SIM336: Strategic Management
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Description
This report needs 3,000 words, and the word of summary is not included in the word count.
When working on this report, please use as many the tables and figures as you can
Before you work on this report, please tell me the company you choose. You must not submit an assignment that analyses the mobile phone industry and or a mobile phone company.
Thanks
Structure of the report (your report must contains 1.PESTLE analysis, 2.Five force analysis,3. Value chain analysis ,6. SWOT analysis,8. Porter’s generic strategies, 9.conclusion and 10. Recommendation） and It is not necessary to add 4. resource based view, and 5. dynamic capabilities and 7. Key issues of the company， you can choose these options according to your interest.
The most important thing is to think about the relationship between every part in the structure. For instants, when you finish the environment analysis and SWOT analysis, you should think about the relationship for the following part of strategy analysis model ( Porter’s generic strategies or others). It is the main purpose for writing this report, in other words, what do you want to do in this report, the purpose of this report.
Introduction (100-200 words)
1.PESTLE analysis （It is necessity） (500-800 words)
2.Five force analysis（Porter’s (1985) Five Forces model）（It is necessity） (500-700 words)
1 and 2 are external environment analysis
- Value chain analysis （It is necessity） (500-700 words)
- resource based view （It is selectable but not necessity）
- dynamic capabilities （It is selectable but not necessity）
3, 4 and 5 are internal environment analysis
- SWOT analysis (100-300 words) —write this part using the bulletin points。
- Key issues of the company(current problems or potential problems in the following 3-5 years) (50-100 words)
- Porter’s generic strategies, Bowman’s Strategy Clock, GE matrix, BCG matrix, or thing like that after the SWOT analysis, as your own analysis actually accounts. (600-900 words)
9.conclusion (100-200 words)
10. Recommendation （300 words）
Appendix 1
Appendix 2
Solution
1.0 Introduction
Hotpoint offers an assortment of products in UK, ranging from refrigerators, dishwashers,
washing machines, as well as tumble dryers and cookers, both electric and gas (Hotpoint,
2013). Indesit Company of Italy currently owns the Hotpoint brand in the UK and rest of
European markets, after having acquired the ownership from original brand owner GEC of
America (Reuters, 2014). Hotpoint competes against other well-established brand
manufacturers in the UK, which include Whirlpool, Electrolux, Bosch and Siemens among
many others. This strategic report analysis focuses on Hotpoint’s performance in the freezers
manufacturing industry, with the main focus being on its chest freezers strategic business unit
in the UK. In particular, the report begins by analysing the external environment within
which the industry operates in the UK, using the PESTEL model. It further evaluates the
market competitiveness using Porter’s Five-Force model, and identifies aspects of its internal
environment using value chain analysis. Finally, it analyses the strength, weakness,
opportunities and threats faced by the firm, competitive strategy of the company, and offers
recommendations on how to improve its operations further.
2.0 UK External Business Environment: Home Refrigerators
2.1 PESTEL Analysis
The PESTEL analysis applies in evaluating macro-environmental aspects in a business
environment, and their direct influence to the business performance. It analyses politics,
economy, social environment, technological aspects, legal requirements, and ecological
pressures in the environment (Yüksel, 2012).
2.1.1 Political situation
The EU enforces a strict safety requirement on all electronic and electric goods, such as
freezers, sold throughout the regional market. More importantly, such goods must bear the
“Conformité Européene” (CE) marking from the manufacturer to ascertain adherence to the
set safety standards (Donaldson, 2011). Manufacturers spend significant resources,
techniques, and time to test these standards and ensure full compliance with the standards.
This consequently wanes their revenue margins, which further lowers profits.
2.1.2 Economic situation
The global economic crisis that began in 2008 increased the national unemployment rates in
the UK, with the period between 2009 and 2012 particularly being worst affected (WSTA, 2013). This resulted in diminished domestic purchasing power as more people lacked stable
income sources (Chowla, Quaglietti & Rachel, 2014). The unemployment rates grew steadily
from 5.5% in 2008 to 8.1% in 2012, before dropping slightly to 7.7% in 2013 as shown in the
graph below. This affected the home appliance market negatively as increased unemployment
in homesteads meant that many of the households only spent their resources on basic needs
such as food.
Fig1: The UK unemployment rates between 2008 and 2013 (Source: WSTA, 2013)
2.1.3 Social situation
The UK has witnessed a rigorous campaign dubbed “Love Food Hate Waste” promotion
(Maxey & Oliver, 2010), which has increased the need for many households to acquire
freezers and stock their foods. Additional findings by Maxey and Oliver further point out that
most UK buyers acquire frozen or chilled food, which would require being stored in the
freezer continuously. These social trends indicate that freezers are almost a necessity in all
households, thus manufacturers have a sure steady market for their commodities.
2.1.4 Technological situation
Refrigerator manufacturers are currently reintroducing old technology that relies on carbon
dioxide gas and hydrocarbons, as opposed to the latest technology running on synthetic
refrigerants (Vestergaard, 2013). Environmental pressures are driving the change in
technology, given that the synthetic variants like CFC and HFC face banning because of their global warming impacts. However, as Vestergaard (2013) further highlights, natural refrigerants such as ammonia are highly toxic and flammable, which creates a major
challenge to the manufacturers as they seek to find a better alternative.
2.1.5 Legislation situation
The UK has ratified strict regulations requiring manufacturers of household freezers as well
as refrigerators to indicate energy labelling on their appliance (Department for Environment
Food and Rural Affairs, 2008). Suppliers working with third party dealers are required to
ensure that they supply them with the energy consumption information to observe the
regulations fully. Indication of information that is inappropriate or misleading to this effect
shall result in legal action, which might influence negatively the brand name of the
manufacturer involved and trade sanctions.
2.1.6 Ecological situation
The UK enforces the waste electrical and electronic equipment regulations (WEEE) policy
requiring all manufacturers to fulfil (Dalrymple, et al., 2007). The manufacturers should use
materials that can easily be recycled, and less hazardous to the environment (Popescu, 2014).
The WEEE Directive implies that UK manufacturers face increasing direct costs because
meeting the disposal and recycling provisions is expensive for the firms.
2.2 Porter’s Five-Force Model Application
The Porter’s Five-Force model is a special tool used for evaluating market competitiveness in
a particular industry. It focuses on five competitive areas of buyer power, supplier power,
threat of new entry, as well the threat of substitution and degree of competitive rivalry in the
industry (Dobbs, 2014).
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