External Environment Analysis Argos Retailer Company

External Environment Analysis Argos Retailer Company Introduction Founded in 1973, the Argos is one of the largest catalogue merchants in the UK. The company has more than 700 stores and has famous brands such as the Elizabeth Duke, Chad Valley, Bush, and Alba. These brands have featured in products such as the Pro Action, Opticom, Aquarius, Visiq, and Mega Games among others.Advertising We will write a custom research paper sample on External Environment Analysis: Argos Retailer Company specifically for you for only $16.05 $11/page Learn More The company has an active price comparison website and it own television network called the Argos TV (Argos, 2014). Thus, this analytical treatise will provide an explicit analysis of the Argos Retailer’s external business environment. PESTLE Analysis Political In the UK, the government’s regulations, taxation strategies, directives, norms of leadership, and employment regulations are highly flexible for business. The UK is one of the most promising busines s places with remarkable expansion in corporate world. The company has taken advantage of the favourable UK economic condition to expand its market niche. The stable economy of the UK has been a pull factor for the company’s products since the purchasing power of many of its potential customers is high, especially for its food stores (Miller, Vandome, and McBrewster, 2011). Legal The legal system in the UK is very stable and functions on the pillars of serving the interest of everybody equally. However, when carrying out its business, the Argos Company has to keep in mind that it needs to comply with all the business laws of the UK and federal laws as well. Being a tax compliant store, the Argos Company has fulfilled its legal mandate as a business and has the freedom to do trade within the territories of the UK and Ireland (Kluger, 2011). Economic environment Despite the global economic meltdown in 2009, the economy of the UK has recovered from these effects and is currently one of the leading economic powerhouses in Europe. The recent economic boom in the UK has resulted into growth of many businesses due to increased demand for products and services.Advertising Looking for research paper on business economics? Let's see if we can help you! Get your first paper with 15% OFF Learn More Being one of the most strategically located businesses, the Argos Company positioned to benefit from the economies of scale and improved revenues since it has several brands within the UK and Ireland (Miller, Vandome, and McBrewster, 2011). Social environment Many social issues affect any business sector or industry. However, the Argos Company has aligned its services with the target market needs by actively participating in series of corporate social responsibility initiatives. Besides, the products and media services provided by the firm are aligned with the socio-cultural needs of customers in the UK and Ireland. Currently, the firm is investi ng in areas where socio-cultural factors promote its business such as the Argos TV (Kluger, 2011). Technological environment The Argos Company has successfully incorporated online activities within its operations. As one of the leading retailers in the UK, the company has launched the Argos credit card, online shopping portal, and live consumer support centre. Since most of its operations rely on the availability and usability of information technology, the business has applied available technology to develop and maintain the market leader status. All aspects of the firm such as sales, purchases, marketing, management, and operations have been aligned to appropriate and sustainable technology (Baltzan, 2014). Porter’s market forces Threat to market entry It is difficult for any aspiring retailer company to enter into the industry in the UK and Ireland markets and manage to break even easily.Advertising We will write a custom research paper sample on External Environme nt Analysis: Argos Retailer Company specifically for you for only $16.05 $11/page Learn More In the UK and Ireland, the Argos’ business magnitude together with that of its main competitors are well established and would easily enjoy economies of scale to the disadvantage of a new entrant (Wright, 2007). The company is well position to survive in the competitive retail market through gaining form economies of scale and strong customer base. Threat of substitutes Asda and Tesco pose the greatest threat to Argos’ existence and business performance. Tesco has been in the industry for longer period and is well established than the Argos Company. Asda and Tesco have the same products and sometimes offer bigger discounts to customers than Argos. Therefore, Asda and Tesco have the ability to offer an alternative perfect substitute to customers who may be unsatisfied with the prices offered by the Argos Company (Argos, 2014). Power of suppliers Suppliers in th e retail industry have more power owing to the existence of many retailer companies in the UK and Ireland. As a matter of fact, suppliers may instigate market demand and supply variances due to difference in price tags for different retailer products (Wright, 2007). However, the Argos Company has endeavoured to use its deep reservoirs as a strategy for balancing the supply forces in the fragile retail market. Power of buyers Reflectively, the amount of output in terms of turn over sales