Argos Going Global Start 222

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Argos Going Global Start 222

  1. 1. ARGOS COMPETITIVE ACTION PLAN BLUE DIAMOND TEAMWORK BLUE DIAMOND JAMES FUN SAM AKIN PRESENTED BY MAX JAMES MANGLESH
  2. 2. BLUE DIAMOND
  3. 3. BLUE DIAMOND Mission Objectives External Analysis Internal Analysis Strategic Choice Strategy Implementation Competitive Advantage The Strategic Management Process Corporate Level Strategy Which Businesses to Enter? • Vertical Integration • Diversification • Strategic Alliances Mode of Entry?
  4. 4. BLUE DIAMOND
  5. 5. OUTLINE <ul><li>PROPOSAL </li></ul><ul><li>STRATEGIC CHOICE </li></ul><ul><li>MARKETING VISION </li></ul><ul><li>RESEARCH AND ANALYSIS </li></ul><ul><li>DEMOGRAPHICS </li></ul><ul><li>CULTURE AND CSR </li></ul><ul><li>FINACIAL ANALYSIS </li></ul><ul><li>STAKEHOLDER ANALYSIS </li></ul><ul><li>COST BENEFIT ANALYSIS </li></ul><ul><li>PLANNING </li></ul><ul><li>MODE OF ENTRY </li></ul><ul><li>HRM AND TRAINING </li></ul><ul><li>COST AND TIME SCALE </li></ul><ul><li>RECOMMENDATIONS </li></ul>BLUE DIAMOND
  6. 6. PROPOSAL <ul><li>Taking Argos to China </li></ul>BLUE DIAMOND
  7. 7. Porter’s Single Diamond Framework BLUE DIAMOND Gov’t Chance Rugman and Hodgetts, International Business 2003
  8. 8. Strategic Fit The Competitive Advantage Matrix BLUE DIAMOND Strong weak weak Firm-specific advantages strong Country-specific advantages Souces: Adapted from Rugman and Hodgetts, International Business 2003 1 2 3 4 ARGOS Cost Leadership Strategy – strong in CSAs but week in FSAs Differentiation (uniqueness) – Any Strategy Focus Strategy Focus Differentiation – Strong FSAs in marketing/customization
  9. 9. The Competitive Advantage Matrix <ul><li>Firm-specific advantage (FSAs) :– Strengths or benefits specific to a firm by using personnel and technology </li></ul><ul><li>Country-specific advantage (CSAs) :- Strengths or benefits specific to a country that result from its competitive environment, labor, gov’t policies, location and industry </li></ul>BLUE DIAMOND
  10. 10. BLUE DIAMOND STRATEGY Short term Medium term Long term <ul><li>Going Global. </li></ul><ul><li>Joint Venture in the global environment – China with a 50 – 50 partnership plan. </li></ul><ul><li>Delivering end-to-end solutions that give our customers convenient ways to order, pay for and obtain the goods we sell. </li></ul><ul><li>Aim to act responsibly and ethically towards all of the stakeholders, including the customers, colleagues, suppliers and business partners and the communities around the business. </li></ul><ul><li>Deliver sustainable returns for all its stakeholders. </li></ul><ul><li>Deliver growth in total shareholder return that at least matches the top quartile of comparable listed companies over the medium to long-term. </li></ul><ul><li>Delivering sales and profit growth throughout the group, supported by investment programmes that give returns in excess of the cost of capital. </li></ul><ul><li>Plan to grow dividends for shareholders broadly in line with earnings, subject to the investment needs of the business and an acceptable level of dividend cover. </li></ul><ul><li>Maintain an appropriate capital structure, financing its operations through a combination of retained profits, bank borrowings and property leases. </li></ul><ul><li>Sector-leading sales and profit growth. </li></ul><ul><li>Leveraging our combined strengths to support our retail brands. </li></ul><ul><li>Developing world-class, low cost sourcing capabilities that enable Argos to deliver even greater value to customers. </li></ul><ul><li>Consistent investment in businesses with competitive advantage will provide sustainable returns to stakeholders. </li></ul><ul><li>generate above normal profits (expected and operational over the long run) </li></ul><ul><li>100% ownership </li></ul>
