Strategic Management for Comet Group Plc - Report Example

Strategic Management Table of Contents Table of Contents 2 Answer 3 SWOT Analysis (Strength, Weakness, Opportunity, Threats) 3 Opportunities and Threats 5 PESTEL Analysis 5 Core competency and resources 7 Recommended strategies for the company 7 Answer 2 7 The TOWS (Threat, Opportunities, Weakness and Strength) matrix 7 Suitability, Feasibility and Acceptability Criteria (SFA) 9 Ansoff Matrix 11 Conclusion and Recommendation 12 References 13 Appendix 15 Appendix 1 15 Answer 1 SWOT Analysis (Strength, Weakness, Opportunity, Threats) Let us analyze the strength and weakness of Comet Group Plc, UK with the help of a SWOT Matrix. Serial Number Particular Strength Weakness 1 Location Comet Group was one of the established retail companies of UK. The company operated 240 stores in UK itself. Post recession, the company could not manage most of its branches and incurred huge amounts of losses. 2 Products The company sold user friendly electrical products which were quite popular among the residents of UK and other countries. The company’s business was seasonal and sold most of its products during the Christmas and post Christmas promotional periods. 3 Technology The company produced highly innovative products. Since, the electrical products are subjected to technological changes the economic life of the products were shortened. 4 Sales of the company The economic environment influences the customer decision making behaviour. It is observed that when the purchasing power of the people is high, they would like to invest in advanced electrical goods and electronic appliances (The Telegraph, 2012). The company’s sales were greatly influenced by tax policy, government regulations, consumer behaviour and the economic environment of the company. During recession, the company could not achieve its sales target and this affected the future of the company (Friedman and Burke, 2011). Opportunities and Threats PESTEL Analysis The PESTEL analysis is an instrumental tool used for identifying the external threats and opportunities faced by an industry. This tool divides the environment into six categories: Political, Economic, Socio cultural, Technological, Environmental and Legal. Political Factors The government has decided to reduce the corporate tax to 24 percent by the end of the year 2014. This would be beneficial for the retail industry in UK. A reduction in the corporate tax rate would enable the companies to lower their prices and enable consumers to purchase more electrical goods (White, 2010). The government of UK is trying to enforce industrial strategy which would help in the betterment of the companies operating in UK. Recently, the government had invested £200 million in the year 2011 through the Technology Strategy Board (TSB) to help the companies grow on a larger scale. A strong policy framework would enable the electrical goods companies to perform better even amidst the current economic slowdown. Economical The employment rate in UK is increasing, as more than 580000 people were employed in the year 2012. This means that the retail industry may hire more employees which will increase the effectiveness of the companies operating in this industry (BBC News, 2012). The retail industry of UK is divided into the two sectors food and non food sector. The non food sector constitutes of clothing, footwear, electrical, home entertainment and furniture industries. The clothing and footwear industries are gaining profits even amidst the economic slowdown however, the electrical goods industry is unlikely to recover until 2013 (SAS, 2012). Socio Cultural Factors The government of UK encourages companies to undertake social responsibility measures. Policies like acquiring environment licenses for disposing, recycling and treating battery waste is compulsory for companies operating in UK (Government of UK, 2013a). The retail industries in UK undertake social responsibility measures for the betterment of the society. The residents of UK are very health conscious and believe in a living a healthy lifestyle (Musafer, 2012). Retail companies like Comet Group Plc donated charity for the betterment of athletes and sportsman of UK. Technological Factors Technology plays a crucial role in devising effective marketing strategies and plans for the companies operating in UK. The retail industry of UK is highly dependent on internet. It has helped in facilitating communication between the consumers and the management of the company. Retail companies of UK like Comet Group Plc has developed its web based information to provide consumers with key information related to the products and services of the company. Legal Factors The government of UK does not levy import fees to the retail companies importing electrical and electronic goods within the European Union. The government of UK imposes restrictions on the export of certain radio equipment, computers, transmitters