Strategy The Warehouse Group Limited - Assignment Example

? Warehouse Group Table of Contents Warehouse Group 1.0Introduction 4 2.0Background information and current situation 4 3.0Relevance of a marketingaudit and SWOT analysis 6 3.1Political environment 6 3.2Economic Environment 7 3.3Legal Environment 8 4.0Marketing Strategy. 8 4.1Horizontal Integration Strategy 9 5.0Marketing Productivity 11 6.0Marketing Functions 12 6.1Corporate Marketing 12 6.2Strategic Marketing 12 6.3Product Management. 12 6.4Product Marketing 13 6.5Field Marketing 13 7.0Analytical Models 13 7.1Economies of Scale 13 7.2Core Competences 14 7.3Competitive Analysis 15 7.4Positioning 16 8.0Summary of findings and critical factors for the takeover’s future success 17 8.1Innovation 17 8.2Global Appeal 18 8.3Customer Loyalty 18 9.0Conclusion 18 References 20 1.0 Introduction The business environment today has been faced by numerous challenges, some of which may be beyond the ability of a business to control. Businesses are consistently faced by dynamism in their operations as they trot towards the envisioned aims and objectives. This therefore calls for substantive strategies that are aimed at restoring the business to its path as well as facing the challenges head on to guarantee continued life and the eventual financial health. The same will see strategies that are market driven that present a strong foundation upon which a business gains a strong standing in its activities. In respect to this, any business foreseeing triumph ought to craft such dimension so as to remain relevant and consistent to the ever changing nature of business environments. By so doing, a firm embraces various strategic perspectives including competition, branding and innovation alongside other aspects that improve the well being of an organization. 2.0 Background information and current situation Operating in New Zealand, The Warehouse Group Limited was established in 1982 and is today rated the biggest retailer sharing similar characteristics with Walmart located in the USA. It is also listed in the New Zealand Stock Exchange where shares are publicly traded. Nevertheless, The Warehouse majors with more operations than those exhibited by department or discount stores with increased capacity and volume of business. Since its inception The Warehouse has grown tremendously increasing its presence in New Zealand to 83 stores by 2012. It is during this time that a decision to be involved in an acquisition was hatched to increase production and reach more markets for growth and success. The actual business of the Warehouse revolves around grocery as well as non grocery products, an activity that is undertaken broadly in its department store with a workforce slightly exceeding seven thousand employees (Gunter & Mark, 2005). Moreover, there are additional distribution stores that purpose to augment as well as broaden the market reach thus increasing the geographical coverage. The Warehouse also boasts with a number of brand names that are situated around the stores that adds up to its other operations. The presence of gardening facilities also increases the value of business more so in Auckland and Christchurch areas where the Warehouse offers its just brand alongside other brands owned totaling to almost thirty (Krishna, 2007). The Warehouse doesn’t operate in isolation and it’s never a monopoly. It operates in a highly competitive business enviroment since there are other players in the industry who are also aiming at capturing a larger share of the market and also remain relevant. The retail platform is shared by Super Cheap Auto who trade in products related to automobiles, Farmers having department stores across the country dealing with lowscale end of the market, Kmart and Briscoes Group who basically major in homeware and sportsware. Notably, the industry is still attractive to venture in hence there are other potential players who have the urge to share in this cake. Subject to time therefore, these players will find their way into this market hence would pose extra competition to Warehouse. With a view to respond to competition, Warehouse has been in constant increase of its stores and hypermarkets which have increased its market touch seeking to satisfy customers even more. Despite all these attempts, the Warehouse has received several criticism on its programs and in a bid to operate optimumly in the prevailing environment. Critics have blaimed the Warehouse for dumping poor products into the market which are lowly priced to attract increased sales (Richard, 2010). Evidence to this is the fact that the Warehouse has been recalling substandard goods sold in the market. For instance, there was a recall for cycle helmets that had been sold by the Warehouse having faulty insulation. After recall, the customers who had purchased these items were refunded their cash. 3.0 Relevance of a marketing audit and SWOT analysis Marketing audit entails a comprehensive and consistent evaluation of the assets of a company with regard to marketing activities. The bid for Warehouse to acquire Noel Leeming Chain of 92 electronics and appliance stores needed an appropriate tool that would review the aims and objectives therein, strategies to be incorporated and the competence of the strategy used in marketing . 