Essay: Primark's Strategic Resources And Opportunities Analysis.

Read the Primark CEO’s statement to see what you can learn about the company company’s strategic position.

Answer the questions below

1, what strategic choices or strategic move has the company made?
2, what opportunities have the CEO identified?
3, Write down any important company resources or assess.
4, Choosing one of these strategies resources, it is.......
A, Valuable?
B, Rare?
C, Inimitable?
D, Supported by the organisation
 

Competitor analysis is the integral part of the strategic business marketing of a business. The identification of the macro and micro environmental factors helps in understanding the business potentiality to operate in a location by considering the external and internal effects. The business analysis process includes the clear ideas about the market feasibility and the probable challenges that may affect the business functionalities (Prajogo, 2016). The report aims to identify the resource capabilities of Primark, which has captured the remarkable position in the clothing retail industry all over UK and Europe. It has been observed that the company has achieved the competitive advantage in current business world by positioning their strategic resources in a significant way. The report would thus identify the statement present by Paul Merchant, the Chief Executive Officer. The report would also explore the strategic insights by identifying the underlying opportunities and resource capabilities. The use of the theoretical framework, such as VRIO, would present the clear analysis of the strategic resources that lead the company towards success.

Primark, the Irish fashion retail company has achieved the leading position by offering a diverse range of the products. The company is originally a subsidiary of British Foods Groups. The company has 238 stores all across UK (Primark.com. 2018). This profit-making private company maintains the hierarchal organisational structure to perform the functionalities. The external analysis of the company indicates that Bexit have the clear impact on the business functionalities as it creates uncertainties in the business environment. It is noticeable that the company is widely focusing on developing positive ‘word of mouth’ instead of developing the promotional strategy through advertisements. The product diversifications, such as starting the clothing range from children to aged people, are creating the strategic insights for the company to drive economic growth and develop competitive advantage. 

Primark has captured the strengthened position in the UK and Europe market. The huge product ranges and the extensive human resource capabilities are making the company competent enough to expand the business in the global market. (Sughra & Crowther, 2015).  Paul Merchant, the CEO of Primark has identified such opportunities by recognizing the resource capabilities. The CEO remarked that Primark would be open seventh store in US with more human resource strengths and more capital investment. The CEO also stated that almost 200 staffs would be hired from new Staten Island store. It is estimated that the parent company, ABF has the capability to deliver almost 22% increases in sales during the first half of the financial year. ABF has even estimated that the sales ratio of Primark product would reach up to 12%. It is also expected that the operational profit of Primark may reach up to €367m in the first half of the financial year whereas €3.1bn is expected in the last half (Businessandfinance.com. 2018). Therefore, the CEO is concentrating on the strategic resource capabilities to secure the competitive position and increase the business revenues.

Strategic Choices Made by Primark

Primark has focused on expanding growth in the US market and increase the revenues much significantly. In order to make the choices for the strategic positioning in US market where the competition is high, it is necessary for the company to make modifications to some of the existing business segments. Primark has been focusing on increasing the profit revenue by selling clothes and fashion accessories to the US customers. Furthermore, the company is also concentrating on delivering the high quality trendy clothes by considering diversifications and plus size clothes for attracting a huge range of customers (Businessandfinance.com. 2018). In addition to this, the company is also paying attention to improve the customer services for the US customers. 

Filieri (2015) suggested that Primark needs to set out to become the low-cost producer in the retail sector. The US clothing market is highly competitive and it is quite difficult to win over those competitors. However, the broader market scenario of US is much opportunistic for Primark to increase the profit revenue. Apart from the United States, Primark is also focusing on opening new stores in China, India, South Africa, and Middle East. The company has identified the high prevalence of the obesity that made the company more opportunistic in terms of increasing the customer base b delivering larger size clothing ranges. Primark delivers the fashion accessories and shoes to the potential customers from diverse ages. Therefore, the company can invest their capitals on sportswear as this is considered to be the fastest growing segment in the clothing industry (Pettinger, 2016). Furthermore, the company has the strategic focus on developing the new distribution channel through which the company would be able to connect more customers. However, it is important for the company to pay attention towards developing the advertising media strategy for improving business promotions.

