Primark Internal and External Analysis

Primark Internal and External comp blockade there be lot of internal and extraneous fixingss which whitethorn influence the performance of Primark. e genuinelywhere recent years, this topic has come up as the close asked dubiousness in Business and sparings slightons. Specifically, is it ethical to buy paltry priced goods produced in sorry countries? My personal answer is an emphatic yes. Its hard to see how our refusal to diffuse some food markets to costless c are go againsticularly in agriculture helps the know takege bases poor. bargonly the debate seems to hinge on the rights, nail d h grey-haireds and dignity of the producers. For this reason, sell merchants standardized Primark (who akin Tesco find oneself themselves on the front line of this debate because of their public profile) seek to uneasily protect their reputations as ethical employers. Recently Primark has fired trine Indian suppliers because they used tike childbed to finish goods.The s uppliers sub-contracted smaller squ ars, which were using child labour to carry out embroidery and sequin buy the farm. A prognosis special on Primark will be broadcast on BBC1 at 9pm on 23 June during their six-month investigation, the BBC uncoered the evidence which they passed to Primark.The information provided by the BBC en adaptedd us to detect that illegal sub-contracting had been taking place and to take action therefore the sub-contracting compound home employmenting and in some instances children were also assemble to be working at home. We take this lapse in standards very seriously indeed. Under no circumstances would Primark eer knowingly earmark much(prenominal) activities, whether directly through its suppliers or through third company sub-contractors.According to Primark, the garments affected accounted for 0.04% of the retailers orbwide sourcing. It currently has to a greater extent(prenominal) than than 170 stores and do a 200m profit in 2007 on t otal sales of more than 1.6bn.Primark An OverviewPrimark Stores Limited is an Irish clothing retailer. Its stores argon located in mixed regions handle United Kingdom, Ireland, and Spain. indoors this bea of responsibility, Primark stores outnumbered opposite clothing retailer business, with one hundred sixty one stores overall distributed in lead major regions one hundred twenty-five in the United Kingdom, 34 in Ireland and eight in Spain. The company positions itself as marketing in style(predicate) at cutthroat prices.The original clothing store was established by Arthur Ryan and his collaborator Micaela Mitchell in Dublin Ireland in 1969. After various achievement in clothing business, great profits and gross income light-emitting diode them to on the fence(p) stores in local and regional argonas. It acquired various premises in contrary business centers within its local and regional areas which eventually generate more profits and income.Primark is known for selling cl othes at the budget goal of the market. Its success is based on sourcing supply, counterfeiting clothes with mere(a) designs and fabrics and targets young, fashion-conscious single(a)s ages 35 below, offering them simple yet lavishly quality clothes and apparels.Hence, these successes brought real changes on Primarks retail business. The relevance of inter depicted object turns and consumers demands on tonestyle do Primark Store Limited reinvent its business scheme and worry structure.Primarks annihilatement and business structureAs a famous clothing retail store, recently, Primark embarks in distinguishable retail products not only restricted on manufacturing clothes but also other related products such as apparels and accessories available to all human sizes.Primark employs simple contendrial operation on its stores structure. Each store has its own manager responsible in overseeing the spatial relation and business operations. With managers inherent authority, they are stipulation the power and control to manage the store within his/her point of responsibility. Moreover, in smaller or bigger branches, assistant and deputy managers are delegate to control and manage the store. Within the store, there are divers(prenominal) subdivided departments in which a manager is assigned like senior department managers and junior department managers who are in maneuver for individual departments.Moreover, under management, there are supervisors in charge of staff on a sales floor, on different departments like stock room staff, customer service staff, customer service desk, cashiers who work on the tills, cash office staff and staff responsible to scene after fitting rooms. This management and business structure posits a simple way of managing human labour force, however, simple it may seem, yet ineluctably creates serious problems and issues if and when good assessment of the structure will be under esteemd.Analysis on the internal and external env ironment of Primark retail industryThe Primark clothing retail industry is a member of Ethical Trading enterprisingness, a collaborative forum bringing together businesses to work on labour rights issues in their supply chains. In fact, Primark developed ethical dodge in order to promote labour rights issues within its governing. Certain guidelines and code of head must be defined in relation to the ethical implications of work to human labour rights. Primark, initiated and defined its ethical trade strategy in 2006, concentering on assessment of employees working conditions, factories operations concerns and addressed incumbent improvement. Primarks annual report of activity should be passed to the Ethical Trading Initiative Board.Moreover, Primark stands to a principle that shared learning and collaboration is one of the more or less self-made ways to achieve sustained controlling progression with its suppliers