Assignment Sample on Strategic Management
1.1. Introduction
The aim of the study is to develop a business strategy for an organization that has non-diversified business in the UK such as Evans. In this study, the present challenges faced by the organization have been discussed. Strategies to overcome the challenging situation in the organization have been evaluated through Porter’s generic strategy model. The three key drivers for the macro environment analysis of the organization have been discussed in this study to evaluate the opportunities and threats for the organization. Strategic capabilities of the organization have been identified through the value chain framework in terms of enhancing its strategic management.
1.2. Background of the company
Evans is a famous fashion brand in the UK that is a part of the Arcadia group. The mission statement of the parent organization suggests that the organization wants to create and deliver fashion that customers would love through their great stores. The subsidiary organization of Arcadia group called Evans is a fashion store that sells its products both through online and offline stores. The organization has recruited the top most fashion designers of the UK of whom the head is Lisa Marie Peacock (Evans.co.uk, 2021). In order to create and deliver fashion to the customers that they would appreciate, the organization has been working hard.
Evans has introduced many fashionable clothes with the help of their innovative ideas and successfully run their business. In the current business era, tough competition among the strong competitors of Evans such as H&M and Primark has created business challenges (Evans.co.uk, 2021). In terms of creating and delivering fashion clothes to customers, the organization has initiated to attempt many strategic plans for business development. The organization has a variety of fashion clothes such as nightwear, dresses, bottoms, tops, and others. Unique designs at a reasonable price have retained the customers to purchase fashion clothes from this organization.
1.3. Current challenges in the organization in terms of achieving future goals
The future goal of the organization is to deliver unique and innovative fashion clothes to customers all over the UK. In this case, other competitors of Evans such as H&M and Primark have created challenges for the organization. In terms of price, the competitor companies have been selling their products at a lower price. In this aspect, the competitor fashion clothes providers have been preferred by the consumers that created a great challenge for the organization (Ghadge et al. 2020). Besides that, due to poor leadership strategy in the organization, efficient employees are leaving the organization and joining other rival organizations. The top management of the organization has not focused on the customer’s purchasing behavior. Rather, they have focused on introducing innovative and unique designs in their clothes. In the current pandemic situation caused by the sudden outbreak of COVID-19, the overall business performance of Evans has reduced.
Huge financial loss during the ongoing pandemic situation has changed the consumer’s purchasing behavior. Consumers have moved to purchase only essential products such as food, medicines, hygiene products, and others. Evans is facing the sustainability challenge in its business for earning more profit from its fashion clothes. The organization sells only women’s fashion clothes but in the current fashion era, men are equally interested in purchasing fashion clothes (Varma et al. 2017). Continuous changes in the fashion industry have created challenges for the organization as the organization has failed to keep the updates regarding frequent changes in the fashion trends. Added shipping charges have created another challenge for the organization in terms of the total number of sales. Most of the fashion stores have used the strategy of providing free delivery that has increased the total number of customers of the competitors that is a threat to Evans.
2. Environmental analysis
2.1. Macro trend analysis
Changes in the macro-environmental factors can have a direct impact on the business operations as well as profitability of an EVANS group. It can also have negative impacts on the competitive advantage of the EVANS group. In order to ensure safety of the organisation, its PESTLE analysis needs to be done, which can assist the organisation in analysing the key drivers of changes that can affect business operations of the company. PESTLE analysis can provide deeper perspectives of challenges faced by the EVANS group in its prevalent macro-environment (Evans.co.uk, 2021). For instance, a business can be highly profitable and have strong growth, but it cannot make a profit if it is situated in a politically unstable region.
EVANS group deals with women fashion apparels and clothing which experiences significant changes in its business operations due to changing factors of PESTLE analysis. Three of the most important key drivers of changes in the business of EVANS group are as discussed below:
Social: The culture of a society and the way of doing things within a society impacts the culture of an organisation working in an environment. Belief and attitudes of the population of a specific region play an important role in how the leaders and managers at Evans group understand the needs of customers of a provided group (Vallati and Grassi, 2019). Leaders and managers of Evans Group are also responsible for designing proper marketing plans for the women’s fashion retailing industry in order to attract more customers. Some of the main social factors which can be considered to be a key driver of changes within the company are as given below:
- Demographic factors and level of skills of the targeted population along with their cultures such as gender roles, social conventions and others.
- Hierarchy, class structure, as well as structure of power in the society, as well as education levels and standards of people.
- Attitudes of targeted populations as many people in today’s world tend to be conscious about environmental safety.
Technological: Technological factor has been fast disrupting many of the industries working in an environment. Technological advancement has been affecting and changing the business operations of the EVANS group. Some of the major technological factors of the UK that is responsible for driving changes in the business operations of the EVANS group are as given below:
- Impact of technological advancement on product offerings as well as cost structure in the fashion retailing industry.
- Technological advancement of rival companies can have negative impacts on the competitive advantages of the company.
