Argos Retail Ltd Strategic management Essay (Critical Writing)

Executive summary

This is an individual report that focused on analysing the external factors that could impact the performance of Argos Retail Ltd in the UK. Our team members agreed that the firm is based on a strong platform that has been instrumental in gaining significant market share.

An analysis of the various strategic models and theories, such as SWOT analysis, PESTEL analysis, Porter’s five forces, and Porter’s diamond mode provided a clear status of the company.

Group members agreed that the management of the firm should use the Porter’s five forces model to improve the performance of the organisation. A key pillar of the proposed model is the gain of market share through focused competitive approaches.

The model is characterised by five forces that could either positively or negatively affect the performance of the organisation. In a market that has strong competitors, it would be expected the profits realised from business operations would be driven to normal profits (Johnson, Whittington, Scholes & Pyle 2011).

A competitive analysis of Argo shows that it has a remarkable level of competitive advantage (Perdana, Roshetko & Kurniawan 2012). The firm has high quality goods that are offered at competitive prices. Its main rivals have not yet utilised the integration of the online shopping in their business activities.

Thus, our advice to the management team of Argos Retail Ltd is that the firm should take advantage of the huge potential for growth that would be supported by their excellent brand and dynamism with regard to changing of customer behaviour.

Introduction

This report offers an overview of the academic and practical research that was conducted by my team. It gives more emphasis on my individual contribution to achieving the goals of the team. My area of research focused on understanding how external factors influence the performance of Argos Retail Ltd in the UK.

At the start of the group assignment, we agreed on the approaches we could utilise to gather data that were critical for the assignment. All group members agreed that we could use a significant number of sources so that we could provide a report with reliable and valid conclusions.

We used more than 30 sources. The sources were from academic journals, business magazines, newspaper articles and labour office reports, among other sources. Various search engines were used to search for various concepts with regard to the assignment.

The materials were in relation to our company of analysis and various strategic approaches that could be used to analyse the company.

Our team leader also organised for a meeting so that we could have interactions with experts in the field of strategic management. My findings were approved my members in the context of strategic management of Argos Retail Ltd.

A critical discussion of the strategic models

It has been established that external factors with regard to business organisations could be analysed through the application of various management approaches. An analysis of the company was conducted using the following models and/or theories.

PESTEL analysis

This framework was utilised in understanding macro-environmental factors that could improve the strategic management of the firm. The report established that Argos Retail Ltd could be analysed as follows using the PESTEL analysis model.

Political

Several political issues were identified, which could negatively affect the operations of the business organisation. For example, single market policies in the EU. Also, the UK government does not address data security concerns raised by various businesses.

However, the UK government is committed to offering support for the utilisation of technology and it has a good strategy for small businesses (Amazon 2014; Gov.uk 2014).

Environmental

In the recent past, air pollution in the UK has increased, but Argos has achieved carbon dioxide reduction target and is conducting best approaches with regard to recycling (BBC 2014f). Argos’ future commitment is focused on impacting the environment positively.

This approach would ensure that the organisation would remain in operation because it supports measures that are geared towards preventing environmental degradation (Kluger 2011).

Social

The cost of living in the UK has fallen significantly and this has resulted in more spending on other things apart from basic needs (Argos 2014a; Argos 2014b; BBC 2014d; BBC 2014e; BBC 2014g). Immigration affects the UK by increasing consumption of goods (BBC 2014a).

In addition, people in the UK have adopted the use of technology, which facilitates purchasing of goods and communications (BBC 2014b).

Legal

From a legal standpoint, joblessness in the UK has fallen considerably in the recent past. Consumer spending has risen due to an impact from the UK’s GDP.

Technological

The adoption of IT is helping the UK become a digitalised economy. For example, there is very fast internet on moving vehicles, kids in the UK are using tablets, and shopping centres have a significant number of web users (Argos 2014c; BBC 2014c).

SWOT analysis

This is a structured strategic management model that could be used to understand internal and external factors that could impact the strategic management of an organisation (Sevkli, Oztekin, Uysal, Torlak, Turkyilmaz & Delen 2012; van Wijngaarden, Scholten & van Wijk 2012).

It analyses the factors that could be favourable or unfavourable for the achievement of the goals of a business establishment.

The SWOT analysis of the company concentrated on the external factors that could be threats or opportunities to Argos Retail Ltd. The strengths and weaknesses of the firm could not be considered because they are internal factors.

Opportunities

Opportunities in the external environment of the company would enable it to improve its performance in the future. A digital economy would ensure that shopping is more convenient. This is illustrated in the growing demand for click and collect (BBC 2013a; Rigby 2014).

Changes in consumer behaviour would imply that consumers purchase more products offered by Argos. Another opportunity is the addition to technology, which could facilitate the process of purchasing (BBC 2013b).

Threats

Stiff competition from businesses that offer similar products would be a threat to the firm (Rugman & Lim 2012). Other threats that could negatively impact Argos are threat of data insecurity, negative attitudes towards online stores, and a general decline in profitability of physical stores (Wall 2014).

Porter’s five forces

This is a strategic management model that is used by business establishments in business strategy development (Lee, Kim & Park 2012). The strategic management approach uses components in industrial organisation economics to assess the level of competition and attraction of the market.

The model could be used to assess the situation of the organisation as it seeks to improve its market share and competitive advantage.

The power of suppliers was found to be weak. Several factors could have led to weak power of suppliers (Savage 2014). Some of these are pressure on suppliers, several discount requests from retailers, and long waiting time in the retail industry in the UK.

