Analysis of Currys Performance in the Market - Report Example

Strategic report for Currys (UK) Executive Summary The paper analyses the initiatives taken by a telecommunication retail company in the United Kingdom named Currys for better strategic management within the company in order to maintain the company’s status. The study reveals that the company is highly susceptible to certain risk factors like the business risk and the operational risks. It is the board of directors and senior executives who takes valuable decisions for the company to overcome these risk factors. The study reveals that the investors find it risky to invest due to high volatility of comapny’s stocks. However, the company has gained reputation in the market by providing its customers with quality products and services. The company also takes initiatives in collecting timely feedback from the customers for further growth of the company. Since the company produces electronic gadgets, it is highly probable to have a lot of competition among the rival companies but the company undertakes a strategic move to go for partnership with other retail giants. Strategic partnership would offer the company to expand its business and produce a wide range of products to satisfy its customer needs. The company also plans to offer training to the mobile retailers so that they can provide better connectivity services to their customers. It plans out strategies to train its newly hired employees and also offers hikes in their remuneration in order to encourage them to perform well. Table of Contents 1.Introduction 4 2.Internal Environment of the Company 4 3.External Environment of the Company 5 4.Strategies applied by the company in order to fulfil the purpose 5 5.PESTEL Analysis for Currys 5 5.1.Political 5 5.3.Social 6 5.4.Technological 6 5.5.Environmental 6 5.6.Legal 7 6.Shareholders and Ethics 7 7.Strategic options available to the company 8 7.1.SWOT Analysis of Currys 8 7.1.1.Strengths 9 7.1.2.Weaknesses 9 7.1.3.Opportunities 10 7.1.4.Threats 10 7.2.Recommendations for future strategic direction 10 8.Conditions affecting Currys’ position in the market 11 8.1Connected retailing 12 8.2Services and support 12 8.3Multi-channel platform 13 8.4Global partnership 13 9Conclusion 13 10Recommendation 14 Reference List 15 1. Introduction The strategic management is a process used by the top management of a company in order to formulate and implement the new goals and objectives that the company plans and the internal and external environment within the organisation that helps the company to be successful in its initiatives (Haas and Hansen, 2005). This study would allow us to analyse the various strategies applied by an electrical and telecommunication retailer named Currys operating in the UK. The main aim for this study is to analyse the internal as well as external environment of the company, the strategic options available to the company that it can undertake for further improvement of the company’s reputation. 2. Internal Environment of the Company During its business, the company faces a numbers of risks and uncertainties in its functioning and undertakes various strategies in order to mitigate these risks and take care of the interests of the shareholders (Haas and Hansen, 2005). The directors of the organization take the responsibility in mitigating the risk factors in order to ensure the effectiveness of the functioning of Currys. They take various initiatives in order to ensure that the company implements better risk management strategies (Birdi, et al., 2008). There are various levels of the management system of the company that is the board of directors handle the managers and the managers in turn control the team leaders. The team leaders are efficient enough in controlling the teams and execution of the projects successfully (Birdi, et al., 2008). They aim at creating various new risk management procedures that are successful in mitigating various types of risks (Haas and Hansen, 2005). Currys has its own risk register where the probable risks are registered and the higher authorities try to find out ways to mitigate various probable risk factors (Lowendahl, 2005; Brown, 2005). 3. External Environment of the Company Currys conducts external audits and the auditors are mainly appointed by the shareholders who provide some opinions regarding the financial statement of the company (Hunger and Wheelen, 2003). The study reveals that Delloite LLP has played a significant role in acting as an external auditor for the company for a longer period of time (Choo and Bontis, 2002). 4. Strategies applied by the company in order to fulfil the purpose Long term schemes used by the companies are aligned according to the interests of the shareholders. These schemes are rewarding only when it proves to be beneficial to the shareholders (Kaplan and Norton, 2001). The company also has a strategy to encourage the employees to invest in company’s shares and thus contribute to the long term success of the company (Thomsen and Pedersen, 2000). It tries to maintain the long term interests of the shareholders and thus plans for future growth prospect (Ireland, et al., 2001). 5. PESTEL Analysis for Currys 5.1. Political Political developments took place within and outside the UK including detailed inspection of the Currys’ industries and suppliers in the countries where they undertake their business (Bottani and Rizzi, 2006). There occurs material and legal regulatory change within or outside the UK that may have a serious impact on the Currys businesses (Dyer, Kale and Singh, 2001). 