Dixons Retail Groups Organisational Structure, Management Style and Marketing Strategy - Research Paper Example

Abstract This paper looks at the different elements of Dixons Retail Group, one of Europe’s leading specialist electric services and retailer company. The paper specifically discusses the Group’s organisational structure, management style and human resource management, marketing strategy and supply chain management. From the findings gathered during the discussion, the paper projects future success for the business, but not in all sectors. Table of Contents Abstract 1 1.0.Introduction 2 2.0.Organisational structure 2 2.1.Dixon Retail Group Structure 2 2.2.Organisational structure and corporate strategy 4 3.0.Management Approaches and Human Resource Management 5 3.1.Management 5 3.2.Human resource management 6 4.0.Marketing Strategy 7 5.0.Supply Chain Management 9 6.0.Summary and Conclusion 11 References 12 1.0. Introduction Dixons Retail plc. is one of Europe’s leading specialist electric retailer and services company that sells consumer electronics, photographic equipment, domestic appliances, personal computers, communication products and related services. As at the June 2011, the company was trading through over 1,200 stores and online in 28 European countries (Dixons Retail, 2011). In 2011, the group employed 38,000 people and reported a turnover UK £8,154.4 million. The company’s founding is traced back as a photographic studio started in London in 1937 by Charles Kalms. In the 1950s, Stanley Kalms convinced his father to begin selling simple cameras and accessories through mail order. The company got listed in the London Stock Exchange in 1962 and begun a string of strategic acquisitions that enabled its growth through the 70s, 80s, 90s and up to its current size. 2.0. Organisational structure 2.1. Dixon Retail Group Structure Dixons Retail Group is operates under four divisions split geographically. These divisions, arranged according to their contribution to the overall group in terms of revenue in descending order are UK & Ireland, Nordics, Other International and Pure play e-commerce respectively. The UK & Ireland and Nordics divisions hold the number one market position within their regions whereas; Other International is ranked one in Greece and second in Italy and Czech. Dixons’ e-commerce division is also the leading pure play specialist electric retailer in Europe (Dixons Retail, 2012b). The UK & Ireland division was the where the company began and has continued to have the leading share of the Group’s resources epitomised by its 642 stores, over 23,000 members of staff and the highest volume of sales. This division operates the most comprehensive end to end service offering in electrical retailing in the UK, giving the Group a unique services model versus the competition. In the spring of 2011 a new services brand known as KNOWHOW was launched to provide customers with clear easily identifiable value for money services. Other brands that are to be found in the UK & Ireland division are: Currys, PC World, DSGi Business, Dixons Travel, Partmaster and Black. The Nordics division has four brands: Lefdal brands that predominantly operate in Norway, Gigantti mainly in Finland, El Giganten which is run in Denmark and Sweden, and Elkjøp brand that is strong across all four countries (Dixons Retail, 2012b). With about a third the number of stores as the UK & Ireland division, Nordic division outperformed its sister division with an impressive £34.3 million in Earnings before interest and taxes in 2011. This division continues to hold much promise for the Group especially with regards to Elkjøp’s successful franchise operation that enables it to operate in smaller and less accessible catchments across the Nordics. Under its Other International division, Dixons’ runs under four major brands: Kotsovolos in Greece, UniEuro and PC City in Italy, and Electro World in the Czech Republic, Turkey and Slovakia. The Group divested its PC City brand in Spain. With the current economic squeeze being experienced in the Group’s key markets – with the exception of Turkey – this division returned losses in 2011. However, a positive change in this environment should result in better results given the market leadership position of the Group’s brands. The pure play e-commerce division comprises PIXmania and dixons.co.uk. This division leverages the Group’s multi-channel operations in the other main business divisions in order to advance the overall internet strategy. With Internet sales across the Group representing 16% of total sales (Dixons Retail, 2011), the e-commerce division provides Dixons with potential to develop other competencies that should give it additional competitive advantages necessary to compete in today’s and the futures multi-business platforms. 2.2. Organisational structure and corporate strategy Organizations can use their design and operating capability as a source of competitive advantage. Given that competitors essentially have access to the same information, the business that strategically organizes its structure / form to best suit the demands of its marketplace, customers, and business model will most probably outperform its competitors. Organization structure should reflect the organizations’ strategic goals and is manifested through constant trade-offs between effectiveness and efficiency, task and process, devolution and centralization, formality and informality. For this reason, organizational structure in most enterprises mirrors their growth patterns (Anon, 2012). Dixon’s growth strategy over the years has been achieved through related diversification and international growth. Related diversification has been characterised by its numerous acquisitions that moved it from being primarily a photography and camera and accessories retailer to its current broad electric products and services retailer. The geographic division of Dixons Retail Group enables it to achieve three things. Firstly, the geographic categorisation enables the Group to more clearly identify with and match the local market’s needs and demands. For example in the Nordic countries most electronic retailers operate as small business thus the Nordic division chose to franchise its brand to accommodate for this market preference. Secondly, the geographic divisional structure makes it easier for the Groups to implement strategic change across its new business acquisitions. According to Johnson (1992) organizational culture is the most difficult organizational attribute to change given that it operates at the “deeper level of basic assumptions and beliefs that are shared by members of an organization, operating unconsciously and defining in a basic “taken for granted” fashion an organization’s view of itself and its environment (p 29)”. On the one hand, concentric diversification ensures relatedness of businesses which in some ways ensures relatedness in organisational culture. On the other hand, organisational culture is a function of the society’s culture thus regionalisation also assures relatedness of societal cultures. Thirdly, dividing the group according to regions gives Dixons’ Group leeway to pursue different strategies in each of the different regions if necessary. 