Laura Ashley as a UK Based Retailer in Wal-Mart - Essay Example

Management Question 2 International market entry requires careful planning and additional financial resources to penetrate a new country and new marled. The company selected for analysis is Laura Ashley, a UK based retailer. Geographical diversification is the response of many retailers to compensate for the loss in market share. Planning and analyzing market entry, the company pays a special attention to opportunities and risks. These findings suggest that operating economies often associated with size of business are changing in important ways. For example, computerization of manufacturing processes has become more available and less expensive with the advent of microcomputers (Adler, 2008). Thus, small manufacturing plants can offer the same manufacturing capability and flexibility previously available only to large plants. Just as many researchers in strategic management emphasize that the formulation of an effective corporate strategy can only lead to the realization of a successful corporate strategy if the implementation is successful, the managers agree that venture success is critically dependent on implementation: a poor venture concept can sometimes be rescued by good management but a good venture concept will not rescue poor management. Management teams that can work in a complementary fashion toward achieving the overall objective are more likely to succeed than those composed of individuals with different objectives and/or only a limited ability to work together. Management teams with a uniform orientation toward opportunity rather than resource control are more likely to be successful than management teams oriented toward control and/or management of acquired resources (Ashley Home Page 2008). IF a company has no financial resources to invest in new subsidy, it can use banking services to expend internationally. The bank can grand the company a loan or invest in its international expansion. .A prospective company approaches a bank with an idea for expanding a business. The lending institution evaluates it, and should the proposed idea be deemed viable, two practical questions are addressed: how to set up the business so that it will function well in a particular environment; how to make the business successful within a very short time span, of perhaps months, or even weeks (Ashley Home Page 2008). In UK, before agreeing to a loan, creditors would expect to see credit references; perhaps draw a report, or get a bank referral. Starting even the simplest manufacturing operation requires realistic evaluations of both the potential market and the kinds and amounts of support that are necessary. Market niches can usually be identified readily in both geographic and need terms, because villages or barrios have natural geographic boundaries, basic unmet needs, and lack of suppliers (Kotler and Keller 2005). As for support, the needs of the total operation must be evaluated clearly and realistically, which potential entrepreneurs often fail to do. Ventures with long planned periods until positive cash flow are found to be too risky investments to be made with a new management team. The company and banks associate a prior degree of understanding and a common set of objectives with regard to the business as the most important prior predictors of whether a management team will cooperate. Question 3 Laura Ashley is a global company with vertical integration and centralized management. Global retailers address consumer groups who, independent of their home country, have similar lifestyles and expectations. Technology has fostered increasingly interlinked customer cultures and lifestyles. Ashley now owns 540 stores in 28 countries. More than 50% of its sales are generated outside of the United Kingdom. The main barriers to trade were in Chili, south America. The main barriers were caused by inadequate legal framework and corruption, cultural differences and low income. The quality of administrators becomes vital here, as in the rest of the development process, especially since the Latin American countries are almost invariably forced to initiate, finance and control socio-economic change themselves (Thompson and Martin 2005). More basic elements in the development complex, though, are the role of agriculture, the influence of population growth, and the existence of regional inequalities. Many specialty chains move out because the domestic market has reached a point of saturation. Plans to go overseas also represent a retaliatory move on the part of retailers whose domestic market share is being eroded by foreign rivals in competing product lines (Ashley Home Page 2008.). Markets for a new venture's product are typically not homogeneous. The idea of a market structure pinpoints this fact. Market structure is the arrangement of groups or segments of buyers comprising a total market. Notably, each segment differs from the others in the way its buyers will respond to a marketing strategy. In fact, this structure exists, for the most part, because customers in different groups have at least somewhat different market