5.2. Economical Since mobile phones have become an important aspect for the customers, it is expected that Currys’ products would be highly demanded.. However, the challenging environment determines the consumers demand for various types of handsets. It also depends on the purchasing power of the consumers (Guilding, Cravens and Tayles, 2000). 5.3. Social Some of the strategies used by the company to maintain reputation is by lowering the prices of the products manufactured by the company, producing exclusive products for their customers, having large stores, advertising about the brands and undertaking efficient sales techniques (Guilding, Cravens and Tayles, 2000). 5.4. Technological Currys is responsible for providing well managed technology platforms in order to provide better services to its customers (Lyneis, Cooper and Els, 2001). It provides better mobile connectivity to the customers in order to gain brand loyalty and expand their customer base which would further lead to the growth of the company (Guilding, Cravens and Tayles, 2000). 5.5. Environmental The business conducted by the telecommunication retailer Currys is highly seasonal with a large portion of its revenue generated during the festive seasons of Christmas and New Year. During the months of December and January, the company hires employees in order to produce additional products (Hitt, Ireland and Hoskisson, 2012). Consumer demands rises during this period and the company raises its production level in order to produce higher quantity of goods (Dyer, Kale and Singh, 2001). 5.6. Legal The company has the power to decide in case of any changes in law and order that may be important for their businesses to run uninterruptedly. There may be a possibility that the company is subject to intellectual property rights that are owned by others and the company may face legal actions in case it tries to violet the rights owned by others (Guilding, Cravens and Tayles, 2000). 6. Shareholders and Ethics As Europe’s leading company in the field of Electronics and Telecommunication, Currys takes care of its ethics and reputation in the market. The company considers the interests of its employees, shareholders and customers as a priority and they ensure that these are reflected in their business decisions (Nag, Hambrick and Chen, 2007). Currys offers its customers a wide range of technological and innovative products for maintaining its strong customer base (Marginson, 2002; Evans, Stonehouse and Campbell, 2012). It enables online shopping of customers from the UK and Ireland providing them the opportunity of ‘click and collect’ from the company’s website (Hillman and Keim, 2001). The company also plans out strategies to introduce its customers with the wide range of products that it manufactures for the benefit of the customers. Figure 1: Currys Customer Relationship Management Strategies (Source: Dixons Carphone Group, 2014) The company creates value for the customers by meeting their desires for a wide range of quality goods and services. The company provides goods to the customers at low costs and the company has successfully gained its brand loyalty for the products of the company. The company even provides subsidies to the loyal customers that encourage the customer to buy more goods from Currys. 7. Strategic options available to the company 7.1. SWOT Analysis of Currys Figure 2: SWOT Analysis of Currys (Source: Dixons Carphone Group, 2015) The detailed analysis on the basis of Currys’ strengths, weaknesses, opportunities and threats are carried out by the researcher as follows. 7.1.1. Strengths Currys is one of the largest independent telecommunication companies in Europe operating in various regions (Edler, Meyer‐Krahmer and Reger, 2002). It manufactures a wide range of products for its customers like mobile handsets, tablets and connecting devices (Hoetker, 2007). The company has well-trained sales executives who are capable of introducing their products to the customers. Also the company’s entrepreneurial culture brings in lot of enthusiasm and competitiveness (Bull, 2003). 7.1.2. Weaknesses The company operates at a highly competitive domain and hence this high competition makes it difficult for the company to run its business processes smoothly. The company is a telecommunication retailer and has got many competitors and is likely to face huge competition. Since Currys is a large technology giant, the problems of the industry are often reflected within the media (Wheelen, 2008). 7.1.3. Opportunities The online consumer behaviour is very important for the company to progress. It is a habit of most of the consumers to undergo online research about a particular product before purchasing it (Pike, Roos and Marr, 2005). The internet offers valuable information to the consumers which prove to be challenging for the company but it also provides the company with an opportunity to arrive into a multi-channel statement (Storey and Barnett, 2000). 7.1.4. Threats The cost of Currys shares may be volatile and may be affected by many factors that are often uncontrollable by the company. Due to this high volatility, the investors may find it risky to invest in shares of these companies (Rugman, 2005). Further, in case there is a change in tax law it may have an adverse effect on the holders of the shares of Currys. Also fall in prices of various product categories continues to crush down the margin levels (Storey and Barnett, 2000). 