What Lays a Great Impact on the of Debenhams Operations - Case Study Example

?Contemporary Issues in Business Ahtasham Khan B. Marong Table of Contents 0 Introduction 3 2.0 Today’s Drivers of Change: PESTEL Analysis of Debenhams 3 2.1 Political 4 2.2. Economic 4 2.3 Social 5 2.4 Technological 6 2.5 Environmental 6 2.6 Legal 7 3.1 Over Comment on Negative Forces of ‘Political’ and How to Solve It 9 3.2 Over Comment on Negative Forces of ‘Economic’ and How to Solve It 9 3.3 Over Comment on Negative Forces of ‘Social’ and How to Solve It 10 3.4 Over Comment on Negative Forces of ‘Technological’ and How to Solve It 10 3.5 Over Comment on Negative Forces of ‘Environmental’ and How to Solve It 11 3.6 Over Comment on Negative Forces of ‘Legal’ and How to Solve It 11 4.0 Conclusion 12 References 13 1.0 Introduction Debenhams is recognised as one of the leading international retail company dealing in multi-channel brands. It operates around 240 stores within 28 countries. This particular retail organisation provides its customers’ differentiated, exclusive and unique range of products in keeping with its own along with international brands. According to the company reports, it has acquired enhanced market share pertaining to women’s wear along with men’s wear, whereas in relation to children’s wear it has acquired considerably less amount of market share as it stood at the tenth position. The company since 20 years as an open system is investing in British design pertaining to its exclusive designers. In the year 2012, the company had been awarded ‘Multichannel Retail’ award (Debenhams Retail plc, 2001). This report intends to discuss the external drivers of change that lays a greater impact on the company’s operations. Moreover, the probable negative forces to change will also be recognised in the report in keeping with Debenhams present operational environment. 2.0 Today’s Drivers of Change: PESTEL Analysis of Debenhams Retail sector frames an important part of the United Kingdom’s economy. Drivers of change are applied to derive information regarding the company’s operational activities. These factors remain external but create a major impact on the organisational operations. This segment of the study will focus on the drivers that foster changes within the retail sector of the UK. Moreover, the implications of these drivers result in internal change within Debenhams as well. The demographic scenarios, the influence of globalisation of the current UK industrial sector and the advanced technical changes have laid a major influence on the retail industry as well. 2.1 Political In order to ensure a competitive analysis of Debenhams within the UK, it is necessary to assess the environment within which the company is presently operating. It has been observed that the retailers are greatly affected by one of the decisive drivers of change i.e. the political structure along with trends in numerous ways. The political influence is essentially created on the retail sector by the power exerted by the politicians pertaining to locations. In the UK, these politicians exert power by on the basis of the ‘land-use planning system’. In this context, the mentioned particular system is primarily about the planning developed by the local authorities. In keeping with these particular activities, government has power to intervene in order to provide direction and guidance regarding the development and opportunities along with proposals (IMI, 2010). Moreover, it has been assumed that regulations prevailing within the UK industrial sector focus mainly on training. In this regard, training expenses act as a driving force within the UK retail sector. Therefore, Debenhams needs to comply with training requirements and regulations to operate within the UK sector. In terms of regulations and governmental impact, it can be noted that in the UK, there are certain national policies being framed on skills and education. These particular national policies lay a major impact on the sector related to skills demand along with supply. Availability of loans and current political body in power also influence the internal operational activities of Debenhams (IMI, 2010). 2.2. Economic Globalisation advancement can be traced down since 1970s. In the midst of progressing years, the market scenario has greatly been affected. It has been observed in these successive years that the large scale retail business has capitalised on the accelerated purchasing power of the worldwide community. The retail sector in order to foster capitalisation has adopted the strategy of expanding the sales network worldwide. Advent of globalisation has enabled the retail industry to accumulate a larger pool of skilled assets and revenues. Economies of productions and regulations pertaining to trade and development frame the basic components and key drivers of change associated with globalisation. It lays a greater impact on economic conditions of a country (IMI, 2010). The major changes occurring within the global economy is shift in the economies of scale. The recent financial along with the economic turbulences have greatly impacted the UK government. Governmental along with personal indebtedness are the decisive scenarios in many of the major countries including the UK. Correspondingly, the economic crisis that occurred in 2008 which resulted in the collapse of financial markets also can be termed as a key driver for change. This economic scenario has also affected the stakeholders of Debenhams. The internal operations of the company might have been affected by the economic downturn (IMI, 2010). 