Contemporary Issues in Business in Primark - Case Study Example

?Contemporary Issues in Business (Primark) Table of Contents Introduction 3 2.0 Reasons for Sourcing From Developing Countries 4 2 Growth Rate 42.2 Competitive Advantage 5 2.3 Brand Image 5 2.4 Diversification 5 2.5 Efficiency 6 3.0 Ethical and CSR Reasons for Sourcing from Third World 7 3.1 Business and Profitability 7 3.2 Sustainability 7 3.3 Business Functions 8 3.4 Equal Opportunities 8 3.5 High Level of Business Activities 8 4.0 Ethical and CSR Reasons for Not Sourcing from Third World 8 4.1 Non-fulfilment of the Product’s Requirements 9 4.2 Non-Availability 9 4.3 Business Competency 9 4.4 Primark’s Ethicality in Business 10 4.5 Challenging Factors 10 Conclusion 10 References 12 1. Introduction Primark is a well-known Irish clothing based retailer which mainly operates in Ireland, Belgium, Austria, Portugal, the Netherlands, Spain, Germany and the United Kingdom comprising 38 stores that are recognized as Penneys. The company was opened in the year 1969 in Dublin. Based on the success rate of the company, it has become apparent that more stores are needed to be added to the chain for improving its value. The company caters to the customers belonging from diverse age groups (Primark Stores Limited, 2013). It targets those consumers who are fashion conscious and want proper value in return for their money. The company caters to the market by way of fulfilment of needs of the people by supplying both menswear and ladies-wear. In addition, it also aims to meet the requirement of the market by way of supplying other products that range from accessories & hosiery, children’s wear and footwear among others. The company is said to attain a sales target of ?3.5billion in the year 2012 which is quite impressive (Northern and Shell Media Publications, 2013). The company has a very effective supply chain that brings together different manufacturing units in India, Turkey, and Bangladesh, China and other countries, having a number of retail outlets in the United Kingdom, Ireland, and in other parts of Europe (The Times Newspaper Limited and ©MBA Publishing Ltd, 2010; Dobson, 2004). In relation to the ethical and corporate social responsibility, the company acts in a much diversified manner. It focuses upon delivering quality products at cheap prices and at the same time retaining the customers by way of creating value for the goods which are manufactured. Identification of the CSR responsibilities of Primark is considered to be the main theme of the paper. Additionally, the paper also aims to highlight various reasons for which the company focuses upon developing and third world countries in relation to sourcing of its products. A Snapshot of Primark Store Source: (The Times Newspaper Limited and ©MBA Publishing Ltd, 2010) 2.0 Reasons for Sourcing From Developing Countries The primary reason for sourcing from developing countries is to source the products in an efficient manner. Moreover, the company in order to improve the manufacturing process the company opted for developing countries. Another reason was to utilise the local fabrics for producing the products. The other reason for sourcing was to create a strong focus on the current product trends (Choi, 2012). 2.1 Growth Rate It would enable to provide high opportunity of growth to the developing nations. It would allow the company to achieve the high rates of growth because it will get to expand its business channels. Primark’s business expansion comes from fulfilling the needs of the customers along with continuing to expand its markets in the selected regions. The company is able to implement very effective marketing strategies as it is primarily laying its focus upon the developing countries. These factors can prove to be concurrent in relation to the aspects related to growth (Grose, 2011).Therefore, the company planned to source its products from developing countries to attain high rate of growth through sourcing the products from developing nations (Grose, 2011). 2.2 Competitive Advantage This would lead to growth of an ideal company and would facilitate to create high level of competitive advantage. Competitive advantage is considered to be a very important factor for the purpose of creating sustainability in the company. In relation to this factor, the company can make all round diversity in the business. It can also increase the profitability of the business as well. It will even allow the organization to develop high amount of expertise in relation to the factors associated with competition from the part of its competitors. It will enable the company to stay ahead of its competitors. 2.3 Brand Image Sourcing from developing countries would enable to expand the business operations for the purpose of building a positive brand image. It will allow the company to make considerable amount of brand awareness as well. Brand awareness will allow the company create wide reach among its customers. It will also lead enhanced social image of the brand as well. All of these aspects combined together will lead to making the consumers familiarized with the products of the company. It will also lead to profitability of the company to a very large extent. 