depends on the buyers’ purchasing power. The higher the purchasing power, the better the turnover in total sales realized over a definite period of time. The Argos’ performance in the UK and Ireland retail industries depends highly on the power of the shoppers.Advertising Looking for research paper on business economics? Let's see if we can help you! Get your first paper with 15% OFF Learn More In fact, the purchasing power determines profitability and probability of survival of a business in short and long term (Kluger, 2011). Fortunately, The Argos has developed a unique market niche from through series of product brands such as the Pro Action, Opticom, Aquarius, Visiq, and Mega Games (Argos, 2014). Rivalry There are several retail companies operating in the same industry with virtually all of them dealing in a variety of retail products and services. For instance, Tesco provides the biggest competition to Argos due to its big market share, affordable prices for its products and expanded network (Kennedy and Ehrenberg, 2007). With many customers looking for good value for their money, quality in service delivery has remained the main basis upon which customers are making their final decision to purchase (Witcher and Chau, 2010). In line with this, the Argos Company has heavily in invested in technological development in its online product platform. Porter’s diamon d analysis Factor conditions The company has strong financial arm besides well trained and highly motivated employees. Besides, the company has diverse portfolio (Miller, Vandome, and McBrewster, 2011). Demand conditions Since most of the Argos products are used on a daily basis by most household, the demand for these products and services have remained high in the UK and Ireland. This has worked to the advantage of the media brand (Baltzan, 2014). Related industries The company has partnered with companies such as the Vanquis Bank to sustain its credit card. Besides, some of the brand has been franchised as an expansion strategy (Kluger, 2011). Strategy, structure, and rivalry The innovative brands such as the Pro Action, Opticom, Aquarius, Visiq, and Mega Games have created an innovative, proactive, and sustainable business environment for the Argos Company (Witcher and Chau, 2010). Yip’s drivers Market drivers The company’s distribution pattern is dynamic and market oriented. The Argos Company is currently the largest retail business in the UK (Argos, 2014). Cost globalisation driver The company has an opportunity for internalisation since its credit card may be used in other parts of Europe. Thus, the company may consider this as an opportunity to expand its stores to other countries (Argos, 2014). Competitive drivers The company has the ability to survive competition from companies such as Tesco by offering discounts since it can still gain from the economies of scale (Witcher and Chau, 2010). Government drivers The UK and Ireland have favourable business policies, political environment, and good infrastructure. This offers favourable business expansion opportunities for the Argos Company (Kluger, 2011; Cheverton, 2004). Value net analysis The company is sensitive to changes in customer preference is demand for its products is sensitive to lifestyle changes. Most of the models of supply chain management at the Argos propose a linear format t o make judgment that marketing within an organization can be described in reference to future expectations. The current assets of the company and structured financial management system will ensure business sustainability (Johnson, Whittington, and Scholes, 2011). CAGE analysis The fair economic environment that has been created within the boundaries of the UK and Ireland has been that which encourages trade. This sustainable trade environment has offered an unlimited access to the market for the Argos stores. The company has earned a segment of the UK and Ireland population that has developed loyalty towards the store because of its promotional activities and friendliness to customers (Baltzan, 2014; Bodily and Allen, 2009). Conclusion The external analysis reveals that the Argos Company has a sustainable business strategy. However, the company needs to respond to the social needs in each brand store. Being a retail company, it needs to make use of the current technology so as remai n on top of the competition. Reference List Argos 2014, About Argos. Web. Baltzan, P 2014, Management information systems: Business driven MIS in Business Driven Information Systems. Web. Bodily, E., Allen, M 2009, â€Å"A dialogue process for choosing value-creating strategies†, Interfaces, vol. 29 no. 6, pp. 16-28. Cheverton, P 2004, Key Marketing skills: Strategies, tools, and techniques for marketing success, Kogan Page, London. Johnson, G., Whittington, R., Scholes, K 2011, Exploring strategy, 9th edn, Prentice Hall, Alabama, Al. Kennedy, R., Ehrenberg, A 2007, â€Å"Competing retailers generally have the same sorts of shoppers†, Journal of Marketing Communications, vol. 7 no. 2, pp. 19-26. Kluger, J 2011, â€Å"Beauty and the Bytes†, Special Commemorative Issue, vol. 16 no. 2, pp. 30-35. Miller, F., Vandome, A., McBrewster, J 2011, Pestle analysis, VDM Publishing, London, UK. Witcher, B., Chau, V 2010, Strategic Management: Principles and Practice, Ce ngage Learning, Alabama, Al. Wright, P 2007, â€Å"A refinement of Porter’s strategies,† Strategic Management Journal, vol. 8 no. 1, pp. 93-101.