and mobile phones. Licenses are to be acquired by the companies to export these products. Apart from that, the export duty fee and regulations are favourable to the retail companies operating in UK (Government of UK, 2013b). Environmental Factors The government of UK has introduced certain environment protection laws and regulations and expects the companies operating in UK to abide by those laws. As per the ISO 26000 standard, the companies need to comply with certain guidelines for social responsibility. Retail companies of UK like Comet Group Plc had taken certain environment protection measures; these companies also believed in the recycling of products (Comet Group Plc, 2012b). Core competency and resources The core competence of the company includes one or two special ability which will very critical to a company’s success. These important capabilities are defined as core competence of the company. The core competence of a company should be rare. The company was one of the few players in the industry to build and develop electronic system in the store (Bruton and Ahlstrom, 2011). The core competencies will be identified through the value chain analysis as shown in the appendix. Recommended strategies for the company Comet Group may have produced high quality products but the company lacked a strong development strategy and could not manage its operations efficiently. The company’s sales were influenced by the changing marketing trends and government policy of the country. The company should have followed the concepts of Game Theory which helps in predicting the behaviour. This theory is helpful in those situations where the company’s success depends upon external factors (Heap and Varoufakis, 2002). The company could have predicted its strategic position in the market during recession and developed marketing strategies accordingly. Answer 2 The TOWS (Threat, Opportunities, Weakness and Strength) matrix It is a conceptual framework which helps in identifying and analyzing the threats and opportunities in the external environment and assessing the company’s weakness and strength. The variables of the TOWS matrix are similar to those of SWOT matrix but matching the variables with each other in a systematic manner is new (Weihrich, n.d.). Let us now analyze the opportunity, threats, strength and weakness of the company with the help of a TOWS matrix. Strength 1) As the purchasing power of the people increases, they invest in electrical goods. 2) The company believes in recycling of products and this process requires a huge amount of investment. Weakness 1) Most of the products were sold during Christmas and post Christmas promotional periods. The sales of Comet Group are seasonal. Opportunity 1) Corporate tax rate of UK would lower down in the future by 24 percent. 2) Government has invested £200 million in the year 2011 through TSB to help the companies grow on a larger scale 1) Lowering down of corporate tax rate means that the common people would increase its spending on electrical goods. This would increase the sales of Comet Group. 2) The company can use the money provided by the government to use it for its recycling projects. The company will have an increased amount of savings. 1) Lowering down of tax rate would not benefit the company on a whole because the company business is seasonal. It has to implement a strong marketing strategy which can increase its sales during other seasons too. 2) The electrical goods are subjected to technological changes and the economic life of the products is shortened. The company spends a lot of money on the innovating a new product. The money given by the government would be spent by the company incurring expenditure. Threats 1) The government of UK imposes restrictions on the export of certain radio equipment, computers, transmitters and mobile phones within the European union. 2) The UK economy is recovering but the electrical goods industry is unlikely to recover until 2013. 1) Most of the competitors of Comet Group Plc would not sell the above mentioned products as acquiring license for these products requires a lengthy procedure. This will be beneficial for the company as the number of its competitors would be less. 1) Since, the government has imposed restriction on the export of items with the European union, Comet Group is bound to face difficulties in its domestic sales. 