Strategic management Assignment 1 Essay Example | Topics and Well Written Essays - 3000 words

Strategic management Assignment 1 - Essay Example Global Retail Industry Global economy is decelerating due to various reasons such as Euro zone crisis and economic recession started in the year 2008 (Deloitte, 2012). Retailers such as Marks & Spencer, John Lewis, Target, Wal-Mart, Kohl and others are struggling to maintain sales growth while other retail players such as Nordstrom, Saks and Neiman Marcus have recorded same store sales growth of 12% last year. Global retailers are facing following trends to change the dynamics of business operation. Format Retailers are using online channel to increase market penetration and offer product in accordance with demand of customers. Wal-Mart has recently closed their Marketside (grocery store) due to poor return on investment. Wal-Mart has planned to open scalable retail version in order to fulfil demand of space constrained and low population market. The initiative is known as Wal-Mart Express. IKEA has launched their country specific retail format way back in the year 2000. IKEA provide s full home solution in order to fulfil multidimensionality of demand. Walgreen has added food section and medicine segment in their retail format with an intention to diversify product offering. UK based departmental store chain John Lewis has implemented online sales channel in order to offer products to time constrained customer. Merchandising Customers are becoming more demanding due to hypercompetitive nature of the market. Retailers have shifted their focus from selling merchandises to offering product associated with customer trait such as right quality, right price and superior service. Retailers are changing their offering in accordance to local culture and taste. In the changed market dynamics retailers need three things. These three things are explained in the following section. Proper market research on taste and preference of local customers Developing analytics engine such as demand forecasting, store clustering, campaign tracking, price mapping and basic assortment pl anning Technology integration such as Enterprise Resource Planning (ERP), RFID (Radio Frequency Identity) is needed in order to create a effective value chain Online Shopping Study conducted by KPMG shows that digital presence (social media, mobile, web traffic) of retail network has increased manifold in recent years. 40 % of retailers are banking on social networking sites for increasing online presence while remaining 60% still believe that web trafficking is the best way to improve online presence. Global report suggests that online retailing is showing a growth potential of 15% while offline trade channels are growing at a rate of 7% for last two years (Grannis, 2012). Porter Five Force Analysis Threat of New Entrants Global retail industry is passing through a crucial period due to following reasons: Market is becoming saturated in developed countries due to presence of many competitors. Market of developing countries is becoming attractive due to various schemes offered by re spective governments. For example, Chinese government has opened up the economy for foreign retailers by decreasing