factories. However, modality change within and outside Primar ks environment changes as it faces the challenges posed by the global business market. Using legal tender and debone analysis, let us examine the ins and outs environment of Primarks retail clothing industry.The PESTLE analysis allows us to examine the external factors affecting the environment of an organization while SWOT analysis aids us to assess organizations internal intensivenesss and weaknesses and further identify threats and opportunities external to its environment.Hence, these methods are helpful for us to understand and underline positive and negative factors affecting the external and internal environment of an organization like Primark.In assessing the political, hearty, and economic factors external to the environment of Primark, we must consider different issues. Primarks business operations are subject to government policies and regulations. The business unswerving should conform to the set of policies and regulations stipulated and enforced by the government and policy making body while conforming to the set of regulations and policies, the firm should assume affectionate responsibility as demanded by the global consciousness. Nowadays, business sectors no prolonged busied themselves to produce bonds of profits and income but deeply involved in social programs to promote social awareness and equality. Cultural and social behaviors of different consumers are authorized to consider when establishing or venturing business in the global landscape.Furthermore, economic, environment, laws, and engineering are inseparable entities in which influence the business operations. The economic stability of certain region cigarette contribute allot to the business condition of certain firm, like Primark. Technology on the other hand, brought a fearsome effect to the status and development of business operations and marketing programs. It generates in the buff trends in a rapid movement, which if organizations are unaware will baffle growth an d development.Hence, Primarks must constantly assess its strategy with consideration to its PESTLE as external factors that in one way or the other affects its internal and business operations.Assessing the capabilitys, weaknesses, opportunities, and threats of Primark, we go back to its established management or business structure. The need for re-tracking the management or business structure is important in analyzing its SWOT. As to my knowlight-emitting diodege upon my encounter with Primarks business operations, its strengths are gained in its simple, systematic and organized business structure, having assigned proper authorities to proper positions. Moreover, its cognizance for valuing high school quality of products and quality go with its customers garnered more strength to attract more multitude. On the other hand, Primarks weaknesses merchant ship be tack in its way of managing populate. Although, Primark is a member of Ethical tidy sum Initiative, debate shows gi ven different negative issues concerning its business operations and transactions like child labour, purports less value on ethical matters. Different issues were assail Primark concerning exploitation and abuse on labour force, other environmental concerns, poor working conditions, and disvaluing workers rights. Primark in different surveys was labelled as a fashion industry with oppressive regime. The primacy of autocratic and rigidity on standard structures gouge be a weakness as well as threats to the life of the company.Since, it goes globally, opportunities are in wide array not only on the part of venturing into regions with much income and profit to gain but also an hazard to share and provide quality products to fashion-conscious people with vogue to fashion lifestyle. remainderGiven this analysis we come to realize that each organization has its own external and internal problems to handle. The process in which we enable to identify and disassemble such problems is by using proper management method of analysis like SWOT and PESTLE. The importance of these methods is squared to the importance of the business itself.No.2 talk over the various business strategies that firms can implement to take Advantage of different markets or trading blocks?For this purpose porter has proposed his generic strategies which are the crush to implement, in my point of view, to take advantage of different markets. These strategies are given as below.Segmentation strategyspecialization strategyCost in the lead strategyMichael Porter has described a category scheme consisting of three general types of strategies that are commonly used by businesses to achieve and throw competitive advantage. These three generic strategies are defined along devil belongingss strategic stage setting and strategic strength. Strategic scope is a demand-side dimension (Porter was in the beginning an engineer, then an economist before he specialized in strategy) and looks at the size and composition of the market you intend to target. Strategic strength is a supply-side dimension and looks at the strength or core readiness of the firm. In particular he identified deuce copencies that he snarl were most important product specialization and product cost (efficiency).He originally ranked each of the three dimensions (level of differentiation, relative product cost, and scope of target market) as either low, medium, or high, and juxtaposed them in a three dimensional matrix. That is, the category scheme was displayed as a 3 by 3 by 3 cube. But most of the 27 combinations were not viable.Porters Generic StrategiesIn his 1980 classic Competitive Strategy Techniques for Analyzing Industries and Competitors, Porter simplifies the scheme by reducing it shovel in to the three best strategies. They are cost leadership, differentiation, and market segmentation (or focus). Market segmentation is narrow in scope while both cost leadership and differentiation are relative ly broad in market scope.Cost leadership strategyThis strategy involves the firm winning market share by openhearted to cost-conscious or price-sensitive customers. This is achieved by having the lowest prices in the target market segment, or at least the lowest price to value ratio (price compared to what customers receive). To watch over at offering the lowest price while still achieving advantageousness and a high return on investment, the firm must be able to operate at a impose cost than its rivals. thither are three main ways to achieve this.The premiere go up is achieving a high summation turnover. In service industries, this may fuddled for example a restaurant that turns tables slightly very quickly, or an air lane that turns around flights very fast. In manufacturing, it will involve doing of high volumes of output. These approaches mean fixed costs are spread over a larger number of units of the product or service, precedeing in a write down unit cost, i.e th e firm hopes to take advantage of economies of scale and experience snub make. For industrial firms, mass production becomes both a strategy and an end in itself. Higher levels of output both require and result in high market share, and create an gateway barrier to potential competitors, who may be unable to achieve the scale necessary to match the firms low costs and prices.The second dimension is achieving low direct and indirect run costs. This is achieved by offering high volumes of standardized products, offering basic essential products and limiting customization and personalization of service. Production costs are kept low by using fewer components, using standard components, and limiting the number of models produced to vouch larger production runs. Overheads are kept low by compensable low wages, locating premises in low rent areas, establishing a cost-conscious culture, etc. Maintaining this strategy requires a continuous search for cost reductions in all aspects of the business. This will include outsourcing, controlling production costs, development asset competency utilization, and minimizing other costs including distribution, RD and advertising. The associated distribution strategy is to obtain the most extensive distribution possible. Promotional strategy often involves trying to discharge a virtue out of low cost product features.A cost leadership strategy may rent the disadvantage of pooh-pooh customer loyalty, as price-sensitive customers will switch once a lower-priced alleviation is available. A reputation as a cost leader may also result in a reputation for low quality, which may make it difficult for a firm to rebrand itself or its products if it chooses to shift to a differentiation strategy in futureDifferentiation strategyDifferentiation is aimed at the broad market that involves the creation of a product or services that is sensed throughout its industry as fantastic. The company or business unit may then charge a ind emnity for its product. This specialty can be associated with design, brand image, engine room, features, dealers, paywork, or customers service. Differentiation is a viable strategy for earning above average returns in a precise business because the resulting brand loyalty lowers customers sensitivity to price. Increased costs can usually be passed on to the buyers. Buyers loyalty can also march as an entry barrier- newborn firms must develop their own distinctive competency to differentiate their products in some way in order to compete successfully. Examples of the successful use of a differentiation strategy are cuneus Honda, Asian Paints, HLL, Nike athletic shoes, Perstorp Byproducts, Apple Computer, and Mercedes-Benz automobiles.A differentiation strategy is withdraw where the target customer segment is not price-sensitive, the market is competitive or saturated, customers take up very specific needs which are possibly under-served, and the firm has unique resources and capabilities which enable it to satisfy these needs in ways that are difficult to copy. These could include patents or other Intellectual Property (IP), unique technical expertise (e.g. Apples design skills or Pixars animation prowess), talented effect (e.g. a sports teams star pseuds or a brokerage firms star traders), or innovative processes. Successful brand management also results in perceived singularity even when the physical product is the same as competitors. This way, Chiquita was able to brand bananas, Starbucks could brand coffee, and Nike could brand sneakers. Fashion brands rely heavily on this form of image differentiation.Some research does suggest that a differentiation strategy is more likely to generate higher(prenominal) profits than is a low cost strategy because differentiation creates a fail entry barrier. A low-cost strategy is more likely, however, to generate increases in market share. This however, may result from a limited understanding of profits. Di fferentiation strategies are indeed likely to result in higher gross and net profit margins due to the pricing power created by perceived uniqueness and high customer satisfaction. However, these higher prices will also likely result in lower sales volumes and lower asset turnovers. As such, the effects on Returns on Capital are likely to be neutral. As illustrated in the Dupont ratio therefore, a firm can achieve high profitability and Returns on Capital by being either a successful differentiator (with high margins and low volumes) or a successful cost leader (with low margins and high volumes). One strategy is not necessarily more profitable than the other.Variants on the Differentiation StrategyThe shareholder value model holds that the timing of the use of specialized knowledge can create a differentiation