Evaluating Corporate Strategy and Performance

Introduction

Strategic positioning is important for all the corporate firms to fulfil the organisational aims and objectives by developing effective strategic planning for positioning of the brand successfully in the market. The companies in the recent era of globalisation and high competition develop proper strategic planning for expanding their business activities and secure future sustainable development so that the operations can be conducted efficiently (Smith, 2017). The aim of the research is to analyse the strengths, weakness as well as opportunities and threats of the company Debenhams and review the financial performance of the company so that it is possible to evaluate the strategic move of the firm to fulfil mission and visions. Through reviewing the financial performance as well as understanding the strategic position of the company, it is possible to acknowledge the strategic move f the company through which the organisation enhance their performance and establish the brand in the market successfully.

Organisational background

Debenhams is a British multinational retailer, operating through the departmental stores in the UK and Ireland and with franchise stores in other countries. The company expands their business through more than 180 stores and it is proficient to grab market opportunities in enhancing their performance and improving their market share in near future. Total numbers of employees of the company is more than 453,528 and migrant workers are approximately 55103 as well as total revenue in the last year was £2777 million (Debenhams, 2019a).

The major products that the company delivers to the customers are such as fashion clothing, shoes, accessories, cosmetics, home and furniture, gifts items, electronics and toys. The company focuses on managing equality, community involvement and maintaining environmental sustainability in order to secure future sustainable development.

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SWOT analysis and organisational strategy

SWOT analysis, is effective for the organisations to identify own strengths and weaknesses, as well as acknowledge the future market opportunities and threats which provides a scope to all the corporate firms to develop effective strategic planning after understanding the internal business environment (Bryson, 2018). Through SWOT analysis, it is hereby possible to analyse strengths and weaknesses of Debenhams as well as predict the future market opportunities and upcoming threats in the global retail industry.

Strengths:

The major strength of the company Debenhams is high brad values and market presence across more than 4171 locations, where the company is successful to expand their business. High brand equality in the retail industry as well as brand recall among the customers are also other strengths of the firm through which it is possible to retain long term customers for the successful establishment of Debenhams. Additionally, strong multi brand retail stores with excellence customer service further satisfies the customers and strengthens their customer base in near future which provides a scope to the company to secure future sustainable development with strong customer base in the retail industry. in addition to this, delivering quality and fashionable products to the customers and helping the consumers with efficient services are another strength of the firm for which it is possible to have high level of customer satisfaction an ensure customer relationship management. Strong employee’s base and high return on investment further influence the leader of the firm to choose further franchise, merger and acquisition for expanding the business across global retail sector (Debenhams, 2019a).

Weaknesses:

The major weaknesses of the company Debenhams are such as low market share of the company due to high presence of other competitive retail stores in the global retail industry, limited global presence of the company, low product demand, lack of investment in the research and development for which the company is not efficient to develop proper financial strategy in order to run their business operational activities. Moreover, it does not target all the segments of customers which reduce the chance of having strong customer base. Limited products and services retain a segment of customers and in this regard, the company lacks to target a variety of customers with different segment (Debenhams, 2019b).

Opportunities:

There are several opportunities of the brand to sustain in the retail industry and expand their business activities strategically. High chance of franchise model for spreading the brand presence is one of the great opportunities though which, the company can expand their operational activities. High consumer demand in retail industry as well as increasing requirements of fashionable products and spread in European territories provide an opportunity to the company to enhance their performance and secure future sustainable development. Through grabbing these opportunities, Debenhams can target a wide range of customers and promote their products sustainably. Additionally, growth in e-commerce business and high technological advancement further provides a scope to the brand to improve their online presence and develop proper strategic planning to retain the customers for long run (Cassidy, 2016). Through technological advancement, website development and presence in e-commerce business, the company can expand their business and strengthen their customer’s base successfully. On the other hand, there are the opportunities of lower inflation rate and stable cash flows and market development for which, the company Debenhams can target the customers and help them to develop effective purchase decision according to their needs and preferences.

Threats:

The major threats of the company are such as high competition and growing strength of local distributors where the competitive firs are such as Asda, Tesco, Sainsbury’s, Morrison, Aldi, Amazon, Walmart and Waitrose, which are operating in the global retail industry and gaining high competitive advantage with latest fashionable products and excellence customer services. other threats are rising price of raw materials and high input costs for which the company set high price for their products due to high operational cost as well as high brad switching, brand awareness among the customers as well as changing demand and preferences of the customers in the recent era of globalisation further raise the threats for Debenhams to perform better in the global retail market and strengthen their customers base (Wolf and Floyd, 2017).

Evaluating strategic position of the organisation

As per the strategic choice and positioning strategy, the company aims at creating values or all the shareholders by giving excellence service to the customers and a wide choice of desirable products by enhancing strong relationship with the suppliers and distributors and partners who own the expertise in developing, sourcing and selling the products and services to the customers in the market (Kerzner, 2019). The company focuses on maximising the values for all the stakeholders and the maximisation strategy of the firm is evaluated further.

