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Situational Analysis

Discuss about the International Management of Officeworks.

Expanding the business in new markets includes a great a market research with determining the target customers. The organizations need to understand the market and consider different factors of market. They have to plan a market entry strategy for offering products and services to a new country. The organization that is taken into consideration for this report is Officeworks. Officeworks is a chain of office supplies and stationary products in Australia that is operated by Wesfarmers Limited. The organization is analyzing the market of Sri Lanka, where it is planning to enter in. This report includes different marketing aspects, like; situational analysis, market analysis, organizational assets and skills analysis and SWOT analysis of Officeworks entering into Sri Lanka. As Sri Lanka is known as a fast growing middle income nation and now it is one of the fastest growing economies in the world, so it can be beneficial for Officeworks to expand business in Sri Lanka.

Business Environment (PESTLE Analysis)

It is very important that a company looks at new country’s business environment before starting its business operations and marketing activities. The organization needs to consider its external environment, which can affect its business operations and growth in new market. PESTLE analysis is one of the major tools that can be used to analyze different factors in environment. These factors are political factors, economic factors, social factors, technological factors, legal factors and environmental factors (Ambos & Håkanson, 2014).

Political Factors

Sri Lanka is a democratic nation with semi-presidential political system, in which the constitution is changed by its two-third of population. By looking at this, it can be stated that Sri Lanka is communist democratic nation, where the public have their own selections to spend money on products. It is favorable for Officeworks, it expands its business Sri Lanka. The people are free to use the products of Officeworks. The company is offering the products at comparatively lower prices, so it will be better to expand its business in Sri Lanka (Anderson, Narus & Narayandas, 2009).

Economic Factors

Currently, Sri Lanka is a middle income level nation and one of the fastest growing economies in the world. As per the figures of IMF, the Gross Domestic Product (GDP) of Sri Lanka is increasing consistently with which it offers an opportunity to organizations to enter in the market and get returns. By expanding business in Sri Lanka, Officeworks can increase its returns on investment and business revenues. Officeworks can have the benefits in developing country as the firm can have opportunity to capture the industry from expansion and it also assists the Officeworks in increasing its market coverage (Bull et al, 2016).

Market Analysis

Social Factors

Social factors in Sri Lanka have affected the retail sector in different aspects. The country has a population of more than 20 million people and it is far ahead than its neighboring countries in achieving human development objectives. The country is considering the factors, which are responsible for social development of people. The literacy rate in the country is very high, i.e. 92.5%, so Officeworks can get more skilled labor force for its stores. The company can have more benefits by selling school supplies in the country, as the country is very much focused on education and literacy rate. Changing perceptions and consciousness of public can increase sales of Officeworks International (Hill, 2008).

Technological Factors

Apart from the natural and human resources, which are available in the country, the technological factors in market may affect attractiveness and brand image in Sri Lanka retail industry. The country has more than 2 million internet users in the year 2011. Telecommunication industry is growing very fast, so Officework should sell its products online with the similar prices as its stores. However, the company can deliver the products by booking order on telephone. The company can use some innovative processes to increase its customer base. Thus, technology can support Officeworks organization in expanding its business in Sri Lanka (Wesfarmers Limited, 2011).

Legal Factors

The laws in Sri Lanka are very complicated, so it can create a barrier to entry for Officeworks. Due to this, the organization is not able to carry its trade processes freely. These complications in laws and authorities can resist the growth of Officeworks by abandoning it to pursue the transactions without taking permission. In addition, the country does not have strict labor laws and rules that can generate issues to the companies (Hollensen, 2015).

As Officeworks is planning to expand its business operations to Sri Lanka, so it needs to analyze various marketing aspect on the country. As it can be seen that market of Sri Lanka is considered as one of the best industry that comes in top 20 markets, which offers consumers goods to the customers. This country has a considerable GDP, due to this the country attracts many developed organizations to expand business in its market and carry business processes in the country.

In this process, Officeworks will determine the prices, which are placed by the customers on the services that they offer. The company will decide the prices according to the B2B, retail demand, payment plans and promotional sales (Hill, 2008).

Market Characteristics

The organization will use different and effective distribution channels for promoting the products in Sri Lanka. It will start the sale of products in the beginning of school year. It will offer the discounts at the beginning of school session and at the end of financial year. The media channels, which it can use, are Television, Radio, Internet, Social networking sites, Billboards, flyers etc.

The company is categorizing the market in smaller parts of consumers with same needs and wants. Officeworks runs its business in the international market of stationary and office supplies. It is more than a stationary store and specifically it is focused on office supplies. For targeting the market, the company is implementing multiple segment specialization strategy, through which it is targeting diverse market (Wesfarmers Limited, 2011).

While targeting the market, the company is considering the demographic characteristics. Officeworks has a different range of target audiences. It is focusing on both the genders. Along with this, the major target audience for the company may be business administration, engineers and office workers. Though, it is offering a wide range of products, so it can target children for school supplies. Officeworks International is focusing on the young families, which possess higher purchasing power (Hollensen, 2015).

There are so many competitors in Australian retail and stationary markets, which are posing threat to Officeworks Organization. In Australia, the major competitors of Officeworks are, such as; Bunnings Warehouse, Mothercare, Toys “R” Us.

