SPD4251 – Business Policy and Strategy
Porter’s Five Forces Model: Parknshop
Value chain analysis
Resources- Based View of the Firm
Current strategies of PARKnSHOP
PARKnSHOP is basically one of the two largest supermarket chains in Hong Kong. This project report aims to find out “Why is a winning business”, review the business strategies, state the opportunities and problems through the internal and external analysis, and recommend future strategies for improvement. (PARKnSHOP, N.D.)
For strategic analysis part, we used PESTLE and Porter’s 5 forces for external analysis; and value chain and VRIO for internal analysis. Some diagrams are used for explanation, such as diagram of strategic group within industries is showing the price level and breath of product line different between PARKnSHOP and her competitors, Value Chain diagram and VRIO framework.
During PESTLE analysis, we discovered that the factors are mainly in political/legal, economic, social and technological sections and some extreme events could affect PARKnSHOP.
For Porter’s Five Forces analysis, the degree of each focus should be: 1. Threat of new entrants - low
2. Threat of substitutes products and service - high
3. Bargaining power of suppliers - low
4. Bargaining power of buyers - mid-low
5. Rivalry among existing firms – high
We identified the relationship between value chains below:
• Technology support to inbound logistics and operation (P – S) • Technology support to procurement and inbound logistics (P – S and S – S) • Human resource management support to entire value chain activities • Marketing and sales support to service (P – P)
The resources types of PARKnSHOP include tangible resources, intangible resources and organizational capabilities.
For tangible resources, financial, physical, technological and organizational resources are used to create value for customers.
For intangible resources, human, innovation/creativity and reputation are used to create value.
For organizational capabilities, innovative products, brand diversification and subsidiary in a large company are the competencies to achieve competitive advantage.
We discovered several major problems of PARKnSHOP. They are listed briefly as the following. More elaborations and solutions developed several strategies to solve them will be dealt with in our report content.
• The linkage between value-chain activities is not strong enough
• Just-in-time system cannot support a sudden increase in demand
• Long queues in the peak time
• Proportion of household spending in PARKnSHOP is likely to fall • High level of rivalry among the existing firm
PARKnSHOP is one of the two largest supermarket chains in Hong Kong. The other is Wellcome. PARKnSHOP was acquired by Hutchison Whampoa in 1973 when Hutchison Whampoa was chaired by Douglas Clague. Since she opened her first store in 1973, she has grown into a network of more than 200 stores in Hong Kong.
PARKnSHOP is a member of the A.S. Watson Group (ASW), a wholly owned subsidiary of Hutchison Whampoa Limited. She sells both Chinese merchandise and imported goods. She is established for satisfying various customers’ wants.
ParknShop strives to meet the needs of an increasingly affluent population whose expectation of quality and convenience are changing every year. It has been in the forefront of setting new benchmarks for quality, value and service in the Asian retail industry.
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