The strategy of the company is to deliver quality products and services to the customers which are right products so that the customers can maximise their satisfaction level by getting the products according to their actual needs and preferences. In addition to these, integrating channels is another strategic positioning for the brand, where the company focuses on strengthening their supply chain and enhance their performance of the distributors in order to serve the customers efficiently by ensuring multi channel operations, strengthening supply chain and web management. Thirdly, the company also focuses on delivering excellence customer service, where Debenhams focuses on offering better in store service to the customers. Additionally, the strategy of delivering great retail experience, faster response to the supply chain and the customers and sustainable growth in near future are also beneficial for the company to run their business sustainably. In this regard, the company Debenhams tries to provide faster response to the customers, suppliers and distributors, so that proper cooperation and communication can be managed and apart from that, proper service improvement, physical environment of the store and the cooperation with the customers further enhance the experience of the customers in the retail store of Debenhams (Debenhams, 2019b).

As per the strategic positioning of the company, Debenhams focuses on managing the people, efficiently by providing excellent services. Apart from that, proper strategy of improving customer’s experience and insight through delivering the right products and services is also beneficial forte brad to deliver quality products to the customers. Infrastructure of the store is also important where the company aims at providing suitable physical infrastructure, so that the customers can feel free to review the options of fashionable products in the store and choose according to their needs and preferences. Additionally, the suppliers and partners are efficient to manage the distribution network and supply chain where they are successful to deliver the products to the customers as well as manage the warehouse and logistics proficiently. This is also another success factor, where the company is able to deliver quality products to the customers (Debenhams, 2019e).

Financial analysis of the company

Through financial analysis, it is possible to understand the performance of the company and evaluate the strategic planning, through which the organisation tries to expand their business strategically and secure future sustainable development. The financial performance across five years is described below, which provides a scope to evaluate the strategic positioning of Debenhams.

As per the financial performance of the company, the gross transaction values of the company are £2.8 billion and it is increasing up to £3.0 billion in the year of 2017. However, it has been decreased in the year of 2018 into £2.9 billion. On the other hand, the profit before tax was £110.3 million in 2014 and it was increasing up to £114.1 million in the year 2016 (Debenhams, 2019c). However, it has been decreased at a higher rate in the years of 2017 and 2018, where the profit before tax of Debenhams was £95.2 million and £33.2 million respectively, which indicates that the performance of the company is not up to mark and the company could not find alternative ways to strengthen their position in the retail market. The performance has been decreasing over the years due to lack of online activities as well as poor customer retention of which the sales volume and profitability of the firm has been hampered (Debenhams, 2019d). Apart from that, the net debt was £300 million in 2014 ad it has been decreasing throughout the year up to 2017, but in the last year the net debt of the company has been increases tremendously up to £321.3 million which may become bad debt of the company, as the company loses their financial position in the market and the debt ratio is increasing and side by side the profitability volume has been decreasing throughout the years. Considering the digital sales growth, the growth of the company through digital activities has been increased from the year 2014 up to 2017, but again, the digital sales growth has reduced in the last year which also indicates that, the company is not able to strengthen their customer’s base and promote the products successfully in the market. additionally, there is huge gap in the earning per share where in the year of 2014, it was 7.1p, but in the last year 2018, it was 2.2p, which indicates that, the company lacks to manage their performance and they fail to provide high return on investment where reduction of earning per share disappoint all the shareholders in the company (Debenhams, 2019f). Apart from that, the dividend per share was 0.5p in 2018, whereas it was 3.4p in the year of 20174. Hence, it can be considered that, there is sharp decrease in earnings per share and dividend per share and it further deteriorate the performance of the brand in the market. The shareholders are happy with the performance as they cannot get high return to investment on the share of the company Debenhams (Debenhams, 2019g).

