a mix of primary and secondary research techniques. The secondary research would be carried out using a variety of data sources including books, journals as well as other sources of credibility. It would also include analysing the annual reports published by the company in order to get a better analysis of the internal environment. Only credible sources of information would be used for gathering information about the business strategies and internal environment of the organization. The data from secondary research would be analysed to get a better view of the internal and external environment of the organization. In addition to the use of secondary data, a primary analysis would also be carried out in the form of a questionnaire survey in order to analyse the customer’s perception about the store. A small sample size of 20 respondents all of which are the customer of the organization would be selected for the study using a probability based simple random sampling technique. A qualitative analysis of the responses would be done to understand a cause and benefit analysis of the topic of study. The primary research would try to find out the customer’s perceptions about the store that would be used to analyse the strengths and weakness of the organization. The data collection technique would be a questionnaire survey that would be used to collect data based on personal interviews with the customers. The data collected from the interview would be analysed qualitatively in order to have a better insight of the customer’s perception so as to determine the internal strengths and weaknesses of the organization. Findings & Analysis SWOT Analysis SWOT stands for Strengths, Weakness, Opportunities and threats faced by an organization. The SWOT analysis for Dixon Plc is given below: Strengths The main strengths of Dixon retail comes from its customer centric business strategies. Every strategy of the company includes the customer at the heart of the business model. The company believes in retaining its existing customers through greater value additions in the service offering. Figure 1: Business Model of Dixon Plc. (Source: Dixon –a, 2011) The figure above shows the business model of the company that clearly shows the strengths of the organization. Some of these include advice to customers on various products, availability of multiple channels including the online store as well as a large number of traditional brick format stores. Certain other strengths include a product offering of reputed brands that offers a wide range of choices for the customers. In addition to this Dixon also provides an excellent after sales support that matches and competes with the best in the industry. In addition to this one of the other critical areas include a low cost operational model under which the company uses a supply chain management that helps control costs, that are ultimately passed on to the customers in the form of low prices of products. The analysis of the primary data collected from the surveys also shows that customers largely prefer the store owning to a wide range of varied product offering available under a single roof. Customers also rated the company high on its brand image that emerges yet another feather in the cap for the company. Another formidable strength in the business strategy of Dixon emerges from its innovations in supply chain management and operations management. The large scale of operations of Dixon has helped it to create economies of scale and scope that has helped generate cost advantages for the organization. In addition to these innovative approaches in operations including a lean management has helped reduce wastages and has also helped in generating loss of revenue. The company also has a six sigma level in maintaining operations that has helped it to generate cost advantages. It has also helped create entry barriers for the new entrants in the market. The results of the primary study also reveal that customers rated the store as highly efficient in store management. They also stated certain points such as good store ambience, friendly staff as well as assured availability of products. This is evident from the fact that products that are launched are immediately available for sale at the stores, that helps generate considerable customer confidence and satisfaction. Dixon also has an effective policy of Corporate Social Responsibility that shows a socially responsible face of the organization helping generate greater effectiveness in its positioning among the target market audience. Last but not the least, the company follows a strategy of continuous innovations that helps generates continuous improvement in services and helping in generation of consumer satisfaction (Dixon-b, 2011). Weakness Some of the weaknesses in the business strategies of Dixon retail emerge from its weakness in the financial management. Recently the company was downgraded to negative from a stable rating. This was mainly because of the weakness in the metrics of the financials of the company (SME Web, 2011). The company’s certain other weak areas include the absence of a good loyalty program that was highlighted in the results of the primary study. Most of the other stores have a loyalty program that helps in retaining existing customers by providing added services to the customers as a reward for repeat purchases. The absence of loyalty program as reflected by some of the respondents can therefore create issues for the profitability of the organization. In addition to this a drop in the level of sales figures also emerges as a weakness in the internal environment of the organization (The Wall Street Journal, 2011). Opportunities Dixon retail has considerable opportunities in both its existing markets as well as new markets that can be targeted by an international expansion. The demand of goods and the signs of recovery in the economy have opened up opportunities for the organization in its existing markets. Moreover, with new innovations like tablet PC’s and other electronic products being consistently on the rise, there emerge considerable opportunities for the company in the market. Considering the fact that Dixon believes in innovation and is one of the rare stores to have newly launched products available very early that shows greater potential in the market. The online portal the company also holds considerable opportunities for the organization as it has become the new buzzword in retail industry. Opportunities also exist for Dixon in the international markets. Developing nations like India and China hold considerable importance for the organization in terms of lucrative business opportunities that is highlighted from the high economic growth rates of 10.4 and 10.3 percent as of the year 2010 (CIA, 2011). These nations have a growing market and the level of competition is relatively lower in these markets. Moreover the growing influence of Western culture in these two nations can also help make Dixon a formidable brand in the market. Considering the fact that the traditional markets in Europe and very saturated, it