Business Organisation & Policy Topshop - Essay Example

? Business Organisation & Policy Contents Discussion 3 Political Structure and Trends 3 Economic Structures and Trends 4 Socio-Cultural Factors 5 Technological Factor 6 Environmental Factors 6 Legal Forces 7 Reference 9 Discussion This essay deals with in-depth analysis and discussion of the processes of business planning and policy making and the reason for change over time of a popular retail high street outlet of United Kingdom. This discussion will be based on the detailed study about the influence of environmental and behavioural factors on corporate size, structure and business strategies of the chosen company. The name of the chosen high street outlet is Topshop which sells fashion apparels in the high street outlets in London. This sector is one of the major economic sectors in the country, with retail sales reaching upto 221 billion pounds and employing round 3 million people with total 3, 00,000 shops in UK alone. High street retail business like Topshop has been affected by a number of factors like price and cost pressure, concentration in the industry etc. Topshop specializes in women’s fashion products such as clothing and apparels. This retail sector is expanding both horizontally and vertically with retailers taking broader strategies to adapt to it (Burt and Sparks, 2003, p. 15). Polarisation increases in the sector with the growth of the bigger companies. Hence, innovation is the critical element which the retailers need to do for their development. With economies opening them to outer world, the competition is increasing and the retailers are developing strategy to survive. But while developing strategy they need to take into consideration the external factors which will impact them. Political Structure and Trends Topshop and other high street outlets i.e. its competitors are affected by the political structure in a number of ways. One of the main way that politician in UK can affect the high street retail outlet businesses is through their exercise of power in the land-use planning system. Though land-use planning is the function of local authority, the national government can intervene in for the development and growth of high street retail outlet business like Topshop. Recently there have been restrictions on green field development project and hence it is becoming harder for retailers to open in the new shopping centres (Bluff, 2012, p.15). Therefore, as a high street outlet, Topshop needs to take a close look at current business policies and re-strategise their decisions for future expansion. The environment of shopping has changed over the years, because the shoppers can now choose between the leisure and experience component. They now face a more functional price driven appeal from the shoppers (APCO Worldwide, 2012, p. 4). With technological advancement the price has become a major component as the consumers can easily compare the price. Hence, the company needs to offer products of varied price ranges and develop and implement effective branding and promotional strategies so that they can position themselves differentially in the market. The competition commission in UK has found out that consumer have accepted many of the changes in the high street retail sector like the online shopping. As discussed the land-use planning affects the location of the outlets, there are other instruments which governments can use to affect the operations like retail trading legislations and the public policies which regulate such working conditions of the industry, like employment practices etc. Economic Structures and Trends The UK high street retail sector is affected by the macro-level position of the country. If the general economic condition is good this sector will experience a high volume of retails sales. If the economic condition of the country improves then there is a possibility of significant investment by other players. Like in India with the Opening up of FDI in the retail sector, many foreign retailers like Walmart, Ikea is going to open themselves up in the country. Like in UK the high street retail business like Topshop is dominated by large multinational brands that sell clothing and apparels. The interest rate which persists in the market also plays a major role because the players will get severely affected with high interest rate payments which they have to pay to the lenders (SBTDC, 2012, p. 2). Again the monetary policies adopted by the central bank of a country will affect the retail industry. If there is more money at the hands of the consumers they will spend more and the profitability will increase. Government spending towards the retail industry should also be looked at. If the investment in the back ends of the high street outlet like Topshop is done by the government, this enhances the supply chain management of the high street fashion stores. The taxation which the government follows must also be considered. Presence of high and retrospective taxation policies in a country is detrimental of the high street business of fashion products. They are also affected by inflation rates which persist in the economy, with the presence of high inflation rates the volume of business will decline. Again this sector is subjected to business cycle with periods of high growth followed by periods of lean business period. Hence, Topshop must be ready to provide discounts in such times to attract the consumers. Socio-Cultural Factors This factor has contributed maximum to the change in the shopping trend in high street outlets like Topshop. The company wants that the consumers have been transformed over the years which have led to change in the beliefs and attitudes of the consumers. Modern consumers need to be concerned about the fact that some consumer purchasing branded products with a conspicuous logo rather than buying similar generic products at reduced price (PwC, 2012, p. 4). Hence Topshop needs to understand and predict the change in this area. The expectations of the consumers have increased due to their exposure to new events, and new ways to doing things, but large retailers in clothing and apparels sector like, Nike have been trying to make their product for the common man. The retailers need to take into consideration factors like Education, Living conditions, age distribution etc. of the customer. For example in India, the middle income population is rising and hence the retailers are targeting them to increase the profitability. With rapid rise in internet connection, the retailers are trying use the e-commerce medium so that customers can use their sites to buy product (PwC, 2012, p.12). Hence the retailers are trying to increase their presence across the social media sites to reach out to new customers. Technological Factor High street retail sector is nowadays are changing or restructuring them on the basis of the technological advancement. Nowadays with the technological advancement, more number of people is getting connected via internet. They