BMG758 CRN Department of Marketing Leadership and Management

BMG758 CRN Department of Marketing Leadership and Management

Section 1

1.1 Introduction

Strategy development is helpful in finding the business opportunities by which operational sustainability can be managed properly. In this, the PESTLE analysis has been included in finding the external environment of an organisation. For this assignment, Coreblue, which is a software organisation, has been selected. The background of this organisation has been provided in this assignment. Porter’s five forces have been highlighted for this organisation to understand its competitive market. With the help of the internal and external analysis, the eight key drivers are identified in this study. Among these eight key drivers, two critical drivers are provided in this study. Moreover, the recommendations for strategic success in the future development of the organisation have been provided with a reflection using the Gibbs model.

1.2 Organisational background

Coreblue is a UK-based software development organisation, which was started in 2016 by Dan Hardman and Lewis Boyles-White (Coreblue, 2023). This organisation has a vision to empower the team of technologies to create a positive effect on the government and business. This organisation follows a hierarchical organisational structure, which has helped in maintaining its operations in the organisation properly. The organisation has a total asset of 65.59%, which had increased by 68.74% in 2021. This has also helped in maintaining a positive work environment in the organisation (UK Global Data, 2023). Moreover, the working capital of this organisation is £491,618.00, which has assisted in maintaining the business operations appropriately (UK Global Data, 2023). This organisation’s strategic approach is to deliver custom software with as much value as possible for the customers. Thus, this strategic approach would help in finding key drivers for developing strategy for the company.

1.3 PESTLE analysis

PESTLE framework is based on understanding the external factors that are impacting the development of an industry. The factors such as political, social, economic, technological, environmental and legal are analysed in this framework for understanding the external environment of the industry. This tool is efficient in developing a wider business environment and ensuring strategic thinking processes.

Political

Political stability in the UK is consistent, which supports both regional prosperity and maintaining developments. It is feasible to maintain corporate operations through the appropriate development of management processes in the UK, which has a political stability score of 0.54 (Global economy, 2023). Furthermore, the UK is a democratic country with a constitutional monarchy that upholds equality for all. Through the maintenance of proper employment, this aspect has assisted individuals in managing a proper lifestyle in the nation. However, the impact of Brexit has created changes in taxes, which can affect the trading operations in the software industry (De Ville and Siles-Brügge, 2019) [Refer to Appendix 1].

Economic

With a GDP of 3131.38 billion US dollars, the UK’s economy, which is ranked sixth in the world, has helped the country’s economy expand (Trading Economics, 2023). Hence, an organisation’s ability to maintain sustainable growth through execution can be facilitated by the economic component. Besides, revenue of £44.1bn was gathered from software development in the UK (IBIS World, 2023). This has helped in maintaining 4.2% growth in the industry, thereby shaped by uncertainty within economic conditions.

Social

The UK has a population of 67,829,840, which has helped the nation to manage its culture (Worldometer, 2023). The social mobility component can aid the software industry in growing its clientele. Furthermore, the high standard of living in the UK emphasises health and well-being. Additionally, this may benefit the company’s development. Additionally, social mobility is rather high in this nation, which contributes to improvements in health and education levels (Goudeau et al. 2021). The cultural diversity in the country has helped in maintaining business opportunities in the software industry to manage the employment processes appropriately.

Technological

The UK is a technologically advanced nation, home to a sizable population of tech workers. In 2023, the UK implemented the Local Digital Index as a means of controlling connection and innovation (Tech UK, 2023). However, the UK is falling behind South Korea and the US in terms of greater technological advancement (Lebrouhi et al. 2022). On the other hand, Ashaye and Irani (2019) stated that the UK’s economy benefits from the high Internet penetration rate, which also helps with the management of online services. Therefore, in the software industry, there may be an opportunity to succeed in the market with technical improvement.

Legal 

The UK’s legal system is extremely strict, which helps to maintain the country’s integrity and work ethics. In the UK, an individual’s right to be managed is governed by the Equality Act 2010 (Ocloo et al. 2021). Numerous organisations across the nation have introduced numerous health awareness programs with this law. The development of the software industry can be managed with the involvement of the Employment Act 1996 for employment development. This law helps to maintain the rights of the employees in an organisation (Middlemiss and Downie, 2020).