3.1 Political environment The political aspect of any nation in the world plays a pivotal role in determining the direction that the business family will assume. New Zealand offers a friendly political environment where businesses and other activities of trade are boosted and encouraged. This gives Warehouse, in its acquition to increase business, surety and certainty that the undertaking will thrive and will be protected from political adversities. The country’s political alignment maintains free trade and puts more emphasies in agriculture. This aspect will come in handy in the manufacture, distrubution and the ultimate sale of the goods produces by the Warehouse. The nation also upholds the principle that emphasizes on an economy of free market as well as democracy that is representative in nature (Theresa & Gary, 2001). All the scenarios coupled with the subsequent encouragement of investments in the country leads to a level ground for all businesses to operate and enjoy in the prevailing political stability. New Zealand has also entered into several agreements that purpose to streamline and enhance growth economically as well as prosperity across the entire region. Warehouse will be guaranteed of an enabling environment to do business since the investment environment is protected. Worth noting also is the China-New Zealand Free Trade Agreement which allows business transactions between these countries. The agreement allows at least 1800 skilled workforce from China to work in New Zealand for a period not exceeding three years. This will assure the Warehouse acquisition with specialised labour thus quality processes and products for a lucrative business. 3.2 Economic Environment On the economic front, New Zealand scores high above 80 in relation to economic freedom which owes from the fact that it is boosted by property right protection as well as a judiciary that prohibits corruption and inclines more towards independence. The prevailing freedom will be translated to lucrative business practices thus levelling the ground for Warehouse. Moreover, the country has been controlling the gross public debt hence institutions have faced effectiveness with increased stability of the economic environment. The vibrance experienced in the economy has made it possible for businesses and organisations to fluorish. Warehouse Company will enjoy these benefits first hand and the prevailing enabling environment will go a long way in ensuring that the activities of the business after the acquisition reap from the economic maturity in the country. 3.3 Legal Environment New Zealand has a sound legal structure which has an inclination towards protecting organisations and their immediate investments into the economy. Owing to the proper functionality of the judicial system, the rights vested on private assets and other property face strict protection thus a business can increase certainty. Likewise the contracts made are always very secure with sound and solid right over intellectual property (Odies & michael, 2010). This scenario will improve business health for Warehouse by assuring the management that their innovation will remain protected by the law of the land thus instilling dire confidence in the business. The protection emanates from consistent laws enacted to govern the business sector. The acquisition effected by Warehouse Company equally entails some contractual commitments that ought to preceed the actual take over. These agreements would be rendered null and void if they are not upheld by both parties but this aspect also enjoys protection from the government. Warehouse Company therefore approaches a fair field with everything in place where relevant institutions are set in place to guarantee a smooth flow of events as the company opens its doors to the public. 4.0 Marketing Strategy. marketing strategies are processes that compels organisations to put their resources into optimal concentration having in mind the goals of increased sales and gaining a lead in competition. To develop marketing strategies requires a thorough scan and scrutiny of the environments both internal and external bearing in mind the constraints that the strategy may have, performance analysis and the marketing mix elements. The Warehouse Company insitutes a number of strategies in order to maintain market relevance as well as gain a competitive advantage in the retail industry (Tony, 2000). This is evident when the company makes adequate efforts and announces its amalgamation with Noel Leeming Chain of 92 electronics and appliance stores. 4.1 Horizontal Integration Strategy This strategy entails a business acquiring another to make a merge in the same industry and with a common objective. The strategy has been deployed widely by Warehouse Company with a view to attaining the desired levels of success.The action of company to acquire is a clear view that more needs to be done to counteract the dynamism in the business environment. After its retailing business fluorished across New Zealand, the company decided to merge with Noel Leeming Chain of 92 electronics and appliance stores in 2012. Not withstanding the Noel Leeming Chain being unprofitable, Warehouse had envisaged increased earnings from the acquisition which was to be operated separately as a trading division with view to also lifting the ‘Red Sheds’ business. Key to this is