New International Markets: Waitrose

New International Markets: Waitrose Waitrose is one of the leading retailers in the UK market being a subsidiary of John Lewis departmental stores. In the wake of the emerging economies, there are many opportunities which the business can take advantage of by expanding its operations internationally. The report will analyze the internal and external factors which affect operations and performance and identify the countries where the business will expand its operations to. The report makes recommendations for the market entry and exit strategies, functional strategies and the control system to ensure that the implementation is done successfully for a period of 5 years from the year 2012 to 2017. Analysis Waitrose opened its first supermarket in 1955 and has shops throughout England, Scotland and Wales locations ranging from high streets to edge of town sites and varies in size from 7,000 square feet to approximately 56,000 square feet. The Waitrose brand is now owned by John Lewis partnership with a specific aim of combining convenience of a supermarket with expertise and service of a specialist shop. (Waitrose Company 2011). Market selection Criteria Australia Canberra Australia is a market that has a relatively little exposure to foreign business. (Tunny 2006). The availability of small business funding in Canberra increases small business growth providing market for retailer. (Australian Business 2011). The market has also demonstrated growth potential in retail business with departmental stores sales rising by 2.3 % in January 2011. (Australian Bureau 2011). Canberra is a flourishing capital city in Australia located 150 kilometers away from the coastal boarders of the country. It has town centers such as Balcones, Tuggeranary and Woden which are known for their huge shopping plazas. Its shopping zone stands in vicinity of major tourists destinations of the city attracting attention from the tourists. The shoppers zone has recently gained reputation for their nightlife with a wide range of entertainment and stylist restaurants. (Asian rooms 2011). Waitrose expansion to the city would be appropriate to take advantage of the strategic location which offers an opportunity for a retail outlet serving the needs of the tourists and the resident. The business would also take advantage of the citys extended hours of doing business to the night. (Canberra 2011) Canada Manitoba Most of consumers expenditure by Canadian households is mainly through retail outlets which consist of 50 to 55% of the household. (Industry Canada 2011). Retailers concentration has resulted to some retailers holding significant market share like the case in which the largest supermarket in Canada held 31.1% of market share in 1998 compared to USs 5.8 % and Britains 15.4%. (Industry Canada 2011). Manitoba has a five year economic plan to taking a balanced approach which will seek to enhance among other things jobs creation and protection of services in its bid to return Manitoba to surplus. This is reinforced by the 2011 budget which seeks to increase investments in health care enabling all people in Manitoba who would like to have a family doctor by 2015 to do it, building the place with increasing infrastructure like bridges, roads transit and community centre as well as putting families first with examples of credit on tax on children activities, senior citizens and those who take care of them. (Budget 2011). Manitoba is a strong trading province with a strategic central location within Canada and has vital links by rail, road, air and sea. (Laubler 2008). With a population of 1,148,401 people, 448,780 households as at 2006 and a significant urban population, the introduction of Waitrose will be well positioned to capture the target the mainly urban population. (Munroe 2011). The region has transportation means ranging from curries services like Purolator, Looms and DHL. Freight carriers include Canada pacific while there is air transport through the modern regional airport. The region also has bus services across the towns adequate for consumer and business transport. Communication means in the region include newspapers, like the weekly newspaper; the modern times, biweekly newspaper; the southern shopper and daily newspapers. Radio stations providing communication in Manitoba include CFAM, KAUF, the eagle and the modern towns local CKMW. Digital cables and internet communication are als o available in the region. (Transport Communication 2011). The province also has high number if experienced and skilled labor force. (Manitoba Business 2011) Manitoba provinces have been posting strong retail sales. An example was retail customers spending up to $1.26 billion worth of sales for the month of September in 2009 which was a 0.8% increase from $1.25 billion in August. The trend shows a strong market considering the 2009 economic hardship hence presenting a potential growth and resilient market. The province is also an appropriate selection as it had the least drop in sales with the 2009 economic downturn effect compared to other Canadian provinces. (McNeill 2009). The market has also demonstrated a growth potential with the retail sales rising for a third consecutive month by 0.5 % in 2011. (Statistics Canada 2011). Pestel Analysis results The internal factors that would affect Waitrose operations in the market would include: In its expansion to international markets, the business will be subject to a wider scope of business environment determined by various factors including internal factors that would include: (Contemporary issues 2011). Workforce/staff is one of the strengths of Waitrose given that all of its staff are shareholders hence increases their commitment to the business. The staffs skills affect the ability of the business to deliver to its customers and remain competitive thus will be a key success factor. (Waitrose 2011). Finances availability is a factor that affects business operations. Availability of finances enhances the business operations in developing new products and brands relevant to the market. Suppliers determine how the company sources its inputs and raw materials. Suppliers efficiency affects ability to deliver to customers in terms of cost and timing. (Pestel Analysis 2011). Competitors affect the business market share by reducing it hence negatively affecting its performance. (Pestel Analysis 