Legal: There are many countries where the legal framework and institutions are not robust enough that can protect the intellectual property rights of an organisation. Therefore, it can be said that legal factors in the UK can drive changes in the business operations of the EVANS group.
- Antitrust law and discrimination law plays an important role in the fashion retail industry, which can have a significant impact on the company.
- Copyright and intellectual property law have a significant role to play in the fashion retail industry, which prevents other organisations from copying ventures established by the EVANS group (Christodoulou and Cullinane, 2019).
2.2. Explanation of two highly uncertain key drivers of change
Two of the highly uncertain key drivers of changes in the fashion retail industry which has a significant impact on the business of EVANS group are as discussed below:
Political factor: Political factors such as bureaucracy and interference of government in the retail industry affects the business operations of the EVANS group. Apart from that, pricing regulations and rates of taxation and incentives also have significant impacts on the organisation, which drives changes within the company (Düerkop and Huth, 2017).
Legal factor: Legal factors such as exchange rates and stability of the currency of an environment in which the company works drives changes within the organisation. Besides that, economic growth or fall out, a growing rate of unemployment and inflation rates also affects the business of Evans group, and so these can be considered to be key drivers of changes for the company.
2.3. Industry analysis
Porter’s five forces model explains that the competitive rivalry of Evans with its strong competitors such as H&M and Primark is high. High competition with strong rival organizations has created hindrances for the organization in achieving its future goals. The bargaining power of the suppliers for Evans is high for that the organization has been unable to reduce the product’s price. It has reduced the total number of customers of the organization and caused barriers to the organization in terms of achieving its mission. As cited by Varelas and Georgopoulos (2017), the threat of substitute products for the organization has reduced the overall profit of the organization. In the current competitive business era, Evans has faced threats from the new entrepreneurs as they are selling their products at a lower price. The huge number of fashion retailers has increased the bargaining power of the consumers and provided them with many options for purchasing.
3. Capability analysis
3.1. Capabilities in the context of the value chain
The value chain model includes five primary activities that are responsible for the overall business performance of an organization. In the case of Evans, the value chain includes inbound logistics, business operations, outbound logistics, sales and marketing, and services (Stindt et al. 2017). The support activities of the value chain for Evans include organizational infrastructure, procurement, technology, and human resource management. The cost advantage of the organization can be generated from its primary activities and mitigate the possible challenges for business development.
Technological innovation can help Evans to make proper research and development on the current fashion trends of the market. As stated by Kano (2018), proper analysis of the present business market can help the organization to generate more ideas for business development. Evans can follow the existing value chain of the fashion industry as it will help the organization to mitigate all the challenges it has faced. The organization can apply any of the two types of competitive advantages such as cost advantage and product differentiation advantage. In the case of Evans, it is a non-diversified organization that sells only clothes for women. As a result, Evans can use cost advantage to achieve its future goals by reducing the price of its products.
In order to apply cost advantage, Evans needs to address its primary as well as support activities. As opined by Arunachalam et al. (2018), adequate knowledge of the organizational operation process can help the operation management team of the organization to identify its cost advantages. In each step of the operational activities of Evans, the top management is supposed to understand the required parts where they can apply the cost-cutting strategy. Cost advantage strategy will help the organization to reduce the price of its products and attract more customers towards the brand. In order to reduce the manufacturing cost, the organization can make a huge production of the product and recruit workers from regional areas at a lower wage.
3.2. VRIO criteria
The four components of VRIO criteria are value, rarity, imitability, and organization that will analyze the sustainable competitive advantages of Evans. Value refers to the usefulness of the resources used by the organization to satisfy its customers. Products of the organization are a valuable resource that is responsible for the customer’s satisfaction. As cited by Hernández and Pedersen (2017), the satisfaction of the customers can increase the competitive advantage of an organization for which Evans has enhanced its strength through its products. Rarity explains the specific products that are hard to find but high in demand by the consumers. However, Evans does not sell any product that is high in demand and hard to find due to the present strong competition in the market.
Imitabilty refers to the capability of the competitors to copy the products of an organization due to the low cost of manufacturing. It can reduce the overall number of sales of Evans if the limitability rate of its products is high. As opined by Miethlich and Oldenburg (2019), unique products in women’s fashion clothes of Evans is not imitable for that the competitive advantage of Evans in terms of its Imitabilty is high. The organized management system of Evans along with operational processes, structure, and organizational culture can impact the competitive advantage of the organization. [Referred to Appendix 1]
3.3. Competitive implications of strength and weakness
Strengths
The cost advantage strategy can help Evans to reduce its total manufacturing cost and logistic costs. Reduced logistic and manufacturing costs of Evans can increase the competitive advantage of the organization in the current competitive business era. The organization can manufacture a huge number of fashion clothes and sell them through their online and offline stores. Seasonal discounts on the products can attract more customers towards the organization that can help the organization to gain more profit. According to the view of Lauer (2019), the organization will be able to reduce its product’s price if the manufacturing cost is reduced. The organization can hand over the delivery process to different organizations that provide only delivery services to the customers. It will help the organization to reduce costs in the logistics department and generate more profit in the women’s fashion clothes business.