Environmental

The country is launching environmental awareness campaigns, which are influential (Liu et al. 2020). Programs for environmental wellness have been included in this, which has helped the nation’s organisations sustain business growth. However, there are difficulties brought about by changing weather in the organisation (Christensen et al. 2021). Moreover, the struggle to reduce carbon emissions is taking a huge time, which is negatively impacting the software industry to manage its environmental sustainability.

Section 2

2.1 Porter’s Five Forces Analysis

This tool is used for understanding the competitive environment of the organisation. The usage of this framework is helpful in addressing the attractiveness as well as the pinpoints of the industry, which can help in developing strategies for improving profitability.

Table 1: Porter’s Five Force Analysis

Critical analysis

From both of the above analyses it is clear that Coreblue, which is a software development company, may face challenges in maintaining environmental stability. This is due to ineffective environmental impact in the country as it is struggling to reduce emissions. Moreover, the usage of advanced technologies by other countries is creating problems in maintaining technological developments in the UK. However, investing in technologies and improving internet speed in the country has provided strong support to the software development industry. Thus, this can help Coreblue to manage the technological upliftments in the organisation.  Additionally, the organisation has a highly competitive environment from different MNCs in the country for which development of unique strategies are important.

2.2 Identification of Key Drivers

Identification of the key drivers within a business is considered to be highly important to evaluate the factors that are likely to have an immense impact on the current business organisation. Overall, the key drivers that will be identified below have been gained from Porter’s Five Forces analysis and PESTLE analysis in the section above.

Table 2: Key drivers of Coreblue

From the table above it can be stated that political instability within the domain of the UK is very low which is considered to be one of the key drivers that can impact the business operations of Coreblue within the UK markets. Apart from that, changes within governmental rules and regulations along with fluctuating GDP rate reflecting unstable economic conditions also seems to be impacting the external environment of Coreblue within the markets of the UK. Moreover, social media users within the UK have increased to 57.10 million as indicated in the figure below which reflects 84.4% of the total population within the UK (MeltWater, 2023). Coreblue is being rapidly impacted by the growing number of users on social media platforms in the UK, which makes it imperative for the company to incorporate digital advances. This trend highlights how important it is to respond to consumers’ rising expectations for technology in the marketplace. The widespread use of smartphones and the internet highlights the necessity of strategic adaptation to satisfy changing customer needs.

However, the UK also reflects high subscription demand in the market as 40% of businesses operating through online services have implemented subscriptions and termed it as their necessity (Tighe, 2022). Additionally, the UK is among those markets with fast-growing signs of subscription as companies like Netflix, Disney and others are operating within the UK markets with successful subscription packages (Kantar, 2023). Most importantly, 81% of the households within the domain of the UK have been observed to be signed up towards subscription services reflecting the high popularity of eCommerce subscriptions in the market (Whistl, 2022). Coreblue must make strategic adjustments in response to the UK’s changing environment, which is shown by the rise in social media users. The incorporation of subscription models is identified as a critical factor that has the potential to bring about revolutionary shifts. Simultaneously, increased rivalry in the UK marketplaces is an important aspect affecting Coreblue’s commercial climate. The next stage of scenario planning will examine two crucial uncertainties that are essential to the business’s trajectory in light of these important drivers, offering a more nuanced picture of possible future events.

2.3 Scenario planning

Scenario planning mainly includes the development of varied scenarios through the use of two main critical uncertainties through the X and Y axis of the scenario matrix (Allan et al. 2022). This graph tends to consist of four scenarios that are termed as four different Worlds based on the identified uncertainties of the current business. Based on the identified key drivers of the current business, high competition within the markets of the UK and increasing demand and trends of the subscription within the UK markets are likely to be influencing the business operations of Coreblue.

Critical uncertainty 1: A high number of competitors of Coreblue in the UK market

Critical uncertainty 1: A high demand and adoption of subscriptions in the UK market

Henceforth, each quadrant of the scenario matrix tends to denote different scenarios as reflected in the figure below.