requirements. Market requirements are the benefits that buyers expect from sellers as a condition of buying. Political instability and economic crisis heated the problems and increased barriers to trade. Progress in the peripheral regions requires substantial government intervention in the economic process, a large amount of goodwill on all sides and the injection of large amounts of capital if the disadvantages of distance, terrain, climate and resources are to be even partially overcome. National economic plans attempt to stimulate development away from the core areas, but the results are generally disappointing (Perreault et al 2003). These barriers and risk demanded new policies and strategies to be developed by Laura Ashley. The company decided to change its product line and adapt it to cultural demands of the population. The case of Laura Ashley shows that an important advantage of being a global company is the ability to adapt stores to cultural and economic conditions with their already proven formula, cheaply and in a short period of time (Ashley Home Page 2008.). The company took this as an expansion advantage. Under the Laura Ashley name, merchandise is offered to target consumers, whose expectations are clearly defined. Worldwide, merchandise is sold under the Laura Ashley brand and identical services are offered at all stores. Thus, during restructuring campaign in Chile, one hundred jobs were cut at management and support levels. A global operations executive position was developed, consisting of managers from all stores. This move was to help recreate a good management structure, which had been lost over the years (Perreault et al 2003). Question 4 Laura Ashley follows social responsibility policies and ethical principles applied to its marketing and management planning. The company stipulates: "Our activities cover a wide range of manufacturing, distribution and retailing operations and as such the company recognises and accepts that concern for the environment is an integral and fundamental part of its business strategy and operating methods" (Laura Ashley Home Page 2008). The main ethical and social problems faced by Laura Ashley were pollution and damaged caused by its production and packaging. In contrast to other social responsibility problems, it was one difficult to avoid and change (Owens and Wilson 1996). During 1990s, production facilities located in UK did not meet standards and pollution norms. In order to overcome these problems, Laura Ashley had to invest in new equipment and technologies. Thus, it was a hard decision for the company which experienced financial problems and income loss. In the not too distant past, when one spoke of community involvement, it usually meant the immediate or close vicinity (town, city, county, or state) of where the business was located. In today's modern world of high-speed travel and communication and many multiple business locations, it has in many instances expanded so that today it can encompass total regions, nations, or even the entire world. National and multinational businesses thus have a large complex of communities with which to concern themselves. When this situation arises, all communities where the businesses reside do not necessarily fare equally. In the not too distant past, when one spoke of community involvement, it usually meant the immediate or close vicinity (town, city, county, or state) of where the business was located. In today's modern world of high-speed travel and communication and many multiple business locations, it has in many instances expanded so that today it can encompass total regions, nations, or even the entire world. National and multinational businesses thus have a large complex of communities with which to concern themselves. When this situation arises, all communities where the businesses reside do not necessarily fare equally (Buyout for Ashley Subsidiary 1990). Another problem faced by Laura Ashley was packaging which could not be disposed or recycled. The company introduced new technology and reduced usage of plastic bags and other polyestrous materials in its packaging. It cost much to the company but tried to meet environmentally friendly policies and regulations. Convenience packaging moves much of the garbage from the household back to the dump, quite often into areas where the crops are grown. Most of the solid waste from households, stores, and offices is a volume problem. Other than for small quantities of pesticides, paints, and illegally dumped motor oil there is no special hazard from this material. It is a matter of space (don't dump it in my back yard) and economics (the cost of the landfill sight and the cost of getting the trash to the sight). This situation, however, does not hold for those that dump toxic waste such as PCBs, chemicals, and other illegal items into purely trash dumps (Change of Style for Laura Ashley 1991). One solution, or possibly it should be called a combination of solutions, is to recycle tin and aluminum cans, prime paper, cardboard, glass, newspapers, oil and scrap metal and then either incinerate or compost the remainder of the solid