The analysis of the generic strategies of Primark indicates that the company requires focusing on their capital resource investment process. It is identified that if Primark can cut down the operational costs, it would set out as the low-cost producer in the retail clothing industry. It is essential for the company to make the strategic choices as per the company benefits. The company requires following the strategic insights in managing the low cost management and operational process, low cost of the advertisements, and low prices with the equal value propositions. Moreover, if the company requires investing on the sports product manufacturing process, it is also essential to prepare the estimated budget for the production materials (Ivanov, Tsipoulanidis & Schönberger, 2017). The maintenance of the capital resources would help the company in acquiring the competitive position in a challenging business scenario. In addition to this, the company is also quite dependent on the human resource supports for developing the performance parameter (Sughra & Crowther, 2015). The further section of the study would explain the strategic insights in analyzing the resource capabilities of Primark.

Opportunities identified

The management of the capital investment is the major focus of Primark to strengthen the competitive position in a challenging business scenario. It has been observed that the company has made the strategic choices of establishing the seventh store in US market. However, the US clothing market is much competitive with more specifications and fashion segments of the US customers. In order to win over the competitors, the resource capabilities of Primark require more strategic direction to be followed. The VRIO framework suggests the four major elements of the strategic resources. The VRIO analysis is present further:

Value:

The resources of thee firm need to be valuable and unique. It generally means, the resources used for the strategic positioning need to be more unique than the competitors in the market. While developing the strategic resources for achieving competitive advantage, it is essential for a firm to determine the efficiency level to win over its competitors (Sivalingam, 2018). Primark has developed the strategic insights to become the low-cost producer in the retail clothing industry. It is essential to analyse the extent of efficiency that would be beneficial in participating in a competitive business scenario. The US clothing industry is much challenging for Primark since the customer base is new and the market competitors are strong (Ivanov, Tsipoulanidis & Schönberger, 2017). It is thus necessary for the company to adjust the capital resources to invest in the appropriate segment from which the profits can be generated. Primark delivers the fashion accessories and shoes to the potential customers from diverse ages. Therefore, the company can invest their capitals on sportswear as this is considered to be the fastest growing segment in the clothing industry (Sughra & Crowther, 2015). The clear vision about the capital resource efficiency would thus be considered as much valuable in such context. The appropriate cost leadership structure would thus be based on the appropriate allocation of the capital resources. 

Moreover, the company is focusing on developing the product diversification strategy to create the remarkable brand image among the US customers. The diverse product range creates the considerable opportunities for the company to strengthen the competitive position in the market (Ivanov, Tsipoulanidis & Schönberger, 2017). The fashion segment includes the clothes and accessories for the children and adults. Moreover, the company also requires managing the sizes of the clothes by considering the obesity issues. This value creation aspect would be much beneficial for the company while expanding the retail stores in US.

Important Company Resources

Rare:

According to Thompson and McLarney (2017), the strategic resources of a firm have to be rare and obtained by the firm itself only. It is noticeable that acquiring the rare resources is quite difficult for a firm that could lead towards achieving competitive advantage. Primark requires observing the market opportunities and the movements of the competitors to understand the scope of the business. It is noticeable that the company is widely focusing on developing positive ‘word of mouth’ instead of developing the promotional strategy through advertisements. Primark requires concentrating more on developing the better promotional strategy by adopting the advanced technological tools. Jin and Cedrola (2016) observed that the rarity factor is often absent when more than one firm has the similar resource or capabilities. It is noticed that Primark has the extensive range of apparels for children, men, old age, and women. Even the company sells accessories, lingerie, hosiery, footwear, and home wear as well. The huge product range is quite rare in a single clothing company (Ivanov, Tsipoulanidis & Schönberger, 2017). Therefore, Primark require developing the strategic positioning process with more efficiency to retain such competitive edge. 

Inimitability

According to Poazi, Tamunosiki-Amadi and Fems (2017), some capabilities or the resources of a firm are quite difficult to be imitated by other firms. Especially, it has been observed that if any firm imitates the products or the service of other firms, it lacks the originality of the original product. If Primark structure their cost leadership by investing huge capital amount and become the low cost producer, it would be quite difficult for the other firms to imitate Primark. The low cost producers in the market always require developing the equal value of the product or services whereas the costs would be kept lower. The firms tend to offer the high quality product due to which the firm needs to invest high capital amount on the materials (Sughra & Crowther, 2015). Therefore, it becomes difficult to keep the price lower since there would be the high chances of loss. In such context, it is essential to develop the appropriate strategic insights that would help the firm to gather more responses by becoming the low cost producers (Gouda & Saranga, 2018). Primark requires allocating the existing capital budget into systematic and synchronized way to manage the costs of the products. If Primark requires participating in the high competitive market of US, it is necessary to develop the cost leadership strategy that would be hard for other competitors to imitate.