2011). Shareholders affect the decisions that are made regarding the investments that a business is to make thus determining its ability to remain competitive in the market. Waitrose being owned by John Lewis has its workers being its staff thus understands the business operations. (Waitrose 2011) Customers determine the relevant products that a business should provide in the market. This is also faced by the changing needs from the evolving preferences, tastes and lifestyles which require the business to remain innovative in order to satisfy the customers needs. (Pestel Analysis 2011). The external factors affecting business in the two select markets include: Australia- Canberra Social: Economic: Political: Technological: Legal: Environmental: Canada- Manitoba Social: Canadian consumers easily identify and recognize US retail goods increasing the entry of US based retailers into the market. Canadians nature demonstrates consumers who are not comfortable with personalized selling. (Industry Canada 2011). Economic: Political: The governments policies allowing foreign direct investment and free trade is increasing presence of freeing retailers especially from US are changing the market structure. The businesses are introducing new retail concepts in the market including low pricing, big box format and logistic systems. (Industry Canada). The government reducing restrictions on foreign investments (OECD Economic 2006). Technological: increase in use of technology is changing retail market structure. This is through the way the internet is affecting the means of consumers access of information and buying of goods in Canada. It is also increasing marketing in the retail sector. Technology has also increased in store innovation like use of bar codes and point of sale price scanning. This has enhanced management of the stores in the market. (Industry Canada 2011). Legal: Environmental: Demographic: Age difference determines the suitability of the retail system service to customers. This was demonstrated by 77% of Canadian consumers aged 18 to 34 indicating in a survey they they would likely shop in self service while those aged 55 years and above would prefer the in store shopping. (Industry Canada 2011). Competition: The increasing competition is transforming the Canadian retailers with their bid to achieve a competitive edge in the market. The foreign retail businesses presence has resulted to almost disappearance of independent local retailers with the market becoming homogeneous. Wall mart is one of the largest retailers in the market credited with introducing innovation into the industry. Other retailers from US include Old Navy, Best Buy and Staples and winners. (Industry Canada 2011). Risks Considered The increasing adoption of self service technology in the Canadian market may not be suitable with some consumers who would rather use the traditional retail system. Strategies. . (Industry Canada 2011). The increasing use of internet by consumers also increases the consumers negotiating power over retailers since they can access information about comparing many retailers quality and prices. (Industry Canada 2011). The different laws and regulations governing retail industry in Both Canada and Australia may present a challenge to Waitrose affect its operations and performance. (Industry Canada 2011). High taxes in Canada like the highest marginal effective rates experienced in 2005 are a factor that could reduce the investment returns. Large businesses like Waitrose would more like face high taxes. (OECD Economic 2006). Strategies Overall strategy Selected Markets Winnipeg is the capital and the largest city of Manitoba in which Waitrose should sett up its business. Its capital region has more than 60% of Manitobas population. By 2006 census there were 633,451 individuals in the town of which 51.7% were female while 43.3% were male. 24.3 % of the population were 19 years or younger while 27.4% were between 20 and 30 years. Having 409,500 people employed in the city and surrounding areas and the city having been ranked by KPMG in 20067 as one of the least expensive locations to do business in Canada makes it an appropriate location for Waitrose. (Winnipeg 2011). Time frame and sequence of Strategy Entry and Exit strategies Australia Canberra Strategic Alliances: A more recent phenomenon is the development of a range of strategic alliances which are different from traditional joint ventures in which two partners contribute a fixed amount of resources and the venture develops on its own. In an alliance, two entire firms pool their resources directly in a collaboration that goes beyond the limits of a joint venture. (Luostorinen Gabrielson 20002). Although a new entity may be formed, it is not a requirement it could be supported by some equity acquisition of one or both of the partners. In an alliance, each partner brings a particular skill or resource-usually they are complementary-and by joining forces, each expects to profit from the other`s experience which will be the key driver behide the strategy for Waitrose to establish its brand in the Manitoba market. The alliances will involve distribution access, technology transfers or production technology with each partner contributing a different element to the venture. Th e type of the alliance to be applied will be a distribution-based one. (Global market 2011). Considering that alliances with two equal partners are more difficult to manage than those with a dominant partner as well as recognizing that the needs and aspirations of partners may change over the life of an alliance and in divergent ways, the partners will be chosen to have Waitrose as the dominant partner. The challenge in making an alliance work lies in the creation of multiple layers of connections or webs that reach across the partner organizations. It is envisioned that the alliances will eventually result in the creation of new organizations out of the cooperating parts of the partners. In that sense, the alliances will be just an intermediate stage until a new company can be formed or until the Waitrose assumes control of the business. This will be applied in the Manitobas Winnipeg and Modern cities. (Global market 2011). Canada Manitoba Mergers and Acquisitions: The need to enter international markets more quickly than through building a base from scratch or entering some type of collaboration has made the