2.4 Diversification For the purpose of diversification of the business activities and for taking the business to new heights, the aspect of sourcing from developing countries would highly beneficial. Diversification would allow Primark to follow its business operations in an efficient manner. Moreover, in order to improve the manufacturing process the aspect of diversification will play a very important role. Diversification will also allow proper utilisation of the local fabrics. These fabrics can be used for producing the products efficiently. It will also lead towards creating a strong focus on the current product trends. 2.5 Efficiency In order to create efficiency of the business by way of meeting the demands of the various nations throughout the world, this strategy would be fruitful (Graham, 2008). Moreover, the creation of efficiency in the business will lead to the fulfilment of various business elements in a diversified manner. It will also allow fulfilling various business goals and will lead to proper flow of business activities. Proper follow of business activities will enable to enhance business profitability (Graham, 2008). The firm considers all the above aspects including the facet of efficiency in order to meet the business requirements in an ideal manner. Therefore, five of the above explained aspects are given equal importance. 3.0 Ethical and CSR Reasons for Sourcing from Third World Primark works to guarantee ethical sourcing through numerous ways. The company has an Ethical Trade Director, whose role is to ensure that Primark’s products are sourced in an ethical manner. He is also responsible for leading a group of ethical managers along with executives who are primarily based in the key sourcing countries. Primark is also an associate of the Ethical Trading Initiative (ETI) (Business Case Studies LLP, 2013). However, operating in an ethical may lead to the incurrence of additional expenses to a business when contrasted with other companies and retailers which do not operate in an ethical manner. The best facet about this company is that is acts in an ethical way and at the same time it delivers value to the customers by way providing reasonable products. As mentioned in the above section, it also does not get involved in mass advertisements in order to save additional expenses. This way, the company is able to perform the cost cutting functions in a very ethical way. However, the main reasons behind sourcing its products from third world countries is that the company wants to provide these countries with an opportunity of growth. This way the organisation is able to act in socialised manner thereby implementing the broad aspects of CSR (Business Case Studies LLP, 2013). While performing such functions, the company also values the moral ethics of business to a very large extent. Five of the specific reasons for the company to sources from the Third World countries are shown below: 3.1 Business and Profitability Development of the nations in terms of business and profitability would be a key reason. 3.2 Sustainability Providing sustainable growth opportunities to the nations to deal with foreign companies can be the other vital reason for sourcing from third world. 3.3 Business Functions Improving the business functions by way of acting in a much socialized and ethical manner is regarded as the other vital factor for sourcing from third world. 3.4 Equal Opportunities In order to provide equal opportunities for the nations to grow and sustain in an operative business environment this strategy can be vital. 3.5 High Level of Business Activities To facilitate high level of business activities as well as for the purpose of diversification of the business, sourcing from third world can enable to derive benefits (Business Case Studies LLP, 2013). Thus, all these activities lead to the fulfilment of the business objectives and also bring about the adherence to interests of the shareholders against the wider group of stakeholders in the market. 4.0 Ethical and CSR Reasons for Not Sourcing from Third World When a company does not source its products from third world countries, it indicates that the company does not want to take any risks. In case of Primark, there may be certain reasons concerning the company’s ethical and CSR facets for not sourcing from Third World countries. In relation to sourcing of the products, the company strives to create competitive advantage. It also delivers great value by way of creating a sustainable business atmosphere along with operating in a well-managed manner. In relation to the fulfilment of such broad aspects, the company lays its business focus on the developing and third world countries as well. However, the company disregards the third world countries by considering the inherent business risks. As already discussed in the above sections, the company has been able to create sustainability. In order to maintain its sustainability level in an international context, the company considers all those aspects associated with the achievement of growth at all levels (Arnold, 2009). Five of the primary ethical and CSR reasons for not sourcing from developing countries/ third world countries are shown below: 4.1 Non-fulfilment of the Product’s Requirements Primark may not be able to source the required quality raw materials for manufacturing its products from developing countries/ third world countries. This would ultimately lead to faulty manufacturing of the products (Arnold, 2009). 