2.3 Social Retail sector frames an important element of the UK economy. Society also plays a significant role in the retail sector. In keeping with the UK demographic trends, it has been ascertained that the changes in the migration rates and rapid ageing population create a major decisive impact on existing retail sector. And, these elements can be termed as a major driver for change in operational paradigm of companies such as Debenhams. This owing to the reason that for a retailer primarily dealing in fashion clothing and accessories, the impact of especially ageing population can be profound as with the growing age people’s tastes and preferences alter substantially. Correspondingly, further analysis has revealed that the persistent changes within the demographic trends in the UK are influencing the consumer demand or the purchasing power and the tastes and preferences. Age, household composition and ethnicity among others are few of the elements or derivers of change that retailers must consider to foster continuous growth and development. Therefore, for Debenhams to operate its retail business without any kind of distortions, it might have adapted the strategy of gaining information regarding demographic structures and trends of the consumers (KPMG LLP, 2013). On the other hand, Generation Y results lay a greater influence on the strategies established by the retail sector. Generation Y is used essentially for the age group of the people within 30 to 35 years. This particular group endures differentiated tastes and preferences. Their way of purchasing and shopping behaviour is quite different. It is necessary for Debenhams to understand the consumers’ psychology before formulating any operational strategies (KPMG LLP, 2013). 2.4 Technological Technological advancement creates a major change within the operations of retail sector. Implementation of advanced technology provides the retail sector a new height. According to recent observations, five major technological developments have been ascertained. These include in-store technologies, image recognition, smart devices, interactive television and augmented reality. In accordance with the five technologies, it has provided a different scenario to the retail sector. In light of the significant role of these technologies, Debenhams also might have adapted the strategies for the sustainability. Correspondingly, it necessitates in part of retailers to endure a clear understanding about the various networks being involved within the retail chain through which the consumer builds a relationship with the retailer (Saunders, 2013). The internet as the basis of the major technological advancements has provided a way to the retail sector. It has been ascertained that digital revolution has greatly influenced the retail industry. This particular technology enhancement has transformed the entire business model. Thus, Debenhams also has been largely influenced by these technological changes in terms of using social media applications such as Twitter. This has facilitated to ensure greater communication with the customers in a lucid manner (Hughes, 2012). 2.5 Environmental A statement “unsustainable patterns of consumption and production, particularly in industrialised countries are a major cause of global environmental degradation”, had been made by the United Nations in the year 1992 (European Commission, 2009). This statement has been made in the UN Agenda 21 that frames the base for the area pertaining to ‘International and European Policy’. Analysing the environmental impact on the product lifecycle and mitigating these issues is vital as communicated in the Integrated Product Policy. Moreover, environmental impact over the economic activities ultimately changes the household consumption along with the governmental activities. These factors must be considered by Debenhams for sustainability and existence. Debenhams follows the regulations persistent with the carbon emission effects. Thus, it has been concluded that retailers are important factor in initiating and also raising consumer along with producers’ awareness related to environmental issues (European Commission, 2009). 2.6 Legal Legal rights and regulations are formulated to maintain a proper flow of operations. In accordance with the recent budgetary documentation, it has been observed that retail industry is required to abide by a high level of legal regulations than others. Under legal compliance, Debenhams also follows the stated rules. Under legal considerations, it has been stated that the company is not liable to demand for extension of business training enduring less than 250 employees. Furthermore, it has been noted that government has announced to remove barriers pertaining to legal policies. This contribution will lead to free flow of trade and commerce. Better legal regulations within a country promote partnership. Furthermore, under legal implications, it is necessary for the retailer to enrich its knowledge for better growth and sustainability within the competitive market. Correspondingly, legal regulations also encourage the trade and commerce in order to accelerate the UK retailers’ international reputation. Thus, it can be ascertained that legal implications also lay a major impact on the overall retail sector (Rhodes, 2013). 3.0 Mitigate Against Negative Forces of Change/Responding Drivers of change represents a natural factor, which cannot be avoided by implementing any strategies, they can only be minimised. With the positive impact of external forces on retail sector, it also faces certain challenges associated with the influence of such forces. Adverse impact of the forces of change needs to be mitigated in order to foster smooth flow of operational activities. Organisational policies and strategies are required to be formulated with a view to minimise the adverse impact of the drivers of change (Verdict Consulting, 2012). 3.1 Over Comment on Negative Forces of ‘Political’ and How to Solve It With regard to the political factors, every organisation fears political intervention within the operational activities. Extensive political intervention often causes disruption within the organisational activities. The major risk pertaining to the political intervention is the political decisions that can affect the profit margins of the company. Debenhams being one of the key members in the retail sector also faces similar challenges in relation to political decisions. Correspondingly, there lies basically two types of political risk i.e. macro and the micro risk. In terms of macro risk, it can be ascertained that decisions complying with the macro risk greatly affect the foreign farms. Furthermore, micro risk pertains to the political decisions that affect local business. Debenhams can formulate strategies, which involve less intervention of political bodies. Furthermore, the company can build up healthy relationship with prevailing political power to avoid political decisions against it (Verdict Consulting, 2012). 