acquisition route extremely attractive aided by the opening of many financial markets, making the acquisition of publicly traded companies much easier. The method will be used for the Australian market to complement the Joint venture strategy will also apply in the same market. A major advantage of acquisitions is that they will quickly position Waitrose in a new business as it will not have to take the time to establish its presence or develop for itself the resources it does not already possess. The strategy will also be a means of taking a potential competitor out of the market. However the strategy is expected to be an expensive way to enter a market and integrating an acquired company into the business will be a challenging tasks confronting top management which will require qualified staff, significant fundi ng all resources of which Waitrose has. (Global market 2011). Functional strategies In the pursuit of the international market ventures, functional strategies will be geared towards: Understanding the connections between the lifestyle and expenditure characteristics of customers, their propensity to purchase one product or brand over another and leverage this understanding to achieve competitive advantage. Improving direct marketing response by ensuring that promotion is targeting the right market segment at the right time, using the right media with the right message. Leveraging consumer data to make better strategic decisions about products, marketing and locations. Increase customer loyalty and retention with a scientific, data driven approach to analytical CRM. The strategies will also be in consistent with the five pillars of retailing which include: Connecting with customer emotions. Solving customers problems. Setting the fairest and not the lowest prices. Treating customers with respect. Saving customers time. (Pavithira 2011). Marketing mix strategies Product positioning The positioning of Waitrose will be of much significant in earning customer loyalty and trust. This will be done by ensuring that service in the outlets will be satisfactory and convenient to the customers. The stores and outlets will have modern technology to enhance service to customers as well as be able to manage demand properly and ensure that customers will always get what they expect. Customers will be provided with online shopping system and partnership cards where they will earn vouchers or redeemable points whenever they shop. (Henderson 2011). Improved compared to the market existing brands focusing on niche market will entail being innovative in the market place. The enhanced products will compete with the existing brands in the market, attract new segments as well as attracting new customers who are not a part of the current target market for the existing products. (Kalyanaram 2011). Pricing The pricing will be done in consideration of competitors prices and to reflect value to customers. As a new venture in the market, the business will have a goal of earning a market share thus will require relatively lower pricing and perceived greater value for premium goods. (Marketing mix 2011). Reduced prices will be aimed at acquiring customers where products will be sold at lower prices attracting customers who would have not bought the products. The reduced prices will also be targeted at winning customers from the competitors. (Kalyanaram 2011). The business will make available in the market premium brands like the royal label; Duchy Originals which Waitrose was licensed to manufacture distribute and sell. Such products will be well positioned to capture market especially for the tourist destinations like Canberra in Australia. (Finch 2010). Distribution The business will reach consumers through different sales channels, stores, websites catalogues. As a retailer, the key aspect of distribution will be where the businesses will be located. In Australia Canberra and its town centers, the business will be located in the shoppers zone in order to make it convenient for the target market to access what they need. In Manitoba Canada, the businesses will be located in the City centers of Winnipeg and Modern City where the urban population, majority of who are working will be the target market. (Exforsys 2009) On the other side the business will make consumers more comfortable with internet shopping since allowing customers to return on-line purchase to their offline stores in case of any problem.(Pavithira 2011). Promotion The business will employ a number of promotion strategies including advertisement, free samples promotion for private label brands and packaging. Advertising will have three objectives of; creating awareness, passing information on available goods and persuading them to buy. Advertising will be done using the traditional media like Television and radio where the mature aged segment can be easily reached and also using the social media where the younger consumers can be easily reached especially considering their significant number in Manitoba Canada. Free samples will be offered in organized contests which will be used to induce the customers to try the new products. (Promotional mix 2011). Use of the partnership chard will be well suited where customers will earn vouchers each time they will spend in the outlets. The card will also be used to provide the customers information to the business where it will be easier to understand them and provide them with well suited products. (Partnership 2011). Operational strategies tactical actions schedule In order to roll out the internalization program successfully, some tactical actions and operations will need to be carried out as identified on the table below with their time line throught the program. Action: Explanation: Duration: Strategic partners identification This will be done for all the markets in Canada and Australia to identify the partners for joint ventures and alliances and identify the businesses which can be acquired in mergers and acquisitions 01/01/2012- 30/06/2012 Authorization and incorporation For the three strategies of entry, the business will seek to get authorization from the relevant authorities during this duration. 01/07/2010- 30/10/2012 Staff recruitment and training The business will hire additional new staff and train all including the acquired businesses staff about the Waitrose products, service and systems in order to help them meet customer satisfaction. 