Long waiting hours could imply that customers could be impatient and leave shopping centres before they could purchase their products. However, this shortcoming could be effectively addressed through the adoption of the internet in purchasing.

The power of buyers was found to be strong. Customers benefit from reduced prices offered by retailers as they seek more customers for increased sales (BBC, 2014h). Online shopping is significantly increasing in the UK and this has resulted in intense competition (BBC, 2013c; Sawas 2012; Tett 2014).

Rivalry among businesses in the same field was found to be strong. Intense completion has made businesses adopt many approaches to increasing their customer numbers. For example, low prices and promotions are being used to attract more customers.

Threat to market entry was established to be weak. Technological and mobile advancements hinder new physical entrants. This could imply that it is quite difficult for new firms to gain competitive advantage in the market that supports the operations of Argos. Any new market entrants would be required to invest heavily.

The market is characterised by intense competition between online and physical store retailers. The main competitors of Argos are well established. However, Argos is the leading retailer in the European Union (EU). Threat of substitutes with regard to products sold by Argos Retail Ltd was found to be strong.

Increased number of substitute goods could imply that products sold by Argos would record low sales. Some substitute goods are from Tesco, Asda, Amazon, and eBay. However, Argos has established own that has found a strategic niche in the market (Asda 2014; Baker 2013).

Porter’s diamond model

This model is based that proposes that some business establishments or business segments could be more competitive in specific locations (Carayannis & Wang 2012; Mann & Byun 2011; Zhao, Zuo, Zillante & Zhao 2012).

With regard to Argos Retail Ltd, this model considered several clusters where the firm could gain competitive advantage through partnering with other business organisations. The framework was used in the context of understanding competition through the application of the six broad categories outlined below:

Factor condition

With regard to Argos, the following components were found to be involved in factor condition: Digitalised economy, highly skilled and motivated personnel, strong financial arms, and EU’s leading and most innovative retailer

Related and supporting industry

This component of the model focuses business factors that support the activities of the firm. Argos Retail Ltd gets support from eBay (Sawas 2013). The firm works with an established delivery firm known as Paracelforce. The organisation has partnered with Vanquis Bank for credit cards.

Argos gets contracts from mobile network companies. Its advertising is conducted by Chi & Partners Ltd. Vendor Technology Ltd offers Argos Retail Ltd mobile technology applications (Davis 2014; Homeretail 2014).

Demand conditions

Consumer behavioural change is geared towards online shopping, which could positively affect the sale sales of the company (Flanders 2013; Marston 2014).

In fact, online shopping is becoming popular due to its high level of convenience. Based on the current market data, products of the firm are relatively popular (Millett 2013). Thus, the firm would continue making good profits in the future.

Strategy and rivalry of the firm

From a strategic point of view, the firm has partnered with eBay so that its product innovation could be increased (Ebay 2014).

Argos has ensured that it maintains a high level of innovation of its products and that it remains relevant through reinventing digital stores. Some rivals are eBay, Currys, PCWorld, Tesco, and Asda (Essential retail 2014).

Key conclusions and findings

Based on the results obtained from the analysis of the strategic models and/or theories, it is clear that Argos Retail Ltd is a business establishment that is operating in an environment that has factors that could ether impact it negatively or positively.

It has based its operations on a growing platform of the online shopping so that it could attract a high number of customers who are shifting their behaviours towards the utilisation of the internet for purchasing products.

The firm has a huge potential for growth because the government of the UK supports the adoption of e-commerce. In addition, the potential for growth is based on the strong foundation of the company, which focuses on dynamism with regard to changing markets.

Although there is stiff competition, the company is strong financially and it is characterised by significant market share. The practical implication for the business organisation is that the market for online products is still huge.

In fact, the company can utilise the various models of strategic marketing to increase its market share in existing markets and gain entry into new markets.

If the organisation enters new markets, then it would significantly improve its sales through attracting new customers for its high quality products.This would also enable it to expand to new markets.

Key issues and conclusions

I have identified key issues and conclusions with regard to the group assignment. First, cooperation is a critical component that greatly increases the chances of a successful completion of group work. When members of a team corporate to carry out group tasks, then they could have better performance outcomes.

Second, punctuality was essential in determining the pace at which members of the team could complete their tasks. In fact, we all ensured that were completed our assigned tasks on time. This helped us to focus on the changes we felt could improve the quality of our findings.

Third, I have identified that sharing of tasks increases the speed of accomplishing a major project. It could have taken relatively long time for an individual to complete the overall group assignment. However, it took us very short time to complete the task because we shared it equally.

Fourth, the use of the internet is very important in conducting research, which leads to valid conclusions. The importance of the internet in the contemporary world cannot be understated. We could find all that we needed on the internet.

Thus, the internet facilitated our research and the space at which we concluded our group assignment.

How my individual contribution impacted on the group assignment

My contributions were important in the following ways:

  • Discussing with my group members about my findings
  • Raising issues about areas that I thought some of our members did not discuss thoroughly
  • Updating my team members on the progress of my individual task
  • Providing a detailed discussion regarding the correlation of internal factors with external factors in relation to Argos Retail Ltd.

References

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Appendices

Appendix 1: A diagram showing PESTEL analysis components

PESTEL analysis components

Appendix 2: A diagram showing SWOT analysis components

SWOT analysis components

Appendix 3: A diagram showing Porter’s five forces.

Porter’s five forces

Appendix 4: A diagram showing Porter’s diamond model

Porter’s diamond model

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