1. Module name: Sustainable Strategy - from Planning to Implementation
Title of the assignment: Strategic Analysis of Kingfisher PLC UK
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2. Executive Summary
Every company who engaged in business needs a strategy which drives the company to
success. Irrespective of the resource availability, if the company adopts a wrong strategy such
company will not be able to maximise its share holder‟s value which is the ultimate goal of a
company. Therefore it is clear that strategy of a company is the power that drives the company.
In this assignment strategy of kingfisher was analysed carefully in terms of its positioning and
the direction using model such as PESTLE, SWOT analysis and five forces .The direction of the
strategy was analysed using BCG matrix. Further suitability, acceptability, feasibility and
sustainability of the strategy were described. Finally recommendations were given in the light of
potential of the company.
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4. 1. Introduction
Kingfisher PLC is a multinational company engaged in home improvement business. The
company‟s headquarter is located in London. Currently the company is speeded its stores in
more than 950 locations around 8 countries in Europe and Asia.
In 1982 the company was founded after a buyout of British Woolworth supermarket chain by
Paternoster stores Ltd. After the incorporation the company expanded its business by series of
mergers and acquisitions such as B&Q, Comet, Castorama and Superdrug.
Listed in London Stock exchange and FTSE 100 the company has recorded revenue of £ 10.4
billion in 2001 while the operating profit for the same year was £704 million. The company is
employed around 80,000 employees around its super market chain.
The company planned to acquire Asda in 1999 and failed due to the competition form Wal-mart,
the largest supermarket chain in the world. The sales from outside UK provide more than 50%
contribution for the total revenue of the company. Due to the high involvement of corporate
social responsibility activities, The Company was listed in two corporate social responsibility
indexes, Dow Jones Sustainability index and FTSE4Good. (http://www.kingfisher.com)
The company‟s major brands are B&Q, Brico Depot, Castorama and Screwfix.
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5. 2. Strategic position
Jonson and Scholes describe that the strategic position of an organisation is refers to
identification and analysing of the impact of the external environment, resources available in the
organisations internal environment and different stake holder competencies. (Jonson & Scholes,
2005)
External Environment
Following techniques and models can be used to analyse Kingfisher‟s external environment.
PESTEL Analysis
It is evidenced that there are several external factors which affect to kingfisher‟s strategic
position. (Appendix 1)
It can be noted that the political situation of those countries where kingfisher has its
supermarkets affects its strategic position. More that 50% of the revenue is generated out of UK
market and thus it is very important that the political situation of those countries to the
operations of the kingfisher.
After considering economic factors it is evidence that the economic stability of the countries
where kingfisher operates have a significant impact to its operations. Among other economic
factors inflation, interest rates, exchange rates plays key role. Further, in the countries that‟s
facing economic crisis such as Greece the company may also face to same problems.
Moreover the fiscal and monetary policy may also affect to kingfisher‟s operations as those may
disturb the market activities of those countries.
High demand for new and stylish home products shows the impact from those goods to the
operations of kingfisher. Those are the new opportunities where company can execute to its
growth.
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6. Cutting edge technology together with innovation may have impact on the operations of
kingfisher. Accordingly the customers may make their choice on the products which has
superior quality and technology.
Environment factors such as corporate social responsibility and sustainability development are
one of the major concerns of various stake holders of the company including customers and
suppliers. Activities which reduce carbon emission and promoting product which require
minimum level of energy are encouraged by various pressure groups. Those factors may affect
to the way the company carry out its operations.
Finally the legal factors relating to operation of supermarket chain in various countries may
different to each other and kingfisher needs to comply with those laws and regulations in
respective countries.
Michel Porter’s five forces
This gives an analysis of forces that affects to the operation of kingfisher in the retail industry in
UK.
(Source,www.hbr.org)
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7. 1. Threat of new entrants
Since kingfisher is offering wide range of products which are required for a house there is a high
threat of new entrants. Kingfisher can eliminate those threats by implementing entry barriers
such as ,
Increasing entry cost by investing in technology
Promoting eco friendly products
Offering new stylish products with high quality
Improving economies of scale through increasing efficiency and effectiveness.
2. Bargaining powers of Customers
Since kingfisher offer large range of products customer has the option to buy those
products from different shops around the country .Bargaining power of the customers
can be eliminated through following activities,
Increase brand loyalty among customers such as B&Q etc
Customer loyalty programs
Further new stylish products offered by the company reduce the bargaining powers of
customer as customers don‟t have much choice in the market.
3. Bargaining powers of suppliers
Kingfisher purchases various range of products for household consumption thus suppliers
can make a great influence for its operations. Thus to eliminate or reduce such threat the
company entered in to long term supplier contract with suppliers and obtain best price from
customers. Further kingfisher buys products from several customers and therefore the
bargaining powers of each supplier is controlled.
4. Threat of substitutes
Since kingfisher operates in retail market the availability of substitutes are very low.
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8. 5. Competitive rivalry within the industry
Competition among the players in the market is very high and therefore the company has
taken server steps to reduce such competitiveness.
Build strong brands which competitors don‟t have
Offer lowest price in the market
Offer new and stylish products and obtain early mover advantage.
SWOT Analysis
Strengths, weaknesses, opportunities and threats that the company has in its operations is
discussed in below,
Strengths Weaknesses
1. Loyal customers- the company have a 1. Low investment in Research and
portfolio of loyal customers who never developments - The Company pays
leave the company little attention in to research and
2. Strong brand value- Kingfisher is having development activities.
strong brands such as B&Q, Brico 2. Low market share in other
Depot, screwfix and Koctas which countries- other than UK an France
competitors does not have. kingfisher has lower market share
3. Pricing- kingfisher offers the best price in home improvement products.
among the competitors which cannot be 3. Weaknesses in the management
matched. team – the recent performance of
4. New and stylish product range- the company shows that the
kingfisher offers new and stylish range management team of kingfisher is
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9. of products which are unique to weak.
kingfisher.