waste or use a combination of both methods. This combination accomplishes several things: it extends the life of the waste dump sight; it recycles scarce materials; it can make compost available to local residents; if the city is large enough it permits generation of heat and electric power for use by the city or excess electricity can be funneled into the local utility system as part of the cogeneration process; and, if done properly, it should pay for itself or even make a profit. Business and other groups could improve their image considerably by cooperating more with one another and making the public more aware of what accomplishments they have truly produced (Drejer 2002). Question 6 Laura Ashley has become a truly global company with the Internet and development of e-commerce strategies. Computerization of retail and wholesale trade is far more advanced than 10 years ago. The major economies derived from computerization of retail involves recording sales, controlling inventory, and automating purchasing/warehousing of merchandise. Thus, computers have reutilized processes in ways that previously required active, knowledgeable, and skillful managers at the store level. Achieving the advantages of this sophisticated computerization requires larger retail operations, that is, those with the resources to own and operate complex, integrated warehouse and distribution systems. Thus, small firms that formerly had the advantage of store-level owner managers who delivered personalized service are now at a disadvantage in a price/profit competitive world. Without the advantages of combining retail, wholesale, and distribution profit margins into a single entity, small retailers cannot compete effectively. In fact, the shift in employment from small to large retailers has been a major factor in the rise in large firm's share of jobs attributable to new establishment formations (Frame 2002). For Laura Ashley, web-based marketing has changed its target audience and created new opportunities for sales. The use of computers and computing technology, where information is processed and handled within a virtual world, will not change this requirement. The process of discovery still needs an individual to identify the opportunity, to have the idea, to develop the concept. What moving to the virtual world will do is vastly increase the productivity that can be achieved by an individual. In other words, the more experiences to which people are subjected, the more likely they are to be able to make a discovery. Equally, the more insightful they are, the more likely they are to generate a discovery from that experience. The virtual world can, as we shall see, certainly increase the level of experiences that a person can assimilate. However, it is beginning also to help to increase the level of insight that can be extracted from that experience (Hollensen, 2007). For Laura Ashley, web-based marketing strategies represent a very real and very accessible attempt to introduce the concept of a virtual world alongside the physical world. The Internet is beginning to touch all aspects of an organisation, however, it should be remembered that it was the R&D community that originally developed the concept, and it is the R&D community that, probably, continues to make best use of it today. Keeping the process in the virtual domain brings with it enormous advantages. Perhaps most fundamentally, designers and engineers can work together. Everyone can see the design at the same time, and everyone has an opportunity to comment on what will and what will not work. The savings from this one change alone are considerable. Car designs no longer have to cycle round long iterative loops that could take weeks or months to complete. Instead, engineers can react to designers' ideas as they are being placed on the drawing boards (Bearden et al 2003). The sales potential of this type of product is enormous: as a company, you save on the reams of market research and segmentation you would normally have to perform in order to get this degree of detail on individual preferences (which would in any case be based on imperfect information) by getting individuals themselves to type in the information you need to identify the products they are likely to buy. Consumers win too, by obtaining informed suggestions about the products they might like to purchase; they can also be alerted when new books or CDs are produced by their preferred artists or authors. For as long as people have traded, they have relied on networks of geographically dispersed agents (Burkun, 2005). Question 7 Globalization trends which influence retail industry today are open barriers to trade and favorable legislation, economic and political stability in Europe and America and new markets in Asia and Eastern Europe. The main problems for European retailers are that trading conditions are not always easy in the EC due to the spread of the outlets across a number of countries.