becomes important for the organization to look out for new markets that can offer significant opportunities to the organization in terms of greater business prospects. Opportunities also exist for Dixon in unexplored markets of Europe where the organization has a formidable brand image. It can leverage on its experience in the market and its brand image and positioning to capture greater market share in its existing markets. Certain other areas of opportunity involves opening up stores in areas like airports and railway stations in and around UK that have considerable potential to drive sales revenue for the organization (Dixon-c, 2011, p.25). Threats In addition to the above mentioned opportunities there also exist considerable threats for the organization in the market. The most important and significant of these threats emerges from the high level of competition in its existing markets. The markets of the company in Europe are highly saturated with a large number of competitors present in the market. The markets resemble a red ocean with a large number of competitors resembling sharks that are fighting with each other for a market space. This includes both traditional brick based retailers as well as e-commerce giants like eBay that offer considerable challenges to Dixon retail Plc. In addition to this, the uncertainties in the external environment particularly with regards to the economic environment also pose considerable challenges for the organization. There are reports of a fresh recession in the economy that can put up considerable pressures on the sales volumes of the company. It can also hamper the credit markets that can reduce the cash availability of the company in order to fund new ventures in the market thereby halting expansions and preventing the growth of the organization. Conclusion The analysis of the strengths, weaknesses opportunities and threats shows considerable strengths of Dixon retail. The most significant of these emerges from the customer centric approach of the company that helps generate customer satisfaction. In addition to this a wide array of product offering also helps in providing greater options for the customers generating greater confidence among the customers. In addition to this the company efficient management of operations including presence of a lean and six sigma in operations and supply chain management also helps generate considerable advantages for the organization. There are also certain challenges that include a weak financial management especially with regards to the downgrading of credit rating for the company apart from the fact that the company is yet to have a good loyalty program that emerges as a big gap in the company’s offering that can very well be taken as a weakness by its competitors. The organization also has considerable opportunities in terms of both penetrating in its existing markets as well as expanding internationally into new markets like India and China that can offer lucrative opportunities to the company. The ecommerce channel started by the organization also holds considerable advantage for the organization so as to maintain more sustainability in its business. Threats to the organization arise mainly from the aspect of high competition within its existing markets as well as the uncertainties in the macroeconomic environment that can generate a significant impact on the business prospects and profitability of the organization. Recommendation The analysis of the study reveals a lot of opportunities for the organization. In order to generate long term sustainability in the market it is very important to use the strengths of the company to take advantages of the opportunities in the external environment as well as reduce the threats and weakness of the firm. An effective strategy in this regard would include international expansion into India and China where there are considerable opportunities for Dixon retail in order to help maintain long term sustainability and profitability in the market. Development of the e-commerce channel can help the company to not only penetrate the market but to also provide greater value addition to the customers. A customer loyalty program would also help Dixon retail to not only gain new customers but to also retain its existing customers. It would also help provide an opportunity to be closer to the consumers in order to effectively analyse their needs and wants. This is also very important as in the present competitive market environment it is very essential to not only attract new customers but to also retain existing ones. This is also more sustainable for the company as it is easier and less cost effective to retain its existing customers than to acquire new ones. Also a good marketing communication strategy would also help bring about greater number of choices for the firm to expand and maintain its sustainability. Finally last but not the least, Dixon must have a monitoring and control mechanism such as a balanced scorecard that would not only help in evaluating its financial strategies but also its non financial objectives (Balanced Scorecard Institute, 2011). Amalgamation of these strategies with a careful planning would not only ensure greater profitability but would also help in generating long term sustainable competitive edge in the long run. References Balanced Scorecard Institute. (2011). What is the Balanced Scorecard? [Online]. Available at: http://www.balancedscorecard.org/BSCResources/AbouttheBalancedScorecard/tabid/55/Default.aspx. [Accessed on December 8, 2011]. CIA. (2011). CIA - The World Factbook. [Online]. Available at: https://www.cia.gov/library/publications/the-world-factbook/geos/ch.html. [Accessed on December 8, 2011]. Dixon Retail. (2011). Who We Are | Dixons Retail. [Online]. Available at: http://www.dixonsretail.com/dixons/en/aboutus/whoweare. [Accessed on December 8, 2011]. Dixon –a. (2011). Business Model. [Online]. Available at: http://www.dixonsretail.com/dixons/en/aboutus/businessmodel. [Accessed on December 8, 2011]. Dixon-b. (2011). Strategy. [Online]. Available at: http://www.dixonsretail.com/dixons/en/aboutus/strategy. [Accessed on December 8, 2011]. Dixon-c. (2011). Dixons Retail plc Annual Report and Accounts 2010/11. [Pdf]. Available at: http://www.dixonsretail.com/dixons/uploads/investorpack/11-07-07_DixonsAnnualReport_bookmarkedforweb.pdf. [Accessed on December 10, 2011]. SME Web. (2011). Moody's changes Dixons Retail plc outlook from stable to negative. [Online]. Available at: http://www.smeweb.com/index.php?option=com_content&view=article&id=3237:dixons-outlook-changed-to-negative&catid=53:news&Itemid=89. [Accessed on December 8, 2011]. The Wall Street Journal. (2011). Dixons Retail PLC. [Online]. Available at: http://www.marketwatch.com/investing/stock/dxns?countrycode=uk. [Accessed on December 8, 2011]. Appendix Annexure 1: Questionnaire Name: Gender: 1. Which store do you consider while making purchase for electronic goods? 2. What is the best part that you find at Dixon. 3. Comment on any deficiencies in the services of the store Read More