Beginners Guide to TikTok for Search - Rachel Pearson - We are Tilt __ Bright...
Primark - A Porter's Case Study
1. Text
A Porter's Five Forces Model and Porter's Value Chain
Case Study
by Mohd Fahusli bin Ali
GP02660
1
2. PRIMARK
Company Background
!
- Founded in June 1969. In the
Republic of Ireland it continues to
trade as Penneys.
- a subsidiary of international food,
ingredients and retail group
Associated British Foods (ABF).
- One of the biggest chain stores in
Europe.
- By Oct. 2014, there are 250 stores
across the Ireland, UK and Europe.
2
3. PRIMARK
Purpose & Objective !
- Making an expedition on the
market share;
- Achieving an improvement on
the sales;
3
Business Strategy !
- Sourcing supply cheaply;
- Purchasing from the factories
directly;
- Simple design, targeting the
customer under 35 years old
4. Porter’s Five Forces
is a simple but powerful tool for understanding where
power lies in a business situation;
!
useful, because it helps to understand both the
strength of the current competitive position, and the
strength of a position the company considering
moving into.
4
5. Supplier Power: Here you assess how easy it is for suppliers to drive up prices. This is driven by the
number of suppliers of each key input, the uniqueness of their product or service, their strength and control
over you, the cost of switching from one to another, and so on. The fewer the supplier choices you have,
and the more you need suppliers' help, the more powerful your suppliers are.
!
Buyer Power: Here you ask yourself how easy it is for buyers to drive prices down. Again, this is driven by
the number of buyers, the importance of each individual buyer to your business, the cost to them of
switching from your products and services to those of someone else, and so on. If you deal with few,
powerful buyers, then they are often able to dictate terms to you.
!
Competitive Rivalry: What is important here is the number and capability of your competitors. If you have
many competitors, and they offer equally attractive products and services, then you'll most likely have little
power in the situation, because suppliers and buyers will go elsewhere if they don't get a good deal from
you. On the other hand, if no-one else can do what you do, then you can often have tremendous strength.
!
Threat of Substitution: This is affected by the ability of your customers to find a different way of doing
what you do – for example, if you supply a unique software product that automates an important process,
people may substitute by doing the process manually or by outsourcing it. If substitution is easy and
substitution is viable, then this weakens your power.
!
Threat of New Entry: Power is also affected by the ability of people to enter your market. If it costs little in
time or money to enter your market and compete effectively, if there are few economies of scale in place, or
if you have little protection for your key technologies, then new competitors can quickly enter your market
and weaken your position. If you have strong and durable barriers to entry, then you can preserve a
favorable position and take fair advantage of it.
5
The Five Important Forces
7. Threat of
New Entry
Competitive
Rivalry
(Moderate)
Buyer
Power
Threat of
Substitution
Supplier
Power
The treat from the new entry in this segment is low since
the cost of setting up a company in the region are high.
The competition in the
market are high as the
customer have a very
wide choice of
alternative option
offered by the other
competitor such as
ASDA, M&S and H&M.
There are some risk (moderate) from existing low price
retailers but none that can be called a substitute.
No single big supplier
and less bargaining
power of suppliers.
Few low price retailers
with similar vast range
of products.
7
8. SWOT Analysis
Strengths
- Large amount of stores in
Europe
- Organised business structure
- Low price
- Ethical trading initiative
Opportunities
- Expending in UK and Europe
- Sharing high quality
products and services
overseas
Weaknesses
- Negative impact on labours
issues and working
conditions
- Lacks of marketing
strategies
Treats
- Strong competitors; like
Next, H&M, M&S, ASDA
- Risk on matching the needs
of the customer in fashion
and uniqueness
8
9. Porter’s Value Chain Model
A value chain is a set of activities that an organization carries out to create value for its customers. Porter
proposed a general-purpose value chain that companies can use to examine all of their activities, and see how
they're connected. The way in which value chain activities are performed determines costs and affects profits, so
this tool can help to understand the sources of value for the organization.
!
Rather than looking at departments or accounting cost types, Porter's Value Chain focuses on systems, and how
inputs are changed into the outputs purchased by consumers. Using this viewpoint, Porter described a chain of
activities common to all businesses, and he divided them into primary and support activities, as shown below.
Value Created and Captured – Cost of Creating that Value = Margin
Step 1 – Identify sub activities for each primary activity.
Step 2 – Identify sub activities for each support activity.
Step 3 – Identify links.
Step 4 – Look for opportunities to increase value.
9
11. Outbound Logistics
- Primark does not
introduce online retailing for
its customer, so all sales are
conducted in its 250 stores.
Transportation after sale are
done by the customer.
Marketing and Sales
- Primark’s target customer is
fashion-conscious and
wants value for money.
- No commercials, no TV, no
magazines. Place their
cheapest items at the front of
the store, attracting passing
trade and word of mouth.
Inbound Logistics
- Product are transport to all
Primark stores across the
Ireland, UK and Europe.
- Effective supply chain,
bringing together
manufacturing units in China,
India, Turkey, Bangladesh
and other countries.
PRIMARK
Porter's Value Chain
PRIMARY
ACTIVITIES
Operations
- 250 Primark stores across
the Ireland, UK and Europe
Service !
- Limited level of
customer services.!
- Low number of sales
assistants in their
store.
11
12. PRIMARK
Porter's Value Chain
Procurement (purchasing)
- Sourcing the highest quality
products from many countries.
- Carried out in strict accordance
with the Primark Code of
Conduct which incorporates
the United Nations Charter,
Chapter IX, article 55.
Human resource management
- Primark has practice of high level in
Human Resource.
- Produce a Code of Conduct where
all suppliers are expected to
follow.
- Since 2009, Primark in partnership
with SAVE, has provided education
and support to workers and their
communities in south India.
Technological development
- Primark does not introduce
online retailing. The
introduction of new item are
place in their website.
!
- Constantly reinforces its
business model across social
media sites and as its
marketing strategy.
Infrastructure
Large stores to encourage
volume shopping.!
SUPPORT
ACTIVITIES
12
13. PRIMARK
Porter's Value Chain
(Potential Improvement)
Web-based training
Upgrade CRM
Network upgrades
Data Customer database
Warehouse
Introduce e-Purchasing
Loyalty Program
1. Web-based training for new employees will make operations more efficient & improve service.
2. Upgrade Customer relationship management (CRM ) platform to be more flexible & able to report customer buying pattern.
3. Improve company network and introduce customer online purchasing (ePurchasing)
4. Improve customer online database; introduce data warehouse.
5. Introduce loyalty program to customer.
13