the fact that the new integration will benefit from the economies of scale that is a resultant feature. Through this perspective, there will be cost benefits emanating from the increased size of the business thus lowering the unit cost of the output considerably. This is because the fixed costs of the company will henceforth be spread over many more unit of products manufactured (Isobel & Robin, 2008). Notably, the merger will also reap highly from efficient operations brought about by the increased scale that proportionately tend to decrease the amount of variable cost incurred. Upon acquiring Noel Leeming Chain, Warehouse will benefit wholly from the determined workforce that manage the chain. As observed by the chief executive, the chain was being led by a talented group who are specialised in electronics as well as home appliances. There is more hope that the retail sector will experience increased growth that comes from the synergy of this team. Warehouse Company will greatly expand its presence in the reference markets having teamed up with Noel Leeming Chain. Its impact would be felt even higher and this may have some influence to the customer who would benefit from quality and efficient production that aims at satisfying their wants and needs appropriately (Subroto, 2005). The company’s increased business coverage will result in amplified voice in the market that gives a competitive advantage in the retail sector over other players in this industry. In another perspective, Warehouse will equally increase its ability to acquire resources alongside other competencies that were not present in the previous situation. The same would make it possible to venture into other new products and other new markets thus increase in market coverage. The absolute risks related to a new product and the entire development cycle reduce substancially thus paving more avenues for research and development to augment the production process. Warehouse Company benefits from reduced market barriers. It’s worth noting that barriers to a certain market may be enormous and inhibitive to the business venture. With this in mind therefore, the company is able to counteract barriers present in the electronics and home appliance industry and also the reduction of competitive reaction. 5.0 Marketing Productivity To determine productivity a company has to assess the level of marketing investments put forward by the management. Warehouse Company will incur some expenses even after the integration. These include promotional costs to give the public the idea of the acquisition and the available offers after that undertaking. Marketing communication investments will also count which purposes to enlighten the public on the happenings and the intended courses of action. Of great importance also are the activities aimed at strengthening the brand through sponsorships alongside other deals intended to create a long lasting relationships with the company. The need to involve the customer in the entire process is of paramount importance and will play a pivotal role in engaging the customer in real situations through active participation to improve on the quality of the products. However, due to the synergy achieved by the company by acquiring Noel Leeming Chain, the ultimate costs incurred in all these activities are reduced proportionately due to economies of scale attained. The yield that results from these investments is the market productivity. The market productivity is expected to remain high owing from the benefits of the acquisition. Other activities that may succeed this acquisition would further streamline business triumph. For instance, product improvement and pricing models may lead to better business whereby reduced prices would increase sales volume translating to more revenue. 6.0 Marketing Functions As the firm is propelled towards more growth, the marketing functions should be in constant focus. The major marketing functions of a business are as follows. 6.1 Corporate Marketing For Warehouse Company, this function entails an overview of global marketing aspired to implement the standards of brands, the enlightenement on the infrastructure with a global perspective for public relation, advertising and so on (Stuart, 2001). This aspect is carried out every year with a definite calendar and set strategies to deliver on the envisioned objectives. 6.2 Strategic Marketing The strategies earmarked for growth by Warehouse Company are set in this phase. All activities viewed to deliver results are brought together in harmony to aid in achieving intended business milestone. These may include managing key relationships to support needs in business and technical support etc. This function operates on a calendar that is based opportunity. 6.3 Product Management. This function is the reason to which the brand stands and determines its survival. It depicts the long term strategy and the direction its now taking towards prosperity. Communication about positioning of the products by Warehouse Company alongside other strategies like those regarding competition and pricing are incorporated in this function. It also drives on a calendar that inclines towards the lifecycle of a product. 