Weaknesses
Reduced costs for the manufacturing and overall business process of an organization in terms of a particular project can reduce the project’s budget. As suggested by Bhattarai (2018), the reduced budget of the projects can impact the quality of the products and reduce the company’s reputation. The increased price of raw materials can cause a threat to the organization in terms of manufacturing and selling fashion clothes at a low price. Reduced wages of the workers can demotivate them to work for the better productivity of the organization and force them to leave the organization. In the case of the workers leaving the organization due to the unavailability of minimum facilities such as food, drink, shelter, and others Evans can face a huge loss. Cost reduction in terms of effective marketing can also impact the total number of sales in the organization.
4. Proposed strategy and conclusion
4.1. Porter’s generic strategies
Porter’s generic strategies explain that cost leadership, differentiation of products, cost focus, and differentiation focus can help an organization to achieve its competitive advantage. According to the view of Mita et al. (2017), a cost leadership strategy can help an organization to reduce its production or manufacturing cost and capture the business market. This strategy can help Evans to gain increased profit by minimizing its production cost in the present competitive business market. The organization is required to set its business strategy in such a way that will help them to reduce the overall cost for the company but increase the overall profit. Evans can increase its total market share to generate profit from the market and use them for the manufacturing or production and retailing of the products.
According to the differentiation strategy, Evans can produce a large variety of products in the fashion industry. As influenced by Karyani and Rossieta (2018), Evans can start manufacturing and selling men’s fashion clothes and fashion accessories for more profit. A huge variety of products will help the organization to capture the consumers of the online fashion market. In order to bring changes in the products and services, the organization needs to make intense research and development regarding the opportunities in current innovations. Innovation in the material can help the organization to attract the attention of the customers in the current competitive business market. For example, Evans can manufacture jeans and clothes from fiber made from plastics as it will make the clothes long-lasting and help in environmental sustainability.
Effective sales and marketing can be attempted for Evans in order to promote the innovative approach to the customers. As influenced by Viltard (2017), clothes that will be made from plastic fibers will take a low cost of manufacturing for which the overall cost will be reduced. In this aspect, the organization will be able to earn more profit through the combination of its cost leadership and product differentiation strategy. Focus strategy can help the organization to focus on the current competitive business market of the fashion industry (Mohamed et al. 2019). It will help the organization to understand the dynamics of the market in terms of consumer’s purchasing behavior. Besides that, a focus strategy can help the organization to build strong relationships with the customers (Liyanage and Weerasinghe, 2018). As a result, the brand loyalty of the customers will be increased and they will retain the organization in terms of product purchasing.
Evans can manage its supplier power through viable strategic options in order to increase the competitive advantage of the organization. According to the view of Dombrowski et al. (2018), the organization can reduce the bargaining power of the customers through its innovative products at a low price. Innovation in the products can help the organization to reach the top of the competitive rivalry and earn more profit (Öneren et al. 2017). Innovative products at a lower cost can help the organization to remove the threat of substitute products from other organizations. It can help the organization to even eliminate the threats of new entrants in the fashion industry of the UK.
4.2. Value chain framework for supporting the arguments
The value chain framework can help to support the proposed strategies in order to increase the competitive advantage of Evans. As opined by Jones et al. (2019), procurement of raw materials, machines to manufacture clothes can enhance the competitive advantage of an organization. In order to enhance the value chain activities such as product designing or redesigning, research and development, and process automation cost leadership strategy will be appropriate. The top management of Evans can provide its employees with proper training on the products, services, their future aim, and objectives for better productivity (Le Bihan et al. 2018). The proper firm infrastructure of Evans such as legal, quality management, finance, and others can help the organization to apply its cost leadership strategy for achieving its future goals.
4.3. Conclusion
The conclusion statement of this study refers to the strategic management process of Evans in terms of achieving its organizational mission. The mission of the organization is to provide the customers with better products and services to build a good relationship with the customers. Environmental analysis of the fashion industry has been initiated through the evaluation of the key driving factors. An analysis of the industry has been initiated in this study with the help of Porter’s five force model. Cost leadership strategy has been suggested to the organization in order to increase its business productivity. VRIO analysis has helped to understand the competitive advantage of the resources required or used in the organization for productivity.
References
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Appendix
Appendix 1: VRIO of Evans
| Component | Value | Rarity | Imitability | Organization | Description |
| Cost strategy | Yes | NO | NO | YES | Cost strategy can increase the overall productivity of the organization but the organization has to manage its cost strategy in such a way that cannot be copied by its rivals. |
| Competitive advantage | NO | NO | YES | YES | The competitive advantage of the organization is medium to high due to its low variety in products and high competition in the market of the fashion clothing industry. |
| Sustainability | Yes | YES | NO | NO | Business sustainability of the organization is medium as the fashion industry is continuously getting updated with the help of technical implementation in the market. |
(Source: LEE et al. 2020)
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