2) The electrical good industry is unlikely to recover which means that Comet Group would not be able to yield profits in the future. We can observe that the TOWS matrix has helped us in identifying several threats and opportunities that the company might face due to the external environment. Suitability, Feasibility and Acceptability Criteria (SFA) For analyzing various strategic alternatives and choices, the management team of the company should analyze whether the company has an efficient team with an effective knowledge database which can identify and select the most appropriate alternative based on substantial data. Suitability The strategic alternatives chosen must be assessed whether they are suitable and compatible with the company’s policies. The main objective of the company is to sell highly innovative and user friendly electrical goods (Learning Centre, 2010) but investment is this sector is costly hence Comet Group should go for a joint venture with a profitable company which manufactures cable wires. Diversification would not only decrease its operating risk but would also increase its profitability. This management of the company should analyze whether this marketing strategy would be suitable as per the company policies and regulations or not. The chosen strategy should capitalize on the company’s strength and core competencies (Gilles, 1996). Feasibility The company should have the required resources to implement its strategy (Gilles, 1996). The company can conduct a break even analysis to analyze its current resources. Comet Group Plc has sufficient human resources to utilize the financial resources and the tangible assets at the optimum level to achieve effectiveness of the company (Learning Centre, 2010). A successful joint venture will only take place if the profitable company is satisfied with the current position of Comet Group. Comet Group needs to conduct the break even analysis to understand its present standing and analyze whether the strategy of undertaking a joint venture would be feasible or not. Acceptability Acceptability is concerned with the expectation of shareholders, stakeholders and employees and any expected financial and non-financial outcomes. The management team of Comet Group should also have a discussion with its stakeholders and shareholders regarding the feasibility of the marketing strategy. If the stakeholders and shareholders are convinced that this strategy would enable lower risk and higher returns the acceptability of the project is high (Gilles, 1996). The management of the company should abide by the laws of Trade Off theory which suggests that the company should have a lower proportion of debt capital which would help the company in evading tax (Learning Centre, 2010). Ansoff Matrix The Ansoff Matrix is a simple way to determine four possible ways that help a company grow and helps the management to think about the risks associated with each option. The company should utilize the result derived from this matrix in developing strategies of the company (Jung, 2011). Market Development The company should target potential customers at home and abroad. They should also use different sales channels to communicate about their products in an improved manner. This will increase the sales of the company. They should use social media like Facebook, Twitter and online retail websites like eBay to promote their products. Diversification The company should diversify into others segments to reduce the risk associated with the company and increase the sales of the company. Comet Group should go for a joint venture with a company which manufactures and sells cable wires. The target customers should be mainly business enterprises. Market Penetration The company should adopt a unique advertising campaign which would help in promoting the company products and services. The company should advertise about their products in commercial advertisements played during popular sports matches like Wimbledon, Ashes cricket test etc. Product Development The company should keep innovating new products and improve the quality of the product (Mindtools, 2009). The company should develop high quality products for the medical companies by adopting vacuum technology which is a cost effective technology. Conclusion and Recommendation The company can work closely with its supply chain company to improve its service delivery which would help in reducing the operational costs and time of the company. The company should try to develop strategies like Drill Down strategy which help in breaking down the problem into smaller parts (Murray and Provost, 2011). These smaller parts are then managed by each and every manager of the company. If the company follows the above mentioned suggestions then it would definitely reap results. References BBC News, 2012. UK unemployment total falls to 2.5m, [online] 20 February. Available at: < http://www.bbc.co.uk/news/business-21517854 > [Accessed 21 March 2013]. Bruton, G.D. and Ahlstrom, D., 2011. International management: Strategy and culture in the emerging world. London: Cengage Learning. Comet Group Plc, 2012a. Fact and figures. [online] Available at: < http://press.comet.co.uk/facts-and-figures> [Accessed 21 March 2013]. Comet Group Plc, 2012b. Corporate social responsibilty. [online] Available at: < http://press.comet.co.uk/csr> [Accessed 21 March 2013]. Comet Group Plc, 2012c. Company history. [online] Available at: < http://press.comet.co.uk/company-history> [Accessed 