Strategic Analysis Uk Retail Industry

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Strategic Management

Analyse Home Retail industry using PESTEL, scenarios, 5 forces and strategic groups.

October 11 of 2012
London, UK
Introduction
Retail stores, are one of the biggest and largest businesses around the world. They produce thousands of hundreds in revenues and they are some of the biggest employers industries. WALL-MART, IKEA, TESCO, ARGOS, MACYS, WALLGREENS and OFICCE DEPOT are some of the well-known retail stores that supply us every day with different kind of goods and services. For a better understanding, one of the main definitions of retail is: “...store commonly a shop or stall for the retail sale of commodities, but also a place where wholesale supplies are kept, exhibited, or sold…” What this means is that these stores represent the last stop of a product in what is known as “supply chain”. Thanks to globalization and new technology such as internet, one of the biggest communication systems in the world, retailing has become easier. It has allowed the creation of new products as well as the expansion of small manufacturing companies. Indeed, globalization and technology have permitted the growth of different markets that supply these retail stores. Home retail has been another big and successful market in this huge industry. This market is the main topic for this writing and for analysing and understanding its environment, we will help us using several frames such as: PESTEL, Scenarios, Porter 5 forces and strategic groups. Finally, we can extract some conclusions depending on the results that these frames show us.

PESTEL
Political * Government decision of changing analogue TV to digital TV. | Economic * High bank rates. * EU recession. * Unemployment. * Inflation rates. * High fuel price. | Social * Easier shopping for costumers with disability. * Old people Internet access. * People migration. | Technological * On the way purchases. * Smartphones. | Environmental * Reduce of CO2 emissions. * Reduce amount of resources used on working operations. | Legal * High manpower rates. * High taxes. | Table 1: PESTEL framework categorise environmental influence into six main types: Political, Economic, social, technological, environmental and legal. * Political factors

The political environment is always going to affect variables in any industry, company or market. For the home retail industry, the decision of the government to change the old TV system in the country to the new digital TV system was an advantage. People needed to change their old TV and buy a new one, or update their TV systems for using it. This increased the production of TV´s as well as the sales of them through this channel.

* Economic factors

Even though the UK doesn´t not share the euro, that doesn´t mean the financial crisis in this sector does not affect the internal economy. Stock exchange rates and import and exports decrease significantly affecting most of the internal markets. As a consequence, unemployment increases affecting purchasing power of families. For controlling inflation, banks need to increase their rates so costumers reduce their purchases affecting directly the industry in a reduction in sales. On the other hand, a high fuel price increases freight traffic of products making them more expensive.

* Social factors

Internet is a power weapon for most industries. On one hand it makes it easer for people with disabilities for buying their products but on the other hand, it does not consider the elderly who may not know how to use this new technology.

The UK is one of the most international countries in the world and every year receives thousands of new people. For the home retail industry these are potential costumers who need to supply necessities with their new homes.

* Technological factors

One of the new developments that smartphones and the internet have brought are the “on the way...
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