3.0. Management Approaches and Human Resource Management 3.1. Management It is difficult to envisage Dixons Retail’s CEO adopting any other leadership style other than participative given the Group’s structure. With three divisions located in different geographies, within different social systems the CEO would have to rely on the different heads who are more in touch with those cultures to assist him in coming up with the best corporate strategy for the group. For example the best marketing strategies employed in the Nordic countries may not work in the UK or vice versa. 3.2. Human resource management Dixons Retail’s HR motto reads “we reward talent, we value diversity”. From this motto we identify three keywords: reward, talent, valuing diversity. Reward informs us that the organisation not only recognises good deeds done by its employees but also has a way of demonstrating its appreciation. In its home page, we are informed that though employees enjoy numerous benefits, eligibility for some of these benefits is dependent on job level and length of service (Dixons Retail, 2012c). This shows that the organisation encourages employees to work with them longer and probably to rise so that they get entitled to more benefits. The second keyword talent bear the implication that Dixons Retail helps its employees to identify their talents so as to use them to advance its business. Training and development is a key element when it comes to talent identification, talent growth and talent exploitation. Some of the notable training and development initiatives include the Product Learning Centre, FIVES program for sales personnel and management development programs designed and run by Ashridge and Henley Management Colleges. The final keywords that we look at as pseudo-compound word “value diversity” can directly inform us of one of the company’s recruitment and job promotion strengths. Diversity can only be achieved by hiring people of diverse ethnic backgrounds. On the other hand, for the company to demonstrate that it values diversity it has to go beyond recruitment. This could imply that it also encourages people of diverse ethnic backgrounds to grow with the company through initiatives such as job promotions and issuing of rewards equitably. As a multinational organisation, the importance of valuing diversity to Dixons Retail cannot be gainsaid. 4.0. Marketing Strategy Successful marketing strategy enable organisations to identify what to goods or services to offer; how to price these offerings; how to make customers aware of its offers; and how it will deliver these offerings to its customers (CIM, 2009). Dixons Retail Group’s marketing strategy is envisioned in its renewal and transformation plan aptly named Customer Plan. I. Product Dixons Retail Group stocks a wide variety of computer and electrical products from the big brands to small but up-coming brands. To add to this products mix Dixons also sell their own label brands such as Currys and PC World essentials, Logik, Advent, Goji and Sandstrøm (Dixons Retail, 2011). In December 2010 the company opened a new store format known as “Black” to conduct trials of new products and services to early adopter customers as well as for testing new systems and technologies for employees. This concept should further enhance the company’s customer value proposition. II. Price Dixons leverages its leadership in market share and economies of scale to bargain with suppliers for lower prices. Also, the company has implemented Lean Six Sigma to re-engineer its business processes (Dixons Retail, 2011). This makes the business support a low cost operating model. The company also scours prices offered by competitors every week to ensure that it does indeed offer the best value to its customers. Dixons confidence on offering its customers unbeatable value is manifested through its “price match plus 10% of the difference” guarantee to customers (Dixons Retail, 2012a). Under this program is a customer finds a product cheaper at a non-Dixons store, the company will match that offer and reimburse the customer 10% of the difference between Dixons’ and the competitor’s price. III. Promotion A simplistic definition of promotion is a company’s way of communicating what it does and what it can offer to both customers as well as its internal staff. Like its competitors the company also engages in advertising campaigns such as Dixons’ Star Wars in 2011, CSR activities, and special offers such as the “price match plus 10% of the difference” program. The company’s new store concept “Black” (mentioned under product above) could also be viewed as a promotion tactic given that it attracts early adopters as well as educates staff on new technologies and systems. IV. Place Dixons Retail Group has been tackling the element of place on two fronts: the physical store and online store. Through the Renewal and Transformation plan the company has been redesigning its stores, making them easier navigate with better signage and including new features such as play tables to allow customers to interact with products before they buy. In the Nordics and Other International divisions, Dixons has introduced the 2-in-1 stores concept to give its customers greater access to specialist computing in combination with a diverse range of electrical offerings. This has seen the company increase its sales densities and rent to space mix. On the web front, the company has rolled e-merchant platforms across all its