Introduction
Organisations vary widely. Some are simple and consist of only one business while others are complex, like a group and containing several businesses. Whatever the size or complexity of organisations, they are all faced with the need to manage for survival and development in the long term (Zastrow, 2009: 45). To cope with the changing market conditions and competition, organisations now must seek long term plans and actions to survive in the market. Strategic planning therefore becomes important for the long run survival and profitability of organisations.
State what this essay sets out to do!!!
Winners Group of supermarkets- a short introduction
The food retailing sector via hypermarkets and supermarkets began to spread rapidly from the 1990s onwards and the rate of growth is now accelerating, reflecting overall growth in demand for convenience and quality food in a quality environment in Mauritius. In terms of consumer demand, grocery shopping involves the purchase of a large number of individual products and the size of the bundle is varied according to the size and income of the household. It is important to look at the characteristic of demand for groceries, that is, the pattern of grocery shopping by consumers and the nature and range of substitutes for particular types of shopping in terms of type and location of outlet that are available to them.
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Winner’s is a leading Mauritius grocery chain founded in 1994 by the IBL group, one of the major private sector business players in Mauritius. All stores carry a full range of groceries, garments, electrical and household goods as well as fresh food and ready-prepared meals (www.iblgroup.com) With around 20 outlets spread all over the island, sales is forecasted to reach Rs 4 billion by end of 2010.
The mission statement of Winner’s clearly defines customers as their first priority. They want to build a long-term business partnership with customers by providing products and services that meet or exceed their expectations. Their core values include internal and external customer focus, quality, profitability and corporate responsibility.
Strategic Management
Strategic management, as quoted by Lamb in 1984 is
“an ongoing process that assesses the business and the industries in which the company is involved; assesses its competitors and sets goal and strategies to meet all existing and potential competitors’ and then reassess each strategy annually or quarterly [i.e. regularly] to determine how it has been implemented and whether it has succeeded or needs replacement by a new strategy to meet changed circumstances, new technology, new competitors, a new economic environment…, or a social, financial, or political environment”
A major process in developing strategy is the assessment of the strengths and weaknesses of an organisation as well as assessment of external factors or macro factors that impact on market factors in which the company operates. This assessment is called a SWOT analysis
WHAT DOES A SWOT DO???
PESTEL analysis
PEST analysis helps us identify factors influencing the food retail industry which in turn impact on strategy formulation.
and evaluate it on basis of Winner’s strategy In order to identify the factors that is, very much going to as of now, we apply.
A PESTEL analysis is a tool that management would use to evaluate the external macro-environment. It allows a business to look in particular at political, Environmental, Socio-cultural and Technological factors. As these factors are generally beyond the control of the organisation and so are usually considered as opportunities or threats.
Political
Law passed by the government and or the people in power could affect the supermarket business. Certain laws are put in place to prevent collusion between firms or one firm dominating other. When Winner’s decide to build new stores it will not be straight forward to do so because the local and regional planning policy is extremely costly and time consuming.
Environment
This is a major factor not only for Winner’s but for all businesses in Mauritius and overseas. The issue of global warming and climate change affects everyone. Winner’s is addressing the issue by minimising waste and recycling and by telling customers to reuse their bags and charging for new bags.
Social
The social impact of opening new stores is immense. By opening new stores Winner’s will be creating new employments for many people.
Technology
Technology has improves massively over the years and it has dramatically affected Winner’s. By introducing sophisticated software for monitoring
Legal
Economies
Winner’s constantly analyse the economic factors as that will determine how and when people are comfortable enough to spend money. If the economy is doing good then people have more confidence in spending more money. Stock exchanges and tax increases have to be monitored to always be aware of any threats and opportunities.
Porter’s Five Forces Analysis
Porter’s five forces analysis “is a means of identifying the forces which affect the level of competition in an industry” (Scholes, 2008).
Force 1: Threats of new entrants
In order to boost brand loyalty Winner’s have engaged into additional roles such as clothes stores, pharmacies and bakeries. This has been a potential growth area for the retailer.
Economies of scale may occur when buying in large quantities and improved supply chain efficiency. The existence of economies of scale creates a barrier to entry.
The capital requirements in entering the supermarket industry are huge.
Product differentiation
There are very low switching costs to customers in the market and so market share can typically be gained by leveraging price and product range variables.
Force 2: Threat of Substitutes
Though Winner’s has successfully improved its margins by selling the range of non-food to food in its stores it has now moved to a more competitive ground. For example selling electrical appliances has put it to collide with JKalachand.
Force 3: Power of the Buyer
Buyer power is very strong in Mauritius’ grocery retailing industry where there is a high concentration of buyers. There is Winner’s, Way, Jumbo and Spar that dominate the market.
Winner’s has a very loyal customer base and this is of great importance when considering product ranges that turn away from traditional Winner’s design. Winner’s has responded to the needs of buyers by providing a wide range of quality convenience goods.
Force 4: Power of the Supplier
Power of suppliers is high if the number of suppliers is few and has the power to negotiate prices. Suppliers include raw materials that a firm uses and finances too and this can be affected by the structure of an industry whereby if a firm can get suppliers elsewhere then it has more bargaining power. For example, Winner’s is a monopoly and so it extracts low prices because it has power over suppliers.
Force 5: Competitive Rivalry
Classical economics predicts that rivalry between companies should drive profits to zero (Gordon, 2003:48). This force describe the intensity of completion between existing companies in an industry.
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