Justifying the strategic option of Debenhams

As per the above analysis and evaluation of strategic position of the company Debenhams and its financial performance, it is necessary for the company to develop effective strategic planning to target the customers and strengthen their customer’s base successfully. More innovative and creative strategic options need to be explored so that the organisational performance can be increased well in the upcoming years (McLean, 2019). In this regard, the strategy of targeting the right customer segment is necessary for the brand. Proper market research needs to be conducted for understanding the actual needs and preferences of the customers as it is a threat for the retail firm nowadays as there is fluctuating of changing preferences of the customer’s preferences. Hereby, targeting the right segment of customers is necessary where the brand should target the fashion industry or the customer who love fashionable clothing and other innovative products in the market. After that, proper pricing strategy is necessary to set appropriate price which can represent the product successfully. In this regard, penetration pricing is one of the effective strategies for Debenhams where it is possible to target the customers and attract more audiences in the market. As per the penetration pricing, the CEO of the company initially set the price o the products and services low to attract more demand in the market. It would be beneficial for Debenhams to expand the fraction of market share and influence word of mouth in the UK where the customers can get extra amount of products at affordable price. As there is high competition in the retail industry of the UK, it would beneficial for Debenhams to follow penetration pricing and attract a wide range of customers successfully. In this regard, the company needs to utilise organic raw materials and use unique design to improve product quality and reduce the cost of the producing the products so that the profit margin can be managed after setting the low price for the products (Channon, and Jalland, 2016). Another strategic option for Debenhams is to maintain proper product line were the company needs to focus on delivering a wide range of products and services to the customers, so that the customers can have the option to review all the products and choose the right products accruing to their needs and preferences. In the recent era of globalisation, there is advancement of technology and the retail firms are focusing on more innovation and creativity and in this regard, Debenhams also needs to focus on innovation and improve their online activates in the market. Recently, the people prefer online activities and they are focusing in accessing all the news and information through online searching. In this regard, the company needs to invest a huge amount of profit on marketing so that though social media marketing or television marketing, the company can promote the products and services and attract the audiences in the market. Due to lack of marketing strategy, the company fails to enhance their digital sales volume. In this regard, presence of digital activities and social media marketing strategy through providing online posts in Facebook, HD picture of the products in Instagram or using Google+ and Twitter would be helpful of the company to target the audiences and attract them for making effective purchase decision for the organisational products of Debenhams. Apart from that, digital activities and presence of e-commerce service needs to be improved, where the company needs to develop effective mobile application for the Smartphone users to influence them to review the available products and use one click option for placing their orders. Apart from that managing the company website is necessary, where the company needs to develop creative content and represent the products through the website s that the customers can review them and choose the best products as per their preferences (Birkin, Clarke and Clarke, 2017). In this regard, the company also needs to improve engagement with the customers to enhance the sales volume and profitability by ensuring the customer retention in long run. in this regard handling customer queries online as well as quick response time, 24*7 online service and managing customer’s feedback for enhancing the service quality are impotent strategic options for Debenhams in order to enhance the performance in the retail industry and gain high market are as compared to other retailers in the market. In this regard, the merger and acquisition is one of the best strategic options, where the company would try to merge with other retail firm such as Waitrose or Walmart to represent their products jointly and utilise each other’s customer’s base for enhancing their profitability and sales volume. These are the major strategic options for Debenhams through which the organisation can improve the brand visibility and represent the organisational products and service through company’s website or mobile application, where it can retain the online buyers successfully for long run and secure future sustainable development by ensuring improving financial performance with enhancing sales volume and profitability.

Critical reflection

Trough this module, it is possible for me to gain more in depth knowledge and understanding about strategic positing of the business. This study provides me a scope to understand the strategic planning of the company as well as review the theories which are effective for my personal and professional development where I would utilise my abilities and knowledge in future in the organisation as a leader or manager. The theories of SWOT analysis and strategic positioning help me to improve the understanding to identify the strengthen weaknesses as well as upcoming opportunities and threats of the company in operating in the market. This is helpful to conduct internal analysis as well as review the strategic planning of the brand which indicates different tactics of marketing, operations, managing suppliers and distributors, human resource management and product design. These knowledge and skill further provide me a scope to improve my performance as a leader or a manager in the current organisation in the future organisation, where I can contribute positively to maximise the organisational values successfully. Apart from that, the study helps me to improve my analytical and critical thinking skill, where I tried hard to evaluate the strategic planning of the company as well as review the financial performance of the company to analyse its performance in the market. During the study, I try to improve critical thinking skill, and identify the major weaknesses of the company and problems in making the business profitable. Apart from the critical thinking skill, I also tried to improve my analytical skill to analyse the strategic planning of the organisation as well as decision making skill which further helps me to develop further strategic option for the company through which the company would enhance their performance in the market. Hereby, both the critical thinking skill, analytical skill has been enhanced throughout the study and additionally, the study also provides me a scope to review the theories and practice in the strategic planning in the organisational context which helps me to explore more strategic options for future success of the firm. This is helpful for me to enhance my capabilities to perform better for future organisation and provide alternative solutions to achieve success. Hereby, the theories and practice are helpful for me to analyse the internal and external business environment as well as strategic planning of the firm in order to make effective decision for the companies in near future which ensures my personal and professional development, where I can contribute in the company positively to active the organisational success.

Reference List

Birkin, M., Clarke, G. and Clarke, M., 2017. Retail location planning in an era of multi-channel growth. London: Routledge.

Bryson, J.M., 2018. Strategic planning for public and nonprofit organizations: A guide to strengthening and sustaining organizational achievement. New York: John Wiley & Sons.

Cassidy, A., 2016. A practical guide to information systems strategic planning. London: Auerbach Publications.

Channon, D.F. and Jalland, M., 2016. Multinational strategic planning. Berlin: Springer.

Kerzner, H., 2019. Using the project management maturity model: strategic planning for project management. New York: Wiley.

McLean, M., 2019. Understanding your economy: Using analysis to guide local strategic planning. London: Routledge.

Smith, R.D., 2017. Strategic planning for public relations. London: Routledge.

Wolf, C. and Floyd, S.W., 2017. Strategic planning research: Toward a theory-driven agenda. Journal of Management, 43(6), pp.1754-1788.