The main purpose of this report is to make a plan for launching new product and services of Wesfarmers in the UK. This report discusses the PESTLE analysis method to evaluate the external situation of UK. It also demonstrates three modes of market-entry like Export, strategic alliance, and Licensing. These modes could be imperative to effectively enter in the market and make a reliable decision. It also discusses the marketing segmentation that could supports to segment the market to deliver goods and services. In last, it also discusses Porter’s generic strategy that could be imperative for obtaining a higher outcome.
PESTLE analysis is used to evaluate the external factors that may influence Wesfarmers at the time of launching their products and services in the UK. It consists of many factors like political, social, economic, technical, legal, and environmental factor (Ang, et. al., 2015). These are discussed as below:
The political factor could be an important factor that may affect business growth in limited time and cost. In the current era, it is also analyzed that UK government support the new business due to improving their existing situation. Further, the current political party gives more priority to the health of UK people hence government makes flexible rules and regulation in oppose to the retail organization. It could facilitate the firm to start their business and get higher benefits. Moreover, there is no issue of seasonal products and services hence organization would be capable to get benefits in each season and obtain higher benefits (Laufs and Schwens, 2014). It is also evaluated that Wesfarmers could make their unique image in the UK market by introducing their products and services.
The economic factor could also influence the performance of the organization. From the analysis of the current situation, it is addressed that the economic growth has been increased that could increase possibilities of getting higher competitive benefits. The annual growth is increased by higher rate after 2009 that could be imperative to make distinguish image in the marketplace. The interest rate and the exchange rate are reasonable in the UK that could be more important for the retail organization to obtain a positive response (Andreu, Claver, and Quer, 2017).
(Sources: Burton and Cross, 2015).
(Sources: Hennart, and Slangen, 2015).
From the above chart, it is also analyzed Wesfarmers could obtain positive responses from introducing their goods and services in the UK market. It could also be essential for obtaining higher competitive benefits. Moreover, it is also evaluated that the economic situation is favorable that supports to obtain a positive result.
The organization could evaluate social factor for evaluating the current situation of the country before launching their goods and services in a particular place. The UK has a multicultural based country that could be imperative for the organization to influence a huge number of consumers with respect to the products and services of the organization. The UK follows a Modern culture that could be essential as an organization delivers healthy products and services to their consumers (Hennart, Sheng, and Pimenta, 2015). This country has believed in the media that could be effective for influencing a huge number of consumers in the least time and cost. It would lead to operating the business process. In addition, it is also evaluated that the positive image of the brand could be imperative for successfully launching products and services and make reliable outcome. Thus, it is evaluated that Wesfarmers could get reliable outcome by launching their products and services in Australia (Schellenberg, Harker, and Jafari, 2018).
Technology is an imperative factor for the accomplishment of the organizational goal. There are certain factors that could be imperative for the attainment of specified aim and objectives. In the UK, people are more believing in innovative technique that leads the organization to use social media and directly communicate with their potential consumers. This feature could also motivate the organization to converse with consumers and change their buying behavior. In addition, it is also evaluated that research and development tool could be imperative for getting higher success (Schwens, et. al., 2018). This country believes in the research and development hence the organization could entail any innovative feature in their products services for influencing a huge amount of the consumers. Moreover, it is also evaluated that Wesfarmers could be capable to launch their products and services in the UK as there are higher possibilities of getting positive responses (Oliveira, et. al., 2018).
The legal factor could also be analyzed by the organization to make a reliable decision in the context of the organization. Before launching products and services, the organization could concentrate on certain policies named health policy, compensation, safety, and working hours. These policies could be imperative for accomplishing organizational target in the least time and cost. The organization could gain their understanding about such policies as it would be imperative for making a positive image of the firm among employees. It would lead to retain employees in the long term that could be essential for getting higher competitive benefits in the least time and cost (De Villa, Rajwani, and Lawton, 2015). In addition, it is evaluated that the organization should also remember that the working hour could be appropriate as it would directly influence the productivity of the employees as well as the organization.
The environmental factor could be an imperative part of human life. Hence, the organization always remembers that they never harm to the environment. There are certain factors that could be important in environmental like Natural Hazards, Water Quality, Pollution, and Air (Ouma, and Oloko, 2015). Wesfarmers previously ensures that their goods and services never indirect impact on the environment. Then, the organization would be capable to successfully launch their goods and services in the UK and obtain higher competitive benefits (Anderson, and Sutherland, 2015).