VRIO Analysis of Primark

Organization

The last step of VRIO framework is to exploit the resources and capabilities by the firm. The firm should always pay attention towards managing the resources in a strategic way (Ivanov, Tsipoulanidis & Schönberger, 2017). The formal structure, management control system and the policies associated with the firm are the major factors of organizing. In case of Primark, it is noticed that the organisational functionalities depend on the control of the hierarchal structure. The CEO of the company is the top level o this hierarchy, who is the ultimate decision maker. The finance officers and operation officer manages the financial accounting purposes and capital resource allocation. On the other hand, the chief operating manager supervises the management functions, stores and associated sub-supervisors. The sales director manages the sales of the company. The head of the HR management deals with the marketing merchandising, planning, buying, promotions, and visual merchandising process. The synchronization maintained by the leaders of all departments organizes the strategic resourcing and capabilities in cohesive way (Sughra & Crowther, 2015). Accordingly, the firm would be able to secure competitive position while conducting business in the US market.

Conclusion 

The study reveals the strategic resource capabilities of Primark, which has acquired the leading position in the UK clothing industry. Paul Merchant, the CEO of the company has decided to establish the seventh store in US market to expand the competitive position. The commendable market share and capital resources of the company are quite beneficial in structuring the strategic direction for the future prospects. While expanding the retail stores in US, it is essential for Primark to select the right strategic direction to develop the competitive edge to win over the competitors. The VRIO framework suggests that the company is able to create the value, rare, inimitable, and organizing resources that would help in strengthening the competitive position for a longer time. The diverse product range creates the considerable opportunities for the company to strengthen the competitive position in the market. The US clothing industry is much challenging for Primark since the customer base is new and the market competitors are strong. If Primark structure their cost leadership by investing huge capital amount and become the low cost producer, it would be quite difficult for the other firms to imitate Primark. The company can invest their capitals on sportswear as this is considered to be the fastest growing segment in the clothing industry. It would be helpful enough for the company to achieve the estimated profit within the stipulated timeframe. 

References

Businessandfinance.com. (2018). February 2017: Paul Marchant, CEO, Primark. [online] Available at: https://businessandfinance.com/february-2017-paul-marchant-ceo-primark/ [Accessed 18 Apr. 2018].

Filieri, R. (2015). From market-driving to market-driven: an analysis of Benetton’s strategy change and its implications for long-term performance. Marketing Intelligence & Planning, 33(3), 238-257

Gouda, S. K., & Saranga, H. (2018). Sustainable supply chains for supply chain sustainability: impact of sustainability efforts on supply chain risk. International Journal of Production Research, 1-16.

Ivanov, D., Tsipoulanidis, A., & Schönberger, J. (2017). Operations and Supply Chain Strategy. In Global Supply Chain and Operations Management (pp. 69-96). Springer, Cham.

Jin, B., & Cedrola, E. (2016). Overview of fashion brand internationalization: theories and trends. In Fashion Brand Internationalization (pp. 1-30). Palgrave Pivot, New York.

Pettinger, R. (2016). The Business of Business: The Context of Organisation and Commercial Development. Procedia-Social and Behavioral Sciences, 221, 11-20.

Poazi, F. D. W., Tamunosiki-Amadi, J. O., & Fems, M. (2017). The Resource-Base View of Organization and Innovation: Recognition of Significant Relationship in an Organization. World Academy of Science, Engineering and Technology, International Journal of Social, Behavioral, Educational, Economic, Business and Industrial Engineering, 11(3), 692-699.

Prajogo, D. I. (2016). The strategic fit between innovation strategies and business environment in delivering business performance. International Journal of Production Economics, 171, 241-249.

Primark.com. (2018). About us [online] Available at: https://www.primark.com/en [Accessed 18 Apr. 2018].

Sivalingam, R. (2018). Strategic Management. Industry Analysis, Strategic Drift and Re-Strategizing.

Sughra, G., & Crowther, D. (2015). Do CSR determinants stimulate profits: Analysis of retail companies in UK. In Sustainability After Rio (pp. 123-140). Emerald Group Publishing Limited.

Thompson, J., & McLarney, C. (2017). What effects will the strategy changes undertaken by next Plc have on themselves and their competition in the UK Clothing Retail Market?. Journal of Commerce and Management Thought, 8(2), 234.