  11. 11. Market Penetration Product Development Carlton ’ s Strategy Market Development Argos ’ Strategy Diversification Product or Services: Increasing technical innovation Present New Market: Increasing new buyers & customers Present New Market Product Selection Argos ’ Strategic Direction [Source: Adapted from Exhibit 7.1: Strategy Development Directions (pg 341) Johnson, G, Scholes, K & Whittington, R (2007) Exploring Corporate Strategy. FT Prentice Hall]
  12. 12. Marketing Vision <ul><li>Leading retailing group that delivers long-term, sector-leading sales and profit growth </li></ul><ul><li>Developing world-class, low cost sourcing capabilities that enable Argos to deliver even greater value to customers. </li></ul><ul><li>Delivering end-to-end solutions that give our customers convenient ways to order pay for and obtain the goods we sell. </li></ul>BLUE DIAMOND
  13. 13. RESEARCH - DEMOGRAPHICS BLUE DIAMOND 1,392,047   total £ 1,111,644,053       average £ 852.49       average $1,605.44           population (from page 4 of 4 chapter 4, 2005 figures)   in BJ $2,200     Phase 1       Shanghai 13,363,000   assumed for all cities     Bei Jing 11,616,000   $2,000.00     Tianjin 9,208,000   factor 1.25     Qingdao 7,202,000       Total Phase 1 41,389,000                   Phase 2 populations from wikipedia       Shanghai 13,363,000 1       Bei Jing 11,616,000 1       Tianjin 9,208,000 2       Qingdao 7,202,000 2       Harbin 9,563,000 3       Shijiazhuang 9,135,000 3       Shenyang 7,200,000 3       Nanjing 6,240,000 3     3000000   Kaifeng 4,800,000 ?     £ 3,700.00   Suozou 6,073,000 3       Hangzou 6,400,000 3     £ 11,100,000,000   Fuzhou 6,600,000 3       Guangzhou 7,607,200 skip       Chengdu 11,000,000 skip       Chongqing 4,196,000 skip     5.3E+11   total retail turnover of china Wuhan 9,700,000 ?       Total Phase 2 129,903,200     0.1%             £ 530,000,000   UK average disposable income per household £ 12,800.00       UK average household size   2.3       average disposable income per person   £ 5,565.22     5%         67% of above   £ 3,710.15      
  14. 14. BLUE DIAMOND
  15. 15. BLUE DIAMOND
  16. 16. BLUE DIAMOND
  17. 17. BLUE DIAMOND
  18. 18. BLUE DIAMOND
  19. 19. BLUE DIAMOND
  20. 20. BLUE DIAMOND
  21. 21. BLUE DIAMOND
  22. 22. BLUE DIAMOND
  23. 23. BLUE DIAMOND
  24. 24. BLUE DIAMOND
  25. 25. BLUE DIAMOND
  26. 26. ARGOS PERFORMANCE IN UK PLUS IRELAND Argos turnover £ 5,548,000,000 population served 65,000,000 UK plus Ireland turnover per head £ 85.35 profit £ 376,000,000 profit 6.8% average disposable income per person £ 5,560 share average person spned of their disposable income 1.5% number of shops 556 number of shop per head of population 116,906 turnover per shop £ 9,978,417
  27. 27. Argos in China Phase 1 980,000 people £ 3,700.00 disposable income each £ 3,626,000,000 of available disposable income 1.5% percentage of disposable income the average UK citizen spends in argos
  28. 28. Argos in China Phase 2 3,000,000 people £ 3,700.00 disposable income each £ 11,100,000,000 of available disposable income 1.5% percentage of disposable income the average UK citizen spends in argos Phase 2 (without phase 1) 2,020,000 people £ 3,700.00 disposable income each £ 7,474,000,000 of available disposable income 1.5% percentage of disposable income the average UK citizen spends in argos 6.8% incorporate rising profit into years   start with 0%
  29. 30. Argos Geert-Hofstede Dimensions
  30. 31. BLUE DIAMOND CULTURE