businesses even though it has a separate division dedicated to this. V. People According to CIM (2009) customers often cannot separate product or service from the employee providing it. At Dixons, employees undergo a program called FIVES that equips them with the right tools to help customers in selecting the most suitable products for their needs. The company also runs an online Product Learning Centre where employees can refresh or acquire new knowledge on new products and services being offered. In all the UK stores, Dixons rolled out a colleague scheduling tool to ensure staff availability meets customer footfall patterns (Dixons Retail, 2011). VI. Process Dixons’ newest brand KNOWHOW was launched specifically geared toward improving the Groups’ process of giving its service. KNOWHOW offers customers extensive technical service and support. In 2011, the company increases its ability to match colleague availability with customer calls through consolidation of its UK call centres to one place as well enabling many of its call centre staff to work from home. VII. Physical evidence The brand image of Dixons’ products and services, its new store layouts, the interactivity and user-ability of its e-commerce portals and the reputation of its customer service offer reassurance to customers. 5.0. Supply Chain Management According to Chiles and Dau (2005) before deciding which specific activities will be employed by a company to improve supply chain performance, one must first determine what type of supply chain is appropriate for a company's products. Dixons’ deals in functional products that have predictable demand and typically low-margins thus its supply chain design is focused on improving efficiency, reducing cost, and reducing inventory. This is in line with one of the Group’s strategic goal of achieving low cost operations. To increase visibility of its supply chain and lower its IT development costs the company set on a re-structuring program in 2005. At that time the stores, along with individual customer home deliveries, were supplied through the Group’s own distribution network comprising of a National Distribution Centre, a Large Goods Hub, eighteen Local Distribution Centres around the UK and Ireland, and Small Products Warehouse, all these centres were located separately. Chiles and Dau (2005) argued that reducing the number of internal facilities in the supply chain and supporting direct distribution helps improve statistical economies and economies of scale by facility. Furthermore, as market share increases, further opportunities for aggregation and consolidation occur which further improve supply chain performance. Dixons reviewed its supply chain and distribution network into a more centralised system in two locations, Newark and Bristol. At Newark the company set up one of Europe’s largest distribution centres to house Regional Distribution Centre (RDC) and Small Products Warehouse for its store network and a Customer Home Delivery Centre for the Home Delivery network. Newark is the primary branch, and it supplies North of the UK, and slow moving goods to the entire UK Electricals branch network, either directly or via transhipment and cross-docking through the Bristol RDC. At Bristol the company set up its secondary RDC which supplies goods for all South/South west UK branches. We believe that Dixons’ more centralised supply chain and distribution network would be highly beneficial for the growth of its internet-based retail service. This will increase sales and brand name presence as the company benefits from its multi-channel retail presence. Multi-channel retailing offers the Group’s a way to exploit its products and brand names through different avenues. 6.0. Summary and Conclusion From this discussion on Dixons Retail plc the following are two key findings. First of all, Dixons Retail has a very strong marketing strategy that permeates all the 7ps of product, price, place, promotion, people, process, and physical evidence. We expect the Group will continue to derive its competitive advantages from this area given that it has several initiatives that directly impact on strengthening its core competencies here such as: Employee FIVES training program, KNOWHOW service offering to customers, Customer Plan and so on. The second finding is that the Group derives huge strength from its organisational structure. Given the diversity in consumer behaviour and market characteristics across continental Europe, it is evident that a multi-strategy approach would be the best way for the group to exploit these different markets. This structure also makes it easy for the Group to know which regions to invest in or divest in. From these two key findings we expect Dixons Retail Group to continue its dominance in UK & Ireland and the Nordic divisions. Also, we expect its e-commerce division and revenue to grow in future if it manages to leverage the strength of the Group’s brands, market positioning as well as the revamped supply chain and distribution network. References Anon (2012). Management MCO101 – Unit 5 – Organisational Structure and Strategy. Limkokwing Cambodia MBA Programme. [Online]. Available from: http://limkokwingmba.wordpress.com/management-mco101-unit-5-organisational-structure-and-strategy/. [Accessed: 19 February 2012]. Chiles, C.R. & Dau, M.T. (2005). An Analysis of Current Supply Chain Best Practices in the Retail Industry with Case Studies of Wal-Mart and Amazon.com. Cambridge, MA: Massachusetts Institute of Technology. CIM (2009). Marketing and the 7Ps. Dixons Retail (2012a). Customer Plan. [Online]. 19 February 2012. Dixonsretail.com. Available from: http://www.dixonsretail.com/dixons/en/aboutus/customerplan. [Accessed: 19 February 2012]. Dixons Retail (2011). Dixons Retail PLC Annual Reports and Accounts 2010/11. Hertfordshire, UK. Dixons Retail (2012b). Structure | Dixons Retail. [Online]. 19 February 2012. Dixonsretail.com. Available from: http://www.dixonsretail.com/dixons/en/aboutus/structure. [Accessed: 19 February 2012]. Dixons Retail (2012c). Working with Us | Dixons Retail. [Online]. 19 February 2012. Dixonsretail.com. Available from: http://www.dixonsretail.com/dixons/en/joinus/workingwithus. [Accessed: 19 February 2012]. Johnson, G. (1992). Managing Strategic Change - Strategy, Culture and Action. Long Range Planning. 25 (1). p.pp. 28–36.  Read More