There are different kinds of modes that could be used by organization at the time of entering the market like Licensing, joint venture and strategic alliance. The organization could consider any methods and enter in the market and sustain their position in the marketplace (Ho, Shi, and Siu, 2015). These are discussed as below:
This method is another method that aids organization to enter in the new market and obtain a reliable result. There are many methods that could be considered as a type of Licensing named franchising, management contract, and turkey operation. It is evaluated that the organization could consider one of them and makes the reliable decision for selling their goods and services (Bertozzi, Ali, and Gul, 2017).
The joint venture is an imperative method that aids the organization to start their business with their partners with certain common objectives like market entry, risk and reward sharing, technology sharing and joint product development, and compliant to the management regulations (Brenes, Montoya, and Ciravegna, 2014). It would be imperative for the organization to get a higher result.
It is another type of investment that supports to freely enter in business and obtain a higher outcome. It permits the firm to make a legal contract between different organizations and reach at the valid conclusion (Abdolshah, Moghimi, and Khatibi, 2018). This method supports to obtain many ways that could be used by the firm named Global competition, economies of scale, industry convergence, reduction of risk, and Association as a difference to the merger (Gould, and Desjardins, 2015). This method assists the company to effectively launch their goods and services in the marketplace.
The joint venture is a key investment entry mode that should be used by Wesfarmers to penetrate into the UK nation. This strategy would be beneficial for the company in terms of getting the taxes benefit, liability and growth strategy. Taxation is a key benefit for partners of joint venture and partnerships (Wicker, et. al., 2015). Since, joint venture and partnership are not required to file taxes as a business body. Along with this, partners are allowed to share their profits and losses directly to their personal income tax return (D. Banker, Mashruwala, and Tripathy, 2014). Wesfarmers can also report to partner for losses in terms of paying tax return and it could be practiced for counterbalance the income increased from other sources.
Another benefit of using this strategy is reducing liability. It is stated that the joint venture has unlimited liabilities in terms of the company’s debts and obligations. The partnership is not a separate legal entity as; it indicates that business creditor may practice an automobile, bank account, automobile, and other personal resources when the assets of company do not cover the obligation (Tansey, Spillane, and Meng, 2014). In addition, a personal creditor of a partner may use the business resources as a compensation for personal debts of partner. Along with this, partners are held accountable to negligent act of other partners (Bayraktar, et. al., 2017).
Growth is another reason for selecting the joint venture partnership. Through the resources of a partner, Wesfarmers can supplement their own resources and gains their capacity without making an investment in capital. For instance, Wesfarmers can co-operate their partners to win the contracts that would be too large for the capacity of the individual. A joint venture strategy can provide access to Wesfarmers to access the market of their partners and consumers without using their own budget and resources to market entry tasks (Harding, 2017).
Undifferentiated marketing strategy could be practiced by Wesfarmers in terms of avoiding the social influencing factors. As per this strategy, Wesfarmers will produce only one segment of product and target mass customers through a single marketing mix. In this marketing, a corporation can involve the whole market and avoids the differences of the segment. It focuses on the whole market through a single marketing strategy (Ho, Shi, and Siu, 2015). This marketing strategy is used to persuade the buying decision of a high amount of customers. Under this targeting approach, a corporation will emphasize on the high amount of media approaches such as radio, newspaper, and television (Parnell, 2016). The key intention of practicing this strategy is to demonstrate the product in front of the bulk of customers.
Wesfarmers’s supermarket can segregate its consumers according to a different basis for persuading the buying behavior of customers towards their food products. It is described as given below:
Wesfarmers should focus on providing the quality food to their prospective consumers. In such a way, it can categorize consumers according to the level of income. Moreover, it can provide 30% of discount to government workforces at each weekend. In such factor, a consumer can segregate the customer on the basis of age like it can segment the 21-25 and 26-30 years of consumers. This age-group of consumers would be selected because of influencing the both middle and business group by providing the low price food products with quality according to the need of an individual (Harding, 2017). It can also segregate the consumer according to the behavior, expectation, and requirement of consumers as it would be effective for influencing the buying behavior of consumers.