  31. 32. CULTURE ANALYSIS <ul><ul><li>Hofstede (See Below) </li></ul></ul><ul><ul><li>Country </li></ul></ul><ul><ul><ul><li>Many different regions with own culture, beliefs and values </li></ul></ul></ul><ul><ul><ul><li>Like a continent similar to the EU </li></ul></ul></ul><ul><ul><li>Language </li></ul></ul><ul><ul><ul><li>Speaking some Chinese builds trust </li></ul></ul></ul><ul><ul><ul><li>China _ Mandarine </li></ul></ul></ul><ul><ul><ul><li>Hong Kong _ Cantonese </li></ul></ul></ul><ul><ul><li>Values </li></ul></ul><ul><ul><ul><li>Do not like to loose face </li></ul></ul></ul><ul><ul><ul><li>Do not like western food </li></ul></ul></ul><ul><ul><ul><li>Family orientated </li></ul></ul></ul><ul><ul><li>Norms </li></ul></ul><ul><ul><ul><li>Median age 2005 = 34 </li></ul></ul></ul><ul><ul><ul><li>Larger number of single males – how to cater </li></ul></ul></ul><ul><ul><ul><li>Owning you own home </li></ul></ul></ul><ul><ul><ul><li>No culture of DIY </li></ul></ul></ul><ul><ul><ul><li>Marriage rates increasing </li></ul></ul></ul><ul><ul><ul><li>Religion not discriminated against </li></ul></ul></ul><ul><ul><ul><ul><li>Chinese traditional religion 232.6m </li></ul></ul></ul></ul><ul><ul><ul><ul><li>Buddhism 111m </li></ul></ul></ul></ul><ul><ul><li>Beliefs </li></ul></ul><ul><ul><ul><li>Cash deals plastic transactions are not trusted, bank fraud </li></ul></ul></ul><ul><ul><ul><li>Savings not credit culture – high returns for savings. </li></ul></ul></ul>BLUE DIAMOND
  32. 33. Corporate social Responsibility <ul><li>Interests and impact of policies on </li></ul><ul><li>Society </li></ul><ul><li>Customers , </li></ul><ul><li>Employees , </li></ul><ul><li>Communities </li></ul><ul><li>And other stakeholders, </li></ul><ul><li>Social responsibility is subjective and ambiguous </li></ul><ul><li>because it requires human judgement </li></ul>BLUE DIAMOND
  33. 34. Business Case For CSR <ul><ul><li>Human resources : recruitment retention, pay and fundraising </li></ul></ul><ul><ul><li>Risk management : reputation that takes years to build </li></ul></ul><ul><ul><li>Brand differentiation : unique selling proposition </li></ul></ul><ul><ul><li>License to operate : avoidance of regulation and interference i.e. Health Safety </li></ul></ul>BLUE DIAMOND
  34. 35. BLUE DIAMOND 4CR FRAMEWORK
  35. 36. BLUE DIAMOND STAKEHOLDER MANAGEMENT AND SOCIAL CAPITAL REPUTATION SHAREHOLDER VALUE SOCIAL INNOVATION, PERFOMANCE STABILITY ECO-EFFICIENCY – FAIR GLOBALIZATION RISK MANAGEMENT REGULATION AND COMPETITIVE POLICIES SOCIAL ACCOUNTABILITY ETHICS INVESTOR DEMAND SRI PHILANTHROPY CORPORATE CITIZENSHIP VOLUNTARY REGULATION COMPANY LAW AND COMPULSORY REGULATION SUSTAINABLE DEVELOPMENT THE 4CR CORPORATE RESPONSIBILITIES MAP
  36. 37. CORPORATE RESPONSIBILITY DRIVING FORCES BLUE DIAMOND Investor Demand Government Pressure Consumer Demand Public Pressure
  37. 38. SAFE BLUE DIAMOND Sustainability: <ul><li>Strong retail brands with large customer bases </li></ul><ul><li>Purchasing, sourcing and supply chain scale </li></ul><ul><li>Choice and value-led product offering </li></ul><ul><li>Shared infrastructure and logistics expertise </li></ul><ul><li>Remarkable stability in inflation and growth rate. sustained economic development over the last 25 years </li></ul>Acceptability: <ul><li>Acceptable to all the stakeholders Ethical principles i.e. Equality, </li></ul><ul><li>Corporate Social Responsibility i.e. Investment in environmental community projects </li></ul><ul><li>Employment Opportunities </li></ul><ul><li>Raising standards of living </li></ul>Feasibility: <ul><li>Population size i.e. target population </li></ul><ul><li>Disposable Income </li></ul><ul><li>Available Infrastructure i.e. building, road network, other resources. </li></ul><ul><li>Governmental policies – e.g. taxation etc. </li></ul><ul><li>Rules and regulations – employment & company laws etc. </li></ul><ul><li>Customer profile </li></ul>Expectations: <ul><li>Business success - Profit & Growth – market potential – 6.8% </li></ul><ul><li>Profit return on investment – shareholders </li></ul><ul><li>employment for local communities </li></ul><ul><li>Government – economic growth </li></ul><ul><li>Good working conditions and employee </li></ul><ul><li>High quality products and services for customers </li></ul>