2.4 Infographic and descriptions of four worlds

World 1: High subscription-ready customers with low competition

In consideration of World 1, as per the scenario matrix, the first scenario depicts having high subscription-ready customers with low competition within the market. From the market of the UK, it can be analysed that subscription adoption among online businesses or households is very high which further indicates the scenario of new businesses likely to be adopting subscription services and offering different benefits related to subscription to the UK population. As the competition in this world is low, therefore, Coreblue has to have a high possibility of gaining customers in the market that tend to access the company in generating high amounts of profits and revenue in the domain as well.

According to Binz et al. (2020), fewer options mean less opportunities for customers to negotiate, which weakens their negotiating power. As a result, Coreblue is in greater need of a reliable infrastructure to handle growing website traffic and market needs. It is essential to address these issues in order to strengthen the company’s position. Furthermore, building loyalty and gaining the trust of customers depend heavily on service quality. These programs not only support the current business objectives, but they also help Coreblue build a loyal client base that improves its position in the market.

Through this scenario, the business will also be profitable in gaining a large market share and revenue margin to sustain its operations in the future scenario. However, the scenario stated in this World highly aligns with the stage of growth in consideration of the Industry Life Cycle Model (Cantner et al. 2021). As per the model of the Industry Life Cycle, the stage of growth seems to be low in competition but it gradually increases the level of competition through the passing time. Nonetheless, Culot et al. (2020) argued that threats in terms of new entrance are likely to be medium to high range as different companies may penetrate into the market due to the stage of growth providing a high opportunity for future benefits. Henceforth, Coreblue in this scenario can benefit in terms of following the strategy of premium pricing, as the company possesses the need to adopt variant strategies of pricing to cope with the competition level in the market.

World 2: High subscription-ready customers and competition in the market

World 2 as per the Scenario Matrix depicts the scenario of high subscription-ready customers and high competition within the market. In consideration of the high competitors and high subscription-ready customers, this market aligns with the stage of maturity within the model of the Industry Life Cycle and can also be termed a matured world. The stage of maturity as per the Industry Life Cycle model reflects the successful point where a business tends to reach the point of saturation (Vo-Thai et al. 2021). As business seems to be at a successful peak in this stage with a high competitive edge in the market, therefore, industrial rivalry in this scenario seems to be a medium that further assists businesses in terms of collaborating and making collective decisions for protecting the business environment. Udokporo et al. (2020) stated that rivalry reduction is considered to be a high concern for different businesses as customer demands are high in the stage further creating immense pressure on the company to meet consumers’ needs.

Contrary to the situation, the stage of maturity also reflects a high opportunity for businesses to maximize profits and revenue while the scope of growth and development in this stage is low within the existing market. This is due to the fact that subscription adoption within the market at this stage is likely to be highly adopted by different population and other businesses at the same time. However, this type of market is taken forward by established players whose services and products are immensely popular among customers and the pricing strategy needs to be reasonable to attract customers towards the domain. The figure above depicts that 47% of UK customers tend to use subscription services based on the price range (Tighe, 2022). Considering this scenario, Coreblue can determine the strategy of cost minimization to elevate its profitability by setting an example of cost leadership within the market.

World 3: High competition and low adoption of subscription

This world is characterised by the scenario of high competition within the market with low adoption in terms of subscription among the population. At this stage, the company does not have the position of expecting any kind of profit from the world as competition within the market is extremely high and the business seems to be having a low competitive edge. However, the main objective in the scenario deals with attracting customers who are not ready to accept the subscription offerings of other companies. Nonetheless, this world seems to be aligning with the startup stage as per the Industry Life Cycle Model. As per the model startup stage, mainly reflects business has low exposure within the markets with a low base of customers and improper production service offerings (Haakman et al. 2021). Apart from that, customers are also not aware of the offerings of the company, which tends to create a low customer base and it is difficult for the business to gain exposure and sustain in the market.