can now see all the products online and compare the prices and then buy the product. It gives much more buying power at the hands of the consumers (KPMG, 2012, p. 13). The Six Degrees of Digital Connections which are email, websites, social networks, texting, mobile and online shopping have increased the level of interaction face by the retailers with the consumer. Hence the retailers nowadays are trying to change their online presence, to enhance the user experience of the consumers. It has been seen that 11% of the shoppers prefer to buy their products online and it is forecasted to grow to 17% in 2023 according to research conducted by Brick Meets Click. Therefore, Topshop needs to use social networking mediums like Facebook, Twitter to develop their brand advertising. Environmental Factors Topshop needs to take into consideration factors like the land price, rent price, the availability of lands for retailing etc. The consumers have to travel to the location to buy from the stores. With increasing competition the retailers have to use address the availability of store locations so that it becomes beneficial to the customers. The company also needs to look at the supply chain part which is also an important factor. For example the food retailers in UK are considered as efficient in doing this. They handle the retail logistics, transportation, storage, reuse of materials and recycling well. Legal Forces The legal forces of the country affect the way the high street outlets like Topshop operate in a country. This business has been affected by issues like child labour law, and workers’ rights. The Union workers in such industry are strong so that the workers can have medical benefits and equitable wage payments. Such factors tend to have a strong negative impression on the retail industry. Like in China, Walmart was faced with issues like human rights violation with the workers. Also trade embargo against the country’s imports forces the wholesalers to find different suppliers. In the last decade there has been a massive growth in the e-commerce industry and the retailer’s needs to develop strategies around that. About ten years ago may be only a minority population had purchased anything online like buying a ticket, or a book may be. In today’s world internet shopping has become a main activity in today’s high street retail business. Majority of the shoppers are now from middle income families, who access the Internet on a regular basis to buy almost everything from grocery items to clothes of latest fashions. With maturity of market, the online retail industry is changing (Dalic, T. 2004, p. 211). But previously it was not possible for all the companies to live up to the dream. Hence in the early days of e-commerce only a few major companies applied it like eBay, Amazon and Walmart. Recently the native start up players like Paly.com has used this online retail showroom and has prospered. Earlier the retail companies used to have separate online operations as compared to their regular retail stores. They were successful in doing this operation (Mills, G. 2002, p. 43). With constant evolving technology the large ecommerce retailers like Amazon, eBay accounts for more than half of the online retail market. One of the key factors for the growth is the drive by high street retailers like Topshop in boosting their online operations and also the realisations both the retail store network and online operation can complement each other. Hence for customers buying product is no longer the case of purchasing through offline or online mode, but this involves a complex set of processes including visits to brick and mortar store and doing online research. Such type of business is known as multi-channel retailing. They have the advantage of meeting the above requirements of the customers along with providing a range of delivery options. Hence the customers can buy online but collect the goods from the local store or use the “click and collect” functions designed to ensure that the customers are not disappointed due to lack of stock. Another factor responsible for the growth of such multi-channel retailing is the growth in the range of goods which the people are willing to buy online, ranging from electronic goods to furniture and white goods (Experian, 2011, p. 9). In countries like UK, fashion is the single biggest online retail sector. But it would be wrong to say that multi-channel retailers are dominant players online. They now account for 55% of the market, and they didn’t increase significantly during 2010. This is because the big players have failed to live up to the expectations. Hence they need to innovate so that their multi-channel capabilities increase. Social media networks have failed to reach their commercial potential because they still lag behind the email and bind search used to lift sales. Hence Topshop needs to innovate to monetise the relationship with online media effectively through close interaction with Facebook and through successfully targeting the appropriate audience on smaller social networks. Facebook alone now accounts for more than half of the UK social networking visits made in every six pages viewed. Therefore, Topshop needs to use the social networks which cater to specialist audiences for more niche products of the retailers. Reference APCO Worldwide. 2012. State of the Retail Industry. Retrieved from: http://www.apcoworldwide.com/content/viewpoints/reputation/_assets/pdf/RoRIndicator_Summary.pdf. [Accessed on: 30 November, 2013]. Bluff, P. 2012. A Retail Market Analysis. Retrieved from: http://poplarbluffchamber.org/wp-content/uploads/2012/06/RMA.pdf. [Accessed on: 30 November, 2013]. Burt, S. and Sparks, L. 2003. Competitive Analysis of the Retail Sector in the UK. Retrieved from: http://www.dti.gov.uk/files/file11029.pdf. [Accessed on: 30 November, 2013]. Dalic, T. 2004. Wal-Mart's European Business Strategy. Nordstrom: GRIN Verlag. Experian. 2011. The changing face of UK retail in today’s multi-channel world. Retrieved from: http://www.experian.co.uk/assets/business-strategies/white-papers/RWC-whitepaper2.pdf. [Accessed on: 30 November, 2013]. KPMG. 2012. Retail Industry Outlook Survey. Retrieved from: http://www.kpmg.com/US/en/IssuesAndInsights/ArticlesPublications/Documents/2012-kpmg-retail-outlook-cautious-optimism-in-style.pdf. [Accessed on: 30 November, 2013]. Mills, G. 2002. Retail Pricing Strategies and Market Power. Carlton South: Melbourne Univ. Publishing. PwC. 2012. Retailing 2020. Retrieved from: http://www.pwc.com/en_US/us/retail-consumer/publications/assets/pwc-retailing-2020.pdf. [Accessed on: 30 November, 2013]. PwC. 2012. The rapid growth of online shopping is driving structural changes in the retail model. Retrieved from: http://www.pwc.com.au/industry/retail-consumer/assets/Digital-Media-Research-Jul12.pdf. [Accessed on: 30 November, 2013]. SBTDC. 2012. How to Conduct an Industry Analysis. Retrieved from: http://www.sbtdc.org/pdf/industry_analysis.pdf. [Accessed on: 30 November, 2013]. Read More