21 March 2013]. Comet Group Plc, 2012d. About Comet. [online] Available at: < http://press.comet.co.uk/index.php?cID=12> [Accessed 21 March 2013]. Friedman, L. and Burke,R., 2011. Essentials of management and leadership in public health. Massachusetts: Jones & Bartlett Learning. Gilles, G.L., 1996. Global business strategy. London: Cengage Learning EMEA. Government of UK, 2013a. Corporate responsibility. [online] Available at: < https://www.gov.uk/search?q=Corporate+responsibility> [Accessed 08 March 2013]. Government of UK, 2013b. Electronic goods: International trade regulations. [online] Available at: < https://www.gov.uk/importing-and-exporting-electronic-goods> [Accessed 08 March 2013]. Heap, S.H. and Varoufakis, Y., 2002. Game theory: A critical introduction. 3rd ed. London: Routledge. Jung, C., 2011. A strategy analysis of Nintendo - Executive summary. Berlin: GRIN Verlag. Learning Centre, 2010. Strategic choice- Johnson and Scholes suitability, feasibility, and acceptability model [pdf] Available at: http://www2.accaglobal.com/pubs/hongkong/students/newsupdate/archive/2010/25/learning_strategic_choice.pdf > [Accessed 21 March 2013]. MindTools, 2011. Ansoff matrix worksheet [pdf] Available at: [Accessed 21 March 2013]. Murray, S. and Provost, L.P., 2011. The health care data guide: Learning from data for improvement. New Jersey: John Wiley & Sons. Musafer, S., 2012. Corporate social responsibility: Measuring its value. BBC News, [online] 21 October. Available at: < http://www.bbc.co.uk/news/business-19876138 > [Accessed 21 March 2013]. SAS, 2012. UK retail 2012 & beyond [pdf] Available at: < http://www.sas.com/offices/europe/uk/downloads/press/sas-verdict-retail2012.pdf> [Accessed 21 March 2013]. The Telegraph, 2012. Comet collapse: Deloitte blames internet and lack of first-time home buyers, [online] 02 November. Available at: < http://www.telegraph.co.uk/finance/newsbysector/retailandconsumer/9652085/Comet-collapse-Deloitte-blames-internet-and-lack-of-first-time-home-buyers.html > [Accessed 21 March 2013]. Weihrich, H., n.d. The TOWS matrix --- A tool for situational analysis [pdf] Available at: < http://www.usfca.edu/fac_staff/weihrichh/docs/tows.pdf> [Accessed 21 March 2013]. White, P., 2010. Open for business - The tax benefits of United Kingdom holding companies [pdf] Available at: [Accessed 21 March 2013]. Appendix Appendix 1 The value chain analysis of a company is divided into primary and supporting activities. Primary activities: The primary activities of the company were to manufacture and sell electrical and electronic goods appliances to consumers. The company divided its electrical and electronic products into three categories brown, white and grey goods. Inbound and Outbound Logistics: Suppliers played an important role in supplying the electrical and electronic goods at the right time and the right place. One of the major reasons of their success prior to the recession was their smooth relationship with the suppliers. Operations: The operational activities of Comet Group Plc included the proper home delivery of the electrical and electronic goods to consumers. The company had completed 1.3 million home deliveries by the end of the year 2012 (Comet Group Plc, 2012a). Marketing and sales: Comet Group Plc offered discounts to its consumers as a part of its marketing strategy. In the year 1999, the company launched its ‘every day low price’ strategy. Under this strategy, the company offered discounts on selective products every day of the week (Comet Group Plc, 2012c). Services: The company believed in providing high quality products and services to customers. They believed that improved customer service could not only bring them closer to customers. Supporting activities include support assistance that is required for primary activities. Procurement: The company procured electrical goods from other retail companies and sold it in their stores. Technology: The Company relied heavily on the technology as it helped them to improve their relationship with the customers and in innovation of electrical and electronic goods. Human Resource management: The human resource management of the company comprised consumers and suppliers. Comet Group Plc was an employee friendly company and believed in rewarding their employees for excellent performance. The company also maintained pleasant relationship with its suppliers. Infrastructure: The head office of the company was located at Hertfordshire, UK. The company maintained a congenial working atmosphere in the branches. The management of the company had installed an electronic learning system which increased the knowledge base of the company. Competitive advantage: Comet Group Plc was the only electrical goods company that provided customers with round the clock calling facility. This facility was known as ‘Comet on Call’ and it provided customers an expert advice on computer related queries (Comet Group Plc, 2012d). Read More