Under these conditions, a company’s ability to weather market storms and achieve growth is crucial because it marks a turning point where the trip may result in either long-term growth or possible collapse (Denis and McKeon, 2021). To properly traverse this climate, Coreblue has to secure large venture funding or solid investments. Being able to spend money instead of making quick gains becomes essential from a strategic standpoint. The threat of new competitors is quite minimal in this setting because of the intense rivalry and the startup nature of enterprises. As such, outsourcing is one of Coreblue’s primary focus areas when it comes to sensible cost-cutting measures. This strategy is essential for maintaining competitiveness, guaranteeing financial stability, and setting up the business to weather market difficulties while promoting expansion.

World 4: Low competition and low subscription adopters in the market

Scenario 4 in consideration to World 4 is designed through a market having low competition and low subscription adopters. As the adoption of subscriptions by the customers in the market is observed to be low in the scenario, therefore, businesses are likely to have low interest in terms of providing subscription services to their customers. As a result, it seems unlikely that Coreblue will be able to obtain clients in the market that it has historically targeted. Given this context, it is essential to strategically reevaluate target market groups in order to enhance corporate operations. Refocusing attention on client categories that are more receptive to one-time payment choices or have lower subscription demand is a wise strategy. This subtle change in targeting is in line with the changing dynamics of the industry and improves Coreblue’s capacity to draw in and hold on to clients in a way that fosters long-term, profitable company growth.

As a result of this, Coreblue in this scenario can invest in the areas of marketing to create awareness regarding the business model among customers. Nonetheless, Mondliwa et al. (2021) argued that the bargaining power of buyers in this world would be high as a low number of customers are there in the market those are ready to adopt subscription services offered by the company. However, providing exciting benefits and offers will be effective for businesses to motivate different customers and engage them within the business. Apart from that, the cost minimization strategy will be an effective strategy for the current business to enhance the efficiency of operations and will enable the business to gain profits in the market as well. Henceforth, the stated strategies will enable Coreblue to sustain itself in this world.

Section 3

3.1 Recommendations

The scenario of World 1 depicts low competition within the markets along with high adoption of subscriptions by the customers. As a result of this, buyers’ bargaining power is medium in the scenario. Based on this, it can be recommended that Coreblue implement a premium pricing strategy to manage the current scenario. Apart from that, enhancement within the quality of production services is also recommended to Coreblue to enhance the base of customers while implementation of differentiation within products and services is also recommended in this world (Lee and Lee, 2020). As a result, it appears unlikely that Coreblue will be able to obtain clients in the market that it has historically targeted. Given this context, it is essential to strategically reevaluate target market groups in order to enhance corporate operations. Refocusing attention on client categories that are more receptive to one-time payment choices or have lower subscription demand is a wise strategy. This subtle change in targeting is in line with the changing dynamics of the industry and improves Coreblue’s capacity to draw in and hold on to clients in a way that fosters long-term, profitable company growth (Rosca et al. 2020).

With increased market rivalry and a low inclination for subscription acceptance, World 3 is a dynamic environment. As such, Coreblue should take a strategic strategy that revolves around competitive pricing. Venturing into an uncharted territory presents new rivals and risks, thus creating a unique competitive advantage is vital to maintain a foothold in the market. By carefully using competitive pricing, Coreblue may strategically enter new markets and increase sales margins and revenue.

Given that World 3 is characterized by intense market rivalry and limited subscription acceptance, Coreblue should be ready to deal with significant capital burn and low-profit margins. Furthermore, it appears that the firm has spent a lot on advertising at this point, which suggests that the company obtained adequate funding to remain in the market. Therefore, in order for Coreblue to thrive in a world with a low-profit margin and be successful in building a viable client base, the company has to get appropriate investment and financial backing.

Lastly, the scenario of World 4 is shaped by a low number of subscription adoptions along with low competitors in the market. As the competitors in the market and subscription adoption are low in this world, therefore, buyers’ power in terms of bargaining is immensely high which directs the recommendation of implementing the cost-plus strategy of pricing by Coreblue in this world. As customer tends to be attracted towards low-price products with high quality, therefore, it will provide benefit for the current company to attract customers in the market (Subawa et al. 2020). Apart from that, restructuring the target markets in terms of shifting the focus from subscription users to on-time payment users can be effective to survive in this scenario. A reflection regarding the learning journey has been stated in the appendix below [Refer to Appendix 2].

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