Wesfarmers’s supermarket can classify the consumer as per their behavior about the food products like buying vegetables, meat, and fruits from the supermarket. Through this approach, a corporation can emphasize on segmenting the loyal consumers however, there is a requirement to provide the affordable rates of foods and discount to government workforces (Parnell, 2016). Consequently, it could be beneficial for persuading the purchasing behavior of consumers.
Porter’s generic strategy is used for assessing the relative position of the company within its industry and helps to understand whether the profitability of the company is above or below the average of the industry. The key basis of average profitability in long-run is to get the sustainable competitive benefits.
(Sources: Bayraktar, et. al., 2017).
A competitive benefit could be attained by Wesfarmers over the rivalry via delivering the better value to customers. The company can gain the value by declining the rates and gaining the benefits and services to validate the higher rate. Moreover, cost leadership and differentiation is used to gain competitive benefits at large extent whereas focus strategies focus on a narrow market. Wesfarmers can focus on combination strategy as customers focus on multiple factors like convenience, style, quality and price (Bayraktar, et. al., 2017).
The cost-leadership could be a good alternative for Wesfarmers that are competent to constantly decline the cost of performing the organization. Furthermore, keeping low overhead expenses and negotiating positive acquisition expenses with suppliers is a key strategy to implement it. Wesfarmers can implement the cost-leadership through different methods. In this way, it can create higher profit margin by offering the industry average rates in spite of using low-cost basis and pass the savings against customers and develops the market share (Hennart, Sheng, and Pimenta, 2015).
A differentiation strategy could be beneficial for Wesfarmers as it does not have strong cost benefits or does not prefer to focus on strengths in production or resale. The key purpose of using this strategy is to identify the needs of customers, designs and builds the quality products and services proceeds to match the markets and sell the solutions by stressing the diversity from competing brands. There are different ways of using the differentiated approach such as product quality, unique features, elite services and environmental accountabilities (Gould, and Desjardins, 2015).
The focus strategy is diverse as it is practiced while Wesfarmers will serve in a niche target market. The cost focus strategy could be used to involve the low-cost operation and market affordability in a niche market. Under the supermarket category, Wesfarmers can drive their business from lower to middle-income purchasers by keeping a very low business. This could enable the business to offer a low rate to most budget-conscious shoppers of grocery. Moreover, the focus strategy can be used to focus on the specific customer, geographical area, and product line and market niche (D. Banker, Mashruwala, and Tripathy, 2014). The idea is to facilitate a limited set of customers as compared to competitors who provide a higher category of products to their customers. This focused strategy could be effective for Wesfarmers in terms of penetrating into the UK nation. Wesfarmers can implement this strategy as it does not have adequate resources to engage in UK marketing efforts. The focus could rely on differentiation or cost strategy. It entails the emphasizing on cost leadership and differentiation on a small level. The idea of using this strategy is to sustain in the particular market sector (Hennart, Sheng, and Pimenta, 2015).
A differentiated focus strategy could be beneficial for Wesfarmers in terms of bigger the market and provides an effective solution to a smaller market segment. Wesfarmers depend on this strategy while competing in against the larger retailers. In this strategy, Wesfarmers can endorse the best choice of food products by hiring the proficient employees as a way to influence the business from discount stores and general merchandise retailers. This strategy can enable the Wesfarmers to develop strong loyalty because Wesfarmers will specifically focus on the needs of a particular set of customers (D. Banker, Mashruwala, and Tripathy, 2014).
Conclusion:
As per the above discussion, it can be concluded that Wesfarmers supermarket is a retail chain in Australia that wants to expand their business into the UK. It can be summarised that PESTLE analysis is used by the company for assessing the country’s situation. It can be also evaluated that there are the different entry of modes that could be used by Wesfarmers in terms of penetrating into the UK. These are export, licensing and investment method. It can be summarised that Wesfarmers will use undifferentiating targeting strategy to target the customers. Further, it would segment the customers on the basis of age such as 21-25 and 26-30 years of people. Moreover, Porter’s generic strategy is used to assess the competitive position of the industry. There are different generic strategic such as cost leadership, focus strategy, differentiation focus strategy and cost focus strategies.
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