advantage as long as the knowledge remains unique. This model suggests that customers buy products or services from an organization to have access to its unique knowledge. T he advantage is static, rather than dynamic, because the purchase is a one-time event.The unlimited resources model utilizes a large base of resources that allows an organization to hold up competitors by practicing a differentiation strategy. An organization with greater resources can manage risk and sustain losses more easily than one with fewer resources. This deep-pocket strategy provides a short-term advantage only. If a firm inadequacys the capacity for continual innovation, it will not sustain its competitive position is over time.Criticisms of generic strategiesSeveral commentators have questioned the use of generic strategies claiming they lack specificity, lack flexibility, and are limiting.In particular, Miller (1992) questions the notion of being caught in the middle. He claims that there is a viable middle ground between strategies. umteen companies, for example, have entered a market as a niche player and gradually expanded. According to Baden-Fuller and Stopford (1 992) the most successful companies are the ones that can reason out what they call the dilemma of opposites.A set outular post-Porter model was presented by W. Chan Kim and Rene Mauborgne in their 1999 Harvard Business Review article Creating New Market Space. In this article they described a value innovation model in which companies must look outside their present paradigms to find new value propositions. Their approach fundamentally goes against Porters concept that a firm must focus either on cost leadership or on differentiation. They afterward went on to publish their ideas in the book Blue Ocean Strategy.Q.No.3 dismember how the firms and industries are benefitted by globalization and the role employ science has played?Globalization, since macrocosm warfare II, is largely the result of planning by politicians to break down borders hampering trade to increase prosperity and interdependence thereby decreasing the lay on the line of future war. Their work led to the Brett on Woods conference, an agreement by the worlds leading politicians to lay down the framework for supranational commerce and finance, and the founding of several(prenominal) international institutions intended to oversee the processes of globalization.These institutions include the International Bank for reconstructive memory and Development (the adult male Bank), and the International Monetary Fund. Globalization has been facilitated by advances in technology which have taked the costs of trade, and trade negotiation rounds, originally under the auspices of the General Agreement on Tariffs and Trade (GATT), which led to a series of agreements to remove restrictions on free trade.Since cosmea War II, barriers to international trade have been considerably lowered through international agreements GATT. Particular initiatives carried out as a result of GATT and the World Trade Organization (WTO), for which GATT is the foundation, have includedPromotion of free trade excreting of ta riffs creation of free trade zones with small or no tariffs decrease dit costs, especially resulting from development of containerization for ocean shipping.Reduction or extermination of capital controlsReduction, elimination, or harmonization of subsidies for local businessesCreation of subsidies for global corporationsharmonisation of intellectual billet laws across the majority of states, with more restrictionsSupranational recognition of intellectual property restrictions (e.g. patents granted by China would be recognize in the United States)Cultural globalization, driven by communication technology and the worldwide marketing of Western cultural industries, was understood at first as a process of homogenization, as the global domination of American culture at the expense of traditional diversity. However, a contrasting trend soon became evident in the emergence of movements protesting against globalization and giving new momentum to the defense of local uniqueness, individu ality, and identity, but largely without success.33The Uruguay Round (1986 to 1994)34 led to a treaty to create the WTO to mediate trade disputes and set up a uniform platform of trading. Other bilateral and multilateral trade agreements, including sections of Europes Maastricht Treaty and the North American Free Trade Agreement (NAFTA) have also been signed in pursuit of the goal of reducing tariffs and barriers to trade.World exports rose from 8.5% in 1970, to 16.2% of total gross world product in 2001Advantages of GlobalizationGlobalization means increasing the interdependence, connectivity and integration on a global level with respect to the social, cultural, political, technological, economic and ecological levels. People around the world are more connected to each other than ever before. Information and money flow quicker than ever. Products produced in one part of a country are available to the rest of the world. It is much easier for people to travel, communicate and do bus iness internationally. This whole phenomenon has been called globalization. Spurred on in the last(prenominal) by merchants, explorers, colonialists and internationalists, globalization has in more recent times been increasing rapidly due to improvements in communications, information and transport technology. It has also been promote by trade liberalization and financial market deregulation.Globalization offers a higher standard of living for people in rich countries and is the only vivid route out of poverty for the worlds poor. Pro-globalization groups e.g. World Trade Organization and the World Economic Forum believe that globalization helps to reduce poverty and increase living standards as well as encourage a better cultural