  38. 39. BLUE DIAMOND Argos - The Balanced Scorecard Customer Perspective Goals Measures     Value Value for money products   Increased customer segments     Choice Wide range of new and   proprietary products     Quality Products defects and return     Responsive supply On-time delivery    
  39. 40. BLUE DIAMOND Argos - The Balanced Scorecard Innovation and Learning Perspective Goals Measures     Technology capability Operating system to support   performance management,   organisational learning and   knowledge management     HRM Human capital readiness   to support business growth   and strategy    
  40. 41. BLUE DIAMOND Argos - The Balanced Scorecard Internal Business Perspective Goals Measures     Technology Capability Operations management for   Marketing, logistic and Just in   time management and sales     Total Quality Management Customer satisfaction   Meeting response time targets     Operating efficiency Products availability,   forecasts and selection   Profitable margins    
  41. 42. BLUE DIAMOND Argos - The Balanced Scorecard Financial Perspective Goals Measures     Healthy Cash Flow     Suceed Yearly sales growth and   operating income     Prosper Year on year increased market   share and return on equity    
  42. 43. Stakeholders <ul><li>Argos Group </li></ul><ul><li>Chinese consumers </li></ul><ul><li>Chinese Government </li></ul><ul><li>Suppilers </li></ul><ul><li>Local Authority – Planning </li></ul><ul><li>Local Community/Groups – Social, Cultural & Environmental considerations </li></ul>BLUE DIAMOND
  43. 44. BLUE DIAMOND STAKEHOLDER ANALYSIS
  44. 45. INTERNATIONAL HRM <ul><ul><li>Local labour laws </li></ul></ul><ul><ul><li>Unions </li></ul></ul><ul><ul><li>Employee rights and insurance </li></ul></ul><ul><ul><li>Multicultural training </li></ul></ul>BLUE DIAMOND
  45. 46. BLUE DIAMOND HRM Functions Socio-economic Institutional Cultural 1) Recruitment and selection <ul><li>External & Internal Labour market </li></ul><ul><li>Availability of skilled workforce & competent managers </li></ul><ul><li>Pressure to recruit locals </li></ul><ul><li>Women’s position in society – managerial position </li></ul>2) Recruitment agency Availability & quality of services Legal regulations – go through China government agencies Unethical practice – to “steal” employees from other companies 3) HR Development Employee training b) Management Development Access to skilled people – numeric & literacy skills Access to managerial competence Local Education system – educational standards Supply of relevant management programme   Tax incentives or financial support. <ul><li>Values and status attached to training & development. </li></ul><ul><li>Attitudes to knowledge & learning </li></ul><ul><li>Style of learning – </li></ul><ul><li>Structured vs. open ended learning situations and activities </li></ul>
  46. 47. BLUE DIAMOND HRM Functions Socio-economic Institutional Cultural 4) Compensation & Incentives Individual Performance Appraisal Wages Performance related pay – sensitive to income inequalities Local designs and levels of wages system Strengths and attitudes of unions       Governing rules minimum and maximum wage levels in China <ul><li>Women’s position in society – managerial position </li></ul>5) Work System Organisation of labour & work systems Labour market - local mix of skills on the use of teamwork – competencies & functional flexibility Safety in workplace and regulations –working hours National norms - Performing tasks in groups High degree of collectivism in China – easier to implement teamwork 6) Labour Relations Social status/class - Employee influence & participation No labour regulations – employees as board member Power distance in society - high in China - more difficult to introduce - union influence