7.2. Recommendations for future strategic direction Although Currys has set up huge business in the UK’s telecommunication market and its products are highly demanded by the customers but the company is expected to face a huge competition in the market against its rivals. Hence it is highly recommended for the company that it should attempt to produce innovative products for its customers and advertise its products in such a way that it attracts the customers. However the company must also be aware of the probable threats that the company is likely to face. The company should efficiently try to mitigate the risk of share price volatility applying various strategies. 8. Conditions affecting Currys’ position in the market The company’s operating and financial performance is affected by the economic conditions in each of the countries in which the company has set up its business (BurgeSmani and Wheelwright, 2004). The economic environment is an important factor that affects consumers spending on electronic gadgets (Kaplan and Norton, 1996). Consumer’s ability in handling these new innovations also plays a very crucial role to attract the consumer to purchase the products. Consumer debt levels, interest rates and unemployment levels are factor that affect consumers decision (Freeman and McVea, 2001). House renovations also have an impact on consumer spending in domestic appliances (Pearce and Robinson, 2000). However, Currys has a competitive advantage as the technology innovations for new products are highly demanded by the customers in the market. According to the company, the current market proposition is such that it gives an opportunity to the company to maintain a good relationship with their customers (Vercic and Grunig, 2000; Smith and Tushman, 2005). The high multi-channel positioning of the company is expected to serve customers of different origin as well as the stakeholders who are very important for the company’s reputation in the market (Roslender and Hart, 2003). Figure 3: Currys strong core to grow substantial revenue as retail giant (Source: Dixons Carphone Group, 2015) There are four important segments through which the company plans to expand its business. The four important segments have been analysed in details as follows. 8.1 Connected retailing Currys tries to set up its business through multi-channel retailing of the various connectivity products that are demanded by the customers (Hill, Jones and Schilling, 2014). The company tries to maintain its brand loyalty by providing quality products according to the needs of the customers. It also takes care of the desires of its stakeholders (Hamel, 2008). 8.2 Services and support The company plans to offer its customers with high technical support options through its class of well-trained sales executives and professionals who understands the customer needs using existing logistics, infrastructure and after sales activities (Freeman, 2010; Burgelman and Andrew, 2001). The company attempts to serve its customers well on time such that there are no complaints arising out from the customer base (Chrisman, Chua and Sharma, 2005). 8.3 Multi-channel platform The company intends to undertake its relationship management with the customers and service providers through its support in various fields of customer needs (Keller, Parameswaran and Jacob, 2011). They also plan to offer training to the mobile retailers who wish to deliver better connectivity solutions to its customers (Beer, 2005). 8.4 Global partnership Partnership with other retail giants enables the company to own branded consumer electronic gadgets and also provide good network operations (Carpenter and Sanders, 2006; Roberts, 2001). According to Currys, it would be highly beneficial for the company to have a partnership with the other retail giants so as to develop new strategies and implement them (Stock and Lambert, 2001). The company believes that it might prove to be challenging to them in case they try to expand their business individually (Reitzig, 2004; Tillmann and Goddard, 2008; Doh, 2005). 9 Conclusion The study indicates that Currys, the international telecommunication retail giant has been performing very well in the market. The company has got efficient managers and sales executive that are well-trained and are capable of managing situations. It undertakes various strategies in order to produce new and innovative products and also to compete with the rivals producing same kind of products. The company plans out to undertake strategic partnership with other retail giants in order to expand its telecommunication business. However the company’s shares are highly volatile that discourages the investors to invest in these shares. However, the company often suffers from various disadvantages due to high volatility the investors find it risky to invest on the shares of these companies. 10 Recommendation As the company is highly susceptible to various risk factors, it is recommended that the company undertakes risk management strategies in order to overcome the risk factors. The company can organize various risk management programs in order to mitigate various types of risks like the business risk and the financial risk associated with the company. It is recommended that the company undertakes risk management for running a good business and also to keep in with the interests of the shareholders. The risk management procedure should be such that it can very well identify the risk factors, good assessment and mitigation of these risk factors is also needed. 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