As the company is planning to enter into Sri Lanka, so the organization may have intense competition in the new market. The biggest competitor in the industry is Ceylon Pencil Co. Pvt. Ltd. Other potential competitors are like; Atlas Sri Lanka, Eco Stationary, Rasaga Trading Ltd etc. Although, Officeworks have a good brand reputation in other countries, so it can get better position in Sri Lanka also (Morschett, Schramm-Klein & Zentes, 2015).

Yes, Officeworks may have the threat of substitutes in the industry. The substitutes of the stationary stores are super markets and hypermarkets. The people can buy these products from departmental stores and other stores.

Officeworks possesses various assets and skills, which are contributing it in gaining effective competitive advantage against its competitors in the current market (Landrum, Gardner & Boje, 2014). The company is a major retailer and supplier of office products and solutions for education, business and home. Currently, this organization has various stores and business channel that provides the customers three modes of shopping. i.e. online, in store and via phone. It has a large customer base in the perspective industry.

Market Segmentation

As per the figures of 2016, the revenues of company are 1.9 billion and total assets of the company are 1.4 billion. The market value of the company is measured between $1.14 billion and $1.52 billion.

The organization possesses effective technological capabilities and resources. It offers a variety of in-store printing services for the needs of business, school and home. Company is producing the sustainable paper sources. It has partnered with the Australian Paper to produce the papers and other products. The organization has created a production team, which is actively engaged in processes. The company has developed good relationships with its suppliers, who supply it raw materials (Officeworks International, 2017).

It is encouraging the people and suppliers to increase the use of post-consumer recycled fiber and material in production of paper.

 Officeworks is implementing an automated delivery system by new technology to offer consistent delivery of products. With this, the organization has selected PageUp’s Unified knowledge management system.

Officeworks is supporting the proactive organizational culture and engaging its people, who are very passionate about working for this organization. The organizational philosophy of Officeworks is “support for life”. It is aligning the knowledge management strategies and performance of employees to the overall strategic of company (Deresky, 2017). At the organization, use of technology and technical skills is very important to maintain sustainable competitive advantage.

This internal analysis shows that the company has sufficient skills and assets to get competitive advantage over its potential competitors.

Strengths

  • Officeworks have more than 150 stores in all the states of Australia and more than 6000 employees
  • Bulk purchase of office supplies provides it an advantage over price.
  • Free delivery of products in major cities
  • Fun activities at stores for engaging the children
  • Solid online presence
  • Officeworks offers the products on rent too (Hollensen, 2015).

Weaknesses

  • At the stores of Officeworks, the furniture is not different and it is generic
  • Geographic positioning is the major reason behind limitations
  • Small business units

Opportunities

  • It can have more focus on school stationary supplies
  • This organization can provide some unique and designer furniture for home and office use
  • It can expand its business in nearby countries like; Sri Lanka, Southeast Asia and New Zealand etc.
  • Expansion of children section will attract their mothers to buy the products from Officeworks.

Threats

  • It has competition from hypermarkets and supermarkets , which provide same products
  • Competition from local retailers
  • Departmental stores with same pricing
  • The products sold at Officeworks store are available at lower prices at their factory outlet and websites of organization (Landrum, Gardner & Boje, 2014).

Conclusion

Thus, Officeworks organization can expand its business in Sri Lanka successfully. Almost all the factors of external environment are favorable for the organization. Legal factors may create the barriers to entry in new market. The company has effective skills and assets to deal with its existing and potential competitors. It has an intense competition in both the industries, i.e. Australia and Sri Lanka. In this way, it will be beneficial for company to expand its business in Sri Lanka.

References

Ambos, B., & Håkanson, L. (2014). The concept of distance in international management research. Journal of International Management, 20(1), 1-7.

Anderson, J. C., Narus, J. A., & Narayandas, D. (2009). Business market management: Understanding, creating, and delivering value. Pearson Prentice Hall.

Bull, J. W., Jobstvogt, N., Böhnke-Henrichs, A., Mascarenhas, A., Sitas, N., Baulcomb, C. & Carter-Silk, E. (2016). Strengths, weaknesses, opportunities and threats: A SWOT analysis of the ecosystem services framework. Ecosystem services, 17, 99-111.

Deresky, H. (2017). International management: Managing across borders and cultures. Pearson Education India.

Hill, C. (2008). International business: Competing in the global market place. Strategic Direction, 24(9).

Hollensen, S. (2015). Marketing management: A relationship approach. Pearson Education.

Landrum, N. E., Gardner, C., & Boje, D. M. (2014). An integral foundation for international strategic management. Humanistic Perspectives on International Business and Management, 120-133.

Morschett, D., Schramm-Klein, H., & Zentes, J. (2015). Strategic international management. Springer.

Officeworks International. (2017). Introducing Officeworks. Retrieved from https://www.officeworks.lk/About-Officeworks-international.html.

Wesfarmers Limited. (2011). Officeworks cuts ties with papermaker. Retrieved from https://www.theaustralian.com.au/business/latest/officeworks-cuts-ties-with-papermaker/news-story/bdbd533cd48fb73bec283a8cc84d6190

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