understanding. Also, due to globalization, there can be international co-operation to forge environmental and social problems.Technology has now created the possibility and even the likelihood of a global culture. The Internet, fax machines and satellit es have swept away the old national cultural boundaries. Global entertainment companies now seem to establish the understandings and dreams of ordinary citizens, wherever they live. Globalization leads to better cultural understanding and tolerance. Because of improvements in travel, more and more people are traveling to different countries, thereby spreading their culture to other parts of the world.Advantages of GlobalizationWe have locomote from a world where the big eat the small to a world where the fast eat the slow, as observed by Klaus Schwab of the Davos World Economic Forum. All economic analysts must agree that the living standards of people have considerably improved through the market growth. With the development in technology and their introduction in the global markets, there is not only a steady increase in the demand for commodities but has also led to greater utilization. Investment sector is witnessing high infusions by more and more people connected to the worl ds trade happenings with the help of computers. As per statistics, everyday more than $1.5 trillion is now swapped in the worlds currency markets and around one-fifth of products and services are generated per year are bought and sold.Buyers of products and services in all nations personify one huge group who gain from world trade for reasons encompassing opportunity charge, comparative benefit, economical to purchase than to produce, trades guidelines, stable business and alterations in consumption and production. Compared to others, consumers are likely to profit less from globalization.Another factor which is often considered as a positive outcome of globalization is the lower inflation. This is because the market rivalry stops the businesses from increasing prices unless guaranteed by steady productivity. expert advancement and productivity expansion are the other benefits of globalization because since seventies growing international rivalry has triggered the industries to i mprovise increasingly.Goods and people are transported with more easiness and speedthe possibility of war between the developed countries decreasesfree trade between countries increasesglobal mass media connects all the people in the worldas the cultural barriers reduce, the global village dream becomes more realisticthere is a propagation of democratic idealsthe interdependence of the nation-states increasesas the liquidity of capital increases, developed countries can invest in underdeveloped onesthe flexibility of corporations to operate across borders increasesthe communication between the individuals and corporations in the world increasesenvironmental protection in developed countries increasesEffects of globalization enhancement in the information flow between geographically remote locationsThe global common market has a freedom of exchange of goods and capitalThere is a broad access to a range of goods for consumers and companiesworldwide production markets emergeFree circu lation of people of different nations leads to social benefitsGlobal environmental problems like cross-boundary pollution, over fishing on oceans, climate changes are figure out by discussionsMore transborder data flow using communication satellites, the Internet, wireless telephones etc.International criminal courts and international justice movements are launchedThe standards applied globally like patents, copyright laws and world trade agreements increaseCorporate, national and sub national borrowers have a better access to external financeWorldwide financial markets emergeMulticulturalism spreads as there is individual access to cultural diversity. This diversity decreases due to hybridization or socializationInternational travel and tourism increasesWorldwide sporting events like the exceeding Games and the FIFA World Cup are heldEnhancement in worldwide fads and pop cultureLocal consumer products are exported to other countriesImmigration between countries increasescross-c ultural contacts grow and cultural diffusion takes placeThere is an increase in the desire to use foreign ideas and products, adopt new practices and technologies and be a part of world cultureFree trade zones are organize having less or no tariffsDue to development of containerization for ocean shipping, the transportation costs are reducedSubsidies for local businesses decreaseCapital controls reduce or vanquishThere is supranational recognition of intellectual property restrictions i.e. patents authorized by one country are recognized in anotherAdvantages of globalization in the ontogenesis worldIt is claimed that globalization increases the economic prosperity and opportunity in the developing world. The civil liberties are intensify and there is a more efficient use of resources. All the countries involved in the free trade are at a profit. As a result, there are lower prices, more employment and a better standard of life in these developing nations. It is feared that some de veloping regions progress at the expense of other developed regions. However, such doubts are futile as globalization is a positive-sum chance in which the skills and technologies enable to increase the living standards throughout the world. Liberals look at globalization as an efficient tool to eliminate penury and allow the poor people a firm foothold in the global economy. In two decades from 1981 to 2001, the number of people surviving on $1 or less per day decreased from 1.5 billion to 1.1 billion. Simultaneously, the world population also increased. Thus, the ploughshare of such people decreased from 40% to 20% in such developing countries