(Laura Ashley 1989). However, with the Single European market, many marketing opportunities have emerged for Laura Ashley and other retailers. The 1990s witnessed a strong tendency among European retailers to look for growth and diversification in the United States by establishing new outlets from scratch and through acquisition. The trend became especially pronounced in the 1990s and beyond. European firms were driven by a series of "push" and "pull" factors as discussed by earlier writers. This development represents the third wave of internationalization of European retailing. Macrolevel factors impel many large European retailers to perceive and exploit new growth opportunities elsewhere, particularly in the United States, which offers a number of compatibilities in the realm of ethnicity, language, climate, religion, and level of industrial development. Most fast growing firms in Europe find themselves in that late 1990s and early 2000 in a state of stagnation, or corporate claustrophobia, because the domestic market has become saturated and the growth vector offer nothing attractive or challenging in the domestic market. This made most European companies interest in acquiring a potentially sound retail operation in the United States rather than going through time-consuming bureaucratic procedures require in Europe for starting a new enterprise. The process is expedited when stocks are available at attractive rates and the owners of U.S. companies are themselves interested in friendly takeovers (A New Pattern of Management 2001). In an already risky and competitive business environment, European retailers could not think of staking their resources in unfamiliar or unrelated fields. They feel more confident and secure by directing their investments to an industry that has not only given them the basic strength but has also remained relatively less vulnerable to technological outgrowth or recessionary downturn (Kotler and Armstrong 2005). The most recent acquisitions are Sap acquired Retek, Wal-Mart has acquired a brazil retail chain. Removal of border controls and custom delays tended to reduce distribution costs and encouraged crossborder hopping by European retailers. The new relaxed business environment also attracted American retail companies even though some of them had suffered heavy financial losses in the past from their European operaions. The elimination of political borders within Europe encouraged consumers to shop out of their own country. This phenomenon of cross-border shopping was yet another motivation for retailers to reach out. European retailers with unique retail concepts and positioning strategies were motivated in different ways. They saw an opportunity to maximize returns, spread risks, and retaliate against foreign competitors invading their home markets. The Single Europe offered them an opportunity of "concentrated internationalization" within Europe, saving them from the bother of widely dispersed geographical expansion that many took as their growth strategy in earlier years with mixed results. Such enterprises encountered a variety of barriers, such as discriminatory treatment meted out to retail companies in the United Kingdom in the matter of investment grants, depreciation, and other allowances, stiffer planning and zoning regulations in Belgium, the Netherlands, and West Germany, and so on. The main purpose of such regulations was to protect small retailers, to maintain a balance between commercial and noncommercial activities, and to protect residential areas from the hazards of business expansion. These restrictions hampered large retail corporations' plans to expand their department stores and hypermarkets. Curbs were imposed even on consumer credit extension in the Netherlands (Adler, 2008). Bibliography Adler, N. J. 2008, International Dimensions of Organizational Behavior, 5th edition. Thomson Press. Buyout for Ashley Subsidiary. 1990. Times-London (U.K.), Nov. 27, 28. Bearden, W. O., Ingram, Th. N., LaForge, L.W. 2004, Marketing, Prentice Hall. Burkun, S. 2005, The Art of Project Management. O'Reilly Media; 1 ed. Drejer, A. 2002, Strategic Management and Core Competencies: Theory and Application. Quorum Books. Change of Style for Laura Ashley. 1991. Times-London (U.K.), Sept. 27, 20. Frame, J.D. 2002, The New Project Management: Tools for an Age of Rapid Change, Complexity, and Other Business Realities. Jossey-Bass. Hollensen, S. 2007, Global Marketing: A Decision-Oriented Approach. Financial Times/ Prentice Hall; 4 edition. Kotler, Ph., Armstrong, G. 2005, Principles of Marketing. Prentice Hall; 11th edition. Kotler, Ph, Keller, K. 2005, Marketing Management. Prentice Hall. Laura Ashley. 1989. EIU Retail Business Quarterly Trade Reviews (Mar.): 46-50. Laura Ashley Home Page. 2008. Retrieved 31 October, 31 2008 from www.lauraashley.com/ A New Pattern of Management Takes Shape at Laura Ashley. 2001. Times-London ( U.K.), Oct. 4, 25. Owens, I. Wilson, T. 1996, Information and Business Performance: A Study of Information Systems and Services in High Performing Companies. Bowker-Saur. Perreault, W.D., Cannon, J.P., McCarthy, E.J. 2003, Marketing: Principles and Perspectives. McGraw-Hill/Irwin; 4 edition. Thompson, J. L., Martin, F. 2005, Strategic Management: Awareness, Analysis and Change. Thomson Learning. Read More