3.2 Over Comment on Negative Forces of ‘Economic’ and How to Solve It Different survey reports in the UK reflect that 2012 was a very challenging year for the retail sector within the nation. Economic condition can be termed as a vital determinant that greatly affects the industries operating with a country. Inflation and recession among others are a few tools that lay an immense impact on the operational activities of an organisation. Financial downturn and the recessionary implications create a hurdle in the growth of an organisation. Loss of exports, fall in the consumer demand and irregularity in the share market are among the key adverse impacts of economic downfall. The adverse effect of economic crisis cannot be avoided but it can be mitigated. In order to mitigate the economic crisis, Debenhams can reduce its product prices; it can further opt for better operational strategies and also can follow certain advanced sustainability measures in the midst of adverse economic conditions (Verdict Consulting, 2012). 3.3 Over Comment on Negative Forces of ‘Social’ and How to Solve It Organisations run on the basis of consumers’. Continuous changes in the customers’ tastes and preferences also create a greater impact on organisational strategies. Demographic changes and customers’ preferences on a frequent basis create a hurdle in organisational development. Customers’ demand for products and the purchasing power greatly affects the organisational marketing strategies. In order to mitigate the consumers’ ever changing trends and behaviours, it is necessary for Debenhams to implement advanced strategies to receive information about this aspect. This will ensure development of strategies in order to fulfil societal responsibilities and customer satisfaction. Debenhams can also apply the similar strategies to mitigate the adverse impact of evolving tastes and preferences (Verdict Consulting, 2012). 3.4 Over Comment on Negative Forces of ‘Technological’ and How to Solve It Technological advancement brings with it positive and negative impacts that often hamper the entire operational process of an organisation. The extensive dependence of the organisation i.e. Debenhams on advance technologies has minimised the involvement of employees. In the aid of extensive technological advancement, a technical fault can be critical deterrence within for smooth operations of Debenhams. It can create a major hindrance for the company to maintain efficient communication with customers. This causes the breakdown of entire operational activity, which increases the operational cost, thereby laying impact on the entire organisational system. Debenhams can implement certain techniques that can ensure continuous growth of operations. Furthermore, human capital is a vital factor and must be utilised in a proper way to avoid technical breakdowns (Verdict Consulting, 2012). 3.5 Over Comment on Negative Forces of ‘Environmental’ and How to Solve It In recent scenario, environment has become a major concern. Environmental legal policies and regulations at times create a negative impact on organisational operations. The entire production life cycle gets hampered due to the regulations imposed by environmental policies. Debenhams is required to ensure measures and technologies, which will increase the organisational operations without effecting the environment (Verdict Consulting, 2012). 3.6 Over Comment on Negative Forces of ‘Legal’ and How to Solve It Legal regulations and implications create a massive hurdle in the organisational growth and development. It has been ascertained that Debenhams needs to comply with the existing legal rules, but these rules at times lay a greater impact on organisational profits. Debenhams can mitigate this particular issue by complying with the legal regulations and executing their operations according to the situational need. It also needs to avoid being involved in any lawsuits which can not only hamper its brand image but also can create a major obstacle for the company’s sustainability in the competitive landscape (Verdict Consulting, 2012). 4.0 Conclusion Conclusively, it can be stated that external drivers of change lay a greater impact on the organisational operations. Debenhams has over the years attained a distinct position for itself in the retail sector by ensuring quality offerings and high-end service delivery. In terms of drivers of change, political, economic, social, technological, environmental and legal factors are the major factors that facilitate to not only drive success but inappropriate focus on these dimensions can impose critical hurdles for Debenhams’ operational activities. Subsequently, the company in order to foster growth and development is required to uphold consistent focus on resolving unprecedented challenges on a continuous basis. References Debenhams Retail plc, 2001. About Debenhams. Home. [Online] Available at: http://www.debenhams.com/about-debenhams [Accessed 26 November, 2013]. European Commission, 2009. Towards A Greener Retail Sector. Bio Intelligence Services, pp. 1-229. Hughes, N., 2012. Analysis: Predicting the Future of Retail Technology. Retail Week. IMI, 2010. Automotive Retail Sector Scenario Analysis of Potential Skill Requirements In 2020. Key Trends, Issues and Drivers, pp. 3-107. KPMG LLP, 2013. How Will Demographic Trends In The UK Affect The Retail Sector? News Releases. Rhodes, C., 2013. The Retail Industry. Economic Policy and Statistics, pp. 3-11. Saunders, N., 2013. What Technologies Are On The Horizon For The Retail Industry? Media Network - Partner Zone. Verdict Consulting, 2012. UK Retail 2012 & Beyond. SAS, pp. 1-20. Read More