6.4 Product Marketing Through this function the Warehouse Company institutes product launches, offerings and processes the positioning strategies to deliver the rightful meaning as per the plans of themanagement. The product lifecycle is where this function derives its calendar. 6.5 Field Marketing This is the function that executes programs related to marketing and other campaigns to reach the intended market promptly in order to make a mark. The field activities are designed to take place after the expiry of every three months. 7.0 Analytical Models 7.1 Economies of Scale The ultimate acquisition carried out by Warehouse Company is key to the realization of many benefits. The fact is that the new integration will benefit from the economies of scale that is a resultant feature. Through this perspective, there emanates cost benefits that are brought about by the increased size of the business thereby reducing the unit cost of the output considerably. This is because the fixed costs of the company will henceforth be spread over many more unit of products manufactured. Notably, the merger will also reap highly from efficient operations brought about by the increased scale that proportionately tend to decrease the amount of variable cost incured. For example, the cost of manufacturing one unit of an electronic device will be lowered by the several factors among them being the lower fixed costs that are extended over a long range of products manufactured at particular time. The acquisition will come with increased production efficiency in the Warehouse business operations and the quality of unit product increases. Increase in production of low cost products will eventually translate to low priced products that eventually trickle down to consumers who may benefit immensely (Celine, 2009). 7.2 Core Competences A core competency is a skill being possesed by a firm or organisation that aims create a distinct value to the customer. The capabilities of an organisation that are unique are personified in what people think and their knowledge and the system of the organisation that influence the interaction of the employees. The amalgamation of Warehouse and Noel Leeming Chain brings on board resources and other capabilities that may remain a foundation that directs the company towards value addition. For instance, Noel Leeming Chain has a professional team that might ensure a unique competency to the entire business. Infact, the chief executive recognises this aspect and hopes that the acquisition will take the firm to a higher level in achieving its objectives so envisioned. Additionally, the resources pooled together builds a unique strength to company. Both Warehouse and Noel Leeming Chain are endowed with various resources of technology, financial resources and human skill as well. All these are valuable and play a unique role in the activities carried out by the company thus constitutes a core competency. The ability to actively utilize these resources with effectiveness also builds up on the core competency dimension. The strategies embraced by the integrated company approach may develop new resources or even use the already existing capabilities. These competencies assist the Warehouse and Noel Leeming Chain in making a clear distinction in its products from the competitors’ and also through the reduction of costs than those of competitors thus creating a competitive edge in the business arena. Also of importance to note is the value created by these core competencies hence decide the future path that the business may take. Innovations and inventions are the ingredients of the core competencies brought about by the acquisition bid where by use of the competencies, new technologies are devised that assure an effective and efficient delivery of the products of the company. 7.3 Competitive Analysis Firms never operate in vacuum but rather in a highly competitive environments something that calls for effective strategies so as to remain competitive and win at last. The analysis of competition in Warehouse acquisition of Noel Leeming Chain unearths weaknesses that face the company, discover opportunities available for exploitation and identification of threats that could injure the business reputation. When developing an organisation strategy, the Warehouse management must scrutinize the strategies of other players in the industry, the competitors. This analysis will act to direct Warehouse towards formulating an effective organisation strategy that has a direct impact on how the company will react to its sector. The analysis therefore is used as a gauge to determine its ability in comparison to the competitors. Warehouse will start the analysis of the competitor by scrutinizing the current and potential competitors. This activity acts as an informed appendage for carrying out industry analysis served by the Warehouse Company. Performing industry analysis pin points possible competition that could pose dangers to the running of the firm. The management of Warehouse Company will perform a competitor analysis that shifts the concentration to direct competitors. Importantly, it is wise to carry out the same when there are few upcoming competitors. As depicted by Michael Porter, he makes an assumption that in an industry the competitive environment depends on the five forces. These forces are, power of suppliers, power of buyers, threat posed by substitute products, rivalry among competitors and threat of new entrants. 