01/11/2012- 31/12/2012 Radio spots Television adverts Radio and Television stations will be identified which will be used to pass information to the markets. The identified medias will be used for advertisement throught the program. 01/11/2012- 30/12/2012 Online system and other systems update. The necessary systems for the business will be installed including the partnership card system and online shopping system for the purpose of E-retailing. 01/12/2012- 30/12/2012 Point of purchase The suitable positioning of the goods will be identified in all outlets so that the outlets can have the most efficient arrangement for customers convenience. 01/01/2013- 10/01/2013 Business stores stock up and launch. The identified and acquired businesses will be stoked up with Waitrose products and service will be launched. 11/01/2013- 30/02/2013 Personal selling. Will be done so as to create relationships with customers and seek to identify what customers will be looking for in a product. 2013-2017. Public relations. Will be a key success factor in trying to enhance good customer relations and handling unfavorable events, rumors and negative perceptions about the products and the company. 01/01/2013- 31/12/2017. Contests and promotions Will be organized so as to interact with consumers and create awareness as well as getting their feedback. EVERY November and December of the year from 213 to 2017. Customer satisfaction survey. This will be done to identify whether the business meets the customers needs satisfactorily and what needs to be improved. Every June from 2013 to 2017. Organizational structure Organizational Structure In the international market expansion the business will adapt an organization structure which will identify the activities to be performed by specific employees and determining the line of authority and responsibility in the business. These tasks are divided into four major categories; strategic management, administrative management/operations, merchandise management, and store management. (Svjrao 2011) This will involve specifying all tasks that need to be performed and dividing their responsibilities among various individuals or channels. The tasks also need to be grouped and classified into a job with a title and description. The structure will also consider the market entry strategy used. (Retail Organization 2011). The strategic market and finance decisions will be under taken primarily by senior management: the CEO, COO, Vice presidents, and the board of directors representing shareholders considering that the acquisitions and joint ventures will bring in some share holders in the business who might not be necessarily employees of the business as has been with Waitrose operations in the UK. Administrative tasks will be performed by corporate staff employees who have specialized skills in human resources management, finance, accounting, real estate, distribution, and management information systems. People in these administrative functions will develop plans, procedures, and information to assist operating managers in implementing the retailers strategy. (Svjrao 2011) The primary operating or line managers will be involved in merchandise management and store management. These operating managers will implement the strategic plans with the assistance of administrative personnel. They will be required to make the day-to-day decisions that directly affect the retailers performance. (Svjrao 2011) The following is the outline of some of the divisions in the retail organization which is much the same as John Lewis organization structure. Owner/CEO or President Store Operations: Management, Cashier, Sales, Receiving, Loss Prevention Marketing: Visual Displays, Public Relations, Promotions Merchandising: Planning, Buying, Inventory Control Human Relations: Personnel, Training Finance: Accounting, Credit Technology: Information Technology (Retail Organization 2011). As the store grows and the retail business evolves, the dynamics of the organizations structure will change addressing the new tasks and responsibilities involved in the international operations. Therefore it will require redesigning the organizational chart to support the decision-making, collaboration and leadership capabilities. (Retail Organization 2011). Structures fit with strategy Strategic control Control system overview Control can be mainly classified as formal and informal with the formal controls being applied by the management in overseeing that tasks are carried out to the specified standards while informal control is work related and is implemented by those working on the tasks as the operations progress without necessarily seeking managerial authorization. Thus informal controls are the most frequent relating to how workers handle themselves and the service delivery. (Jawarski 1988). The measures will be appropriate for controlling and measuring achievement of the objectives like achieving the targeted market share, increasing sales and establishing an effective and efficient distribution network in the new markets. Elements of control Formal control will include process control on how the set standards are to be achieved. It will also include output control and marketing audits to establish progress levels. Process control The Company will focus process control on both management and organization control. Management control will ensure there are in place all resources and commitments necessary for the objectives achievement while organizational controls will focus on internal marketing ensuring cooperation between departments for smooth operation. (Jawarski 1988). ii. Output control Output control will seek to ensure that the quantifiable objectives are been achieved. This will be done by assessing information from the production and other operation departments and from independent surveys to help set achievable objectives and identify necessary measures to achieve them. (Jawarski 1988). Marketing audits Marketing audits will be performed before the execution of the marketing programs to identify the key factors. Two methods which will be used are; SWOT analysis and PESTEL model to analyze competition, marketing mix and macro environment factors. (Jawarski 1988). Informal control will include developing an organization culture for the business and creating a conducive working environment. Control fit with strategy and structure Conclusion