4.2 Non-Availability As compared to sourcing of products from developed nations, there arise difficulties in relation to sourcing of products from developing countries/ third world countries. In the developed countries, there are high extents of business scope which can benefit any business. In addition, the quality and availability of raw materials in developed countries at times is very high as compared to developing countries/ third world countries (Arnold, 2009). 4.3 Business Competency Sourcing of raw materials to manufacture finished goods from developing countries/ third world countries may pose certain amount of complications in relation to the creation of business competency. From an ethical/CSR perspective, the company may not be able to meet the expectations of the consumers. Additionally, the company may face hurdles in sourcing those products that match up with the requirements of the company. Primark pays extra importance in delivering high quality products at low prices and for ensuring this aspect the company has to act in a competitive manner (Rowe, 2008; Arnold, 2009). 4.4 Primark’s Ethicality in Business Primark aims at making its overall business processes ethical and follows its trade processes in a transparent manner. The company also aims at demonstrating its commitment towards the consumers by way of following the manufacturing process in a responsible manner. This provides great aid to the company for meeting the satisfaction levels of the customers. All these ethical aspects are met by the company as they are able to source the products in a uniformed manner. However, the same aspect may not be achieved if the company starts sourcing its products from developing countries/ third world countries. Hence, it may prove to be another reason for the company’s non-involvement regarding sourcing from such countries (Arnold, 2009). 4.5 Challenging Factors Sourcing products from developing countries/ third world countries and at the same time meeting the expectation levels of the customers may prove to be a challenge for Primark. Thus, all those factors relating to business risks and challenges may have instigated Primark towards staying away from sourcing the products from developing countries/ third world countries (Arnold, 2009). Conclusion From the overall analysis, it has been learnt that Primark is an emerging name in the arena of clothing retail which is responsible for providing consumers with proper value for their money by delivering fashion items. The company has a very efficient supply chain that binds together diverse manufacturing units in China, India Turkey, Bangladesh, and China along with other countries, having diversified retail outlets in Ireland, the UK and in other parts of Europe. It has also been ascertained that one of the most important principles of Primark is to supply valuable products to the customers by way of maintaining ethical/CSR manufacturing standards business. In addition, it has been evaluated that company may face certain deep impacts if it sources its products from developing countries/third world countries. References Arnold, C., 2009. Ethical Marketing and the New Consumer. John Wiley & Sons. Business Case Studies LLP, 2013. Home Page. Providing Consumers with Ethically Sourced Garments. [Online] Available at: http://businesscasestudies.co.uk/primark/providing-consumers-with-ethically-sourced-garments/what-are-business-ethics.html#axzz2kzrftx39 [Accessed November 20, 2013]. Choi, T. M., 2012. Fashion Supply Chain Management: Industry and Business Analysis. Business Science Reference. Dobson, C., 2004. An Introduction to Online Company Research: Search Strategies, Case Study, Problems and Data Source Evaluations. Thomson/Texere. Grose, V., 2011. Basics Fashion Management 01: Fashion Merchandising. A&C Black. Graham, H., 2008. Marketing Strategy and Competitive Positioning. Pearson Education India. Grose, V., 2011. Basics Fashion Management 01: Concept to Customer. A&C Black. Northern and Shell Media Publications, 2013. Primark Looks To US Market. Home. [Online] Available at: http://www.express.co.uk/finance/city/434852/Primark-looks-to-US-market [Accessed November 20, 2013]. Primark Stores Limited, 2013. What’s New. Primark. [Online] Available at: http://www.primark.com/whats-new [Accessed November 20, 2013]. Rowe, J., 2008. Studying Strategy. Jim Rowe & Ventus Publishing APS. The Times Newspaper Limited and ©MBA Publishing Ltd., 2010. Primark. The Times 100, pp. 1-4. Read More