7.4 Positioning The strategies of positioning can be formulated in a number of ways. They can be developed from the attributes of the products, competition,types of consumers involved as well as many other dimensions (Sahaf, 2006). Warehouse Company may use product characteristics or even the benefits derived by the customer to develop a positioning strategy. Through this, the features attached to a product will be focussed on. In this perspective therefore Warehouse Company may inform the public or make illustrations of a feature of a product like durability, economic or reliable to purchase. Its electronic product line may relay the information of the attractiveness and the durability of the appliances. For example, in the toothpaste market most companies have always insisted on ‘freshness’ and ‘cavity protection’. The Warehouse Company may also use pricing as a strategy to position itself in the market. The company can take the approach of quality. This can be achieved by making the market percieve highly priced as better as opposed to those priced lowly. The attachement and comparison between price and quality will go a long way in proposing preference for the company’s products. The positioning can also be based on the product process. This strategy associates the product with the user. Some casual garments like jeans have enbraced ‘designer Labels’ thus developing an image of fashion. Warehouse could utilize this aspect to increase preference for its products in the market. A case in point is that of Johnson and Johnson. The repositioning of its shampoo brand from it being useful only to babies to even wash hair led to increased market share. The Warehouse Company can utilize a similar idea as well. 8.0 Summary of findings and critical factors for the takeover’s future success Through the acquisition bid, Warehouse was able to penetrate more markets that it could not have approached alone. The same had instilled confidence in the consumers most of who look at this bid as a success. The company has cultivated its positioning in the minds of many consumers as that of quality thus improving on customer loyalty that leads to increased volume of sales and eventual revenue hike. By application of various strategies, the company has been able to contain competition in the market thereby maintaining the market share and market command as far as service delivery is concerned. There are several critical factors that tend to shape the destiny of takeover bids like this one. The Warehouse Company will have to strictly address these issues if future success is to be guaranteed. 8.1 Innovation The company ought to invest in innovation of its products as innovative designs are what drive many markets today. This holds some sense since consumers are consistently seeking products that increase what they deem effective as well as information accessibility (Allan, 2003). In order to remain competitive and relevant, Warehouse must enhance product designs by embracing technology. 8.2 Global Appeal Products that have a global orientation to the consumers will achieve a competitive edge over those that do not. To achieve future market success, products manufactured by Warehouse should appeal groups of people who share some interests in common, hobbies etc as opposed to those sharing common location. 8.3 Customer Loyalty Currently consumers have become very selective when making purchase decisions. Establishing a relationship is beneficial and not only makes them come back but facilitates a repeat purchase (John, 2001). The mission is equally an important tool that customers look for as well as values and the business’ character when making the ultimate decision to buy. Outright ethics and pronounced public relations are instrumental in ensuring that a competitive edge is attained not only in the current situation but also in the near future. 9.0 Conclusion The business environment has become complex phenomenon in the modern world. This has required proper positioning through relevant strategies to make sure that the business does not become extinct. This paper scrutinizes diverse aspects where a company in the retail industry, Warehouse Company Limited acquires another company’s business with a view to improving its financial health (Kim, 2008). The paper also discusses at length the element of environmental scanning as well as various strategies that are aimed at directing the business towards the envisaged objectives and goals. There is also an evaluation of the takeover bid with the underlying implications isolated and given relevant focus. The paper ends at observing the critical factors that must be considered in order to guarantee future continuity since the business is a going concern. References Allan, A. (2003). Innovation Management: Strategies, Implementation and Profits. Oxford University Press, Incorporated. Celine, C. (2009). Strategic Positioning in Voluntary and Charitable Organizations. Routledge. Gunter, S., & Mark, M. (2005). Mergers And Acquisitions: Managing Culture And Human Resources. Stanford University Press. Isobel, D., & Robin, L. (2008). International Marketing Strategy: Analysis, Development and Implementation. Cengage Learning. John, B. (2001). Management dynamics: the new synthesis. McGraw-Hill. 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