  47. 48. Implementation Argos - International Assignments BLUE DIAMOND <ul><li>Aims: </li></ul><ul><li>to improve co-ordination of international business activities for managerial, commercial, technical and HRM functions. </li></ul><ul><li>Project Team consist of </li></ul><ul><li>Project Leader </li></ul><ul><li>Human Resource - HR Training and Development Programmes </li></ul><ul><li>Finance - control and audit business accounts and finance </li></ul><ul><li>Marketing - supply chain management, marketing strategy and customer relationship management </li></ul><ul><li>ICT – technical and communication support and training </li></ul><ul><li>Competent managers </li></ul><ul><li>Managers who involved with Argos Project in Indial – expertise and management support. </li></ul>
  48. 49. BLUE DIAMOND <ul><li>Short term International Assignments (1-2 years) to minimise </li></ul><ul><li>Fear of losing influence at corporate centre </li></ul><ul><li>Managers find reintegration difficult on return </li></ul><ul><li>Immigration/employment laws/ HC restrictions(adapted from Barham </li></ul><ul><li>and Devine 1990) </li></ul><ul><li>BARHAM, K & HEIMER, C (1990) ABB – The dancing global giant: </li></ul><ul><li>creating the globally connected corporation in (Ed) GOODERHAM, </li></ul><ul><li>PN & NORDHAUNG, O (2003) International management cross </li></ul><ul><li>boundary challenges. Blackwell Publishing, England. </li></ul>
  49. 50. BLUE DIAMOND <ul><li>Comprehensive package includes </li></ul><ul><li>social cultural and logistic support, </li></ul><ul><li>cross cultural, diversity and language trainings, </li></ul><ul><li>attractive compensation and benefit package </li></ul><ul><li>preparing and helping employee and their family to make healthy adjustment </li></ul><ul><li>success on cross cultural adaptation in new environment. </li></ul><ul><li>(adapted from Black & Gregersen, 1999) </li></ul><ul><li>BLACK, J S & GREGERSEN, H B (1999) </li></ul><ul><li>The right way to manage expats. Harvard Business Review, </li></ul><ul><li>77(2): 52-60. </li></ul>
  50. 51. BLUE DIAMOND <ul><li>BLACK, J S & GREGERSEN, H B (1999) The right </li></ul><ul><li>way to manage expats. Harvard Business Review, 77(2): 52-60. </li></ul><ul><li>Comprehensive package includes </li></ul><ul><li>cross cultural, diversity and language trainings, </li></ul><ul><li>social cultural and logistic support, </li></ul><ul><li>attractive compensation and benefit package </li></ul><ul><li>preparing and helping employee and their family to make </li></ul><ul><li>healthy adjustment </li></ul><ul><li>success on cross cultural adaptation in new environment. </li></ul><ul><li>(adapted from Black & Gregersen, 1999) </li></ul><ul><li>BLACK, J S & GREGERSEN, H B (1999) The right way to </li></ul><ul><li>manage expats. Harvard Business Review, 77(2): 52-60. </li></ul>
  51. 52. COST AND TIME SCALE <ul><li>Cost of Joint Venture – est. £30 million </li></ul><ul><li>Time scale: 2 to 6 months </li></ul><ul><li>Fully operational – 6 months </li></ul>BLUE DIAMOND
  52. 53. RECOMMENDATION BLUE DIAMOND
  53. 54. References <ul><li>BEARDSHAW, J. et al. (2001) Economics: A student’s guide. 5 th ed. Financial Times Prentice Hall. </li></ul><ul><li>JOHNSON, G. et al. (2005) Exploring corporate strategy. 7 th ed. Financial Times Prentice Hall </li></ul><ul><li>NEEDLE, D. (2004) Business in context, 4 th ed. Thompson. </li></ul><ul><li>PORTER, M.E. (1980) Competitive strategy: techniques for analysing industries and competitors In : JOHNSON, G., et al. (2005) Exploring corporate strategy . 7 th ed. Financial Times Prentice Hall. </li></ul><ul><li>WORTHING, I. et al. (2003) The business environment. 4 th ed. Financial Times Prentice Hall. </li></ul>BLUE DIAMOND
  54. 55. THANK YOU FOR LISTENING BLUE DIAMOND TEAMWORK BLUE DIAMOND JAMES FUN SAM AKIN TO

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