Opportunities Threats
1. Global level competition in UK- with
1. Acquisitions – There are lots of small the acquisition of Asda by wall mart
companies where company can acquire there is a severe competition
and expand its operations. among companies to increase the
margins and volume. In this
2. Expansion in to foreign markets- the scenario kingfisher needs to face to
company‟s operations are limited to the completion at global level.
Europe and Asia. Company has the 2. The technology used by the market
potential of expanding its operations in is very cheap and thus it will threat
to American and African region. to kingfisher as they use latest
technology at high cost.
3. Innovation - Kingfisher can improve its 3. Economic recession
product range by undertaking research In a situation where economy faces
and development activities and innovate recession the company may exposed to
new products which can offer to threat where the consumers may not
customers. interested in home appliances thinking that
those are unnecessary costs.
4. Diversification- without limiting to home
appliances and products sales kingfisher
can expand its operations in to other
suitable business sectors using its
knowledge and experience.
Capabilities of Kingfisher
1. Ability introduce new and innovative products with eco friendly manner
2. Ability to expand operation in to foreign countries with a lower level of risk
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10. VRIN Analysis
1. Identifying Kingfisher resources
Strong brand portfolio
Geographically dispersed supermarket chain
Highly skilled labour force
2. Valuable
Above mentioned resources are capable of helping the firm to create value creating
strategy.
3. Rare
The resources kingfisher has is rare compared to the competitors of the company
4. In- imitable
Those resources are hard to in-imitable as its involves high cost to imitate
5. Non substitutable
Those resources cannot be substitute by any other resources.
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11. Value chain
The value chain of King fisher is as follows
(Soruce,WWW.hbr.org)
3. Strategic Directions
Kingfisher launched seven point “Delivering value „ plan in the year of 2008. Accordingly such
seven objectives are as follows,
1. Driving up B&Q UK and Ireland profits
2. Exploiting our UK opportunities
3. Expanding our total france business
4. Rolling out Eastern Europe
5. Turning around B&Q China
6. Growing group sourcing
7. Reducing working capital
(Source, www.kingfisher.com)
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12. .In order to monitor whether the objectives are achieved kingfisher has established following
Key Performance Indicators (KPI)
Operating margins
Total trade sales
Net profits
Direct shipments
Working capital balance
Results of staff engagement survey
Eco product sales value as a percentage of total sales.
(www.kingfisher.com)
When considered the strategic direction of kingfisher it can be analysed using Ansoff‟s growth
matrix as follows,
Products/Services
Existing New
Existing MARKET PENETRATION PRODUCT DEVELOPMENT
Increase the revenue in Promote other retail
UK and Europe products such as food
countries where the items in the existing
company is already retail markets
having operations. Develop new and
Markets Expand retail shops in stylish products to the
the Asian region existing market and
customers
New MARKET DEVELOPMENT DIVERSIFICATION
Start operations in new Expand operations
foreign markets with through diversifications
same products. Start offering new
Expand operations in products in new foreign
UK and Europe region markets.
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13. When carefully analysing kingfisher‟s seven strategies it is understand that the company is
concentrating market penetration strategy. The company‟s strategy is to grow its operations in
the existing market such as UK, France and Asian countries such as china. However it is clear
that kingfisher is having a lots of potential to consider other 3 strategies as its has all resources
to execute such strategies. (Peter, 1995)
Kingfisher and BCG Matrix
(source ,www.bcg.com)
Once we considered the BCG matrix it can be suggest that all the brand of kingfisher, “B& Q”,
“Castprama”, “Brico Depot”, “Screwfix”, “Koctas”, and “Hornbach” are in Star position as it has
launched its seven step strategy in 2008 and from that time onwards company was improving its
performance over the period. Accordingly over the four years from 2008 to 2011 the Key
Performance Indicators (KPIs) of the company shows positive improvements and therefore it is
concluded that kingfisher is in the star position.
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14. 4. Suitability, Acceptability, Feasibility and Sustainability
Suitability
The vision of the company is to “Be the world‟s leading local home improvement retailer” and
this vision is evidenced by the seven step strategy formulated by the company. Accordingly the
strategy of the company was formulated to accomplish the vision of the company.
(www.kingfisher.com)
Acceptability
The strategy of the company can be accepted as such strategy has formulated with the intention
of increasing the cash returns of all parties. Accordingly it is clear that the objective of such
strategy was to increase the shareholders value.
Feasibility
The feasibility of the strategy of kingfisher is proved by achieving Key Performance Indicators
set by the company from the year of in which the strategy was initiated.
Sustainability
The strategy of kingfisher concentrates on the sustainability as well. This is evidenced by the
introduction of “Eco product sales as a percentage of total sales” as a Key Performance
Indicator to its strategy. (Johnson G, Scholes, 2005)
5. Conclusion and recommendation
It is evidenced through this analysis that kingfisher is a company where they can explore lots of
their potentials. Further it has lots of strengths and opportunities where company and
concentrate on. Having a loyal customer portfolio and strong brand portfolio i propose following
strategies to kingfisher.
Expand in to new markets both in UK Europe and other continents with strong brand
portfolio such as B&Q, Castorama, Brico Depot etc.
Realign its marketing strategies to grow UK and Europe operations so that it can remain
in the star position in the BCG matrix.
Divest in to new sectors such as food items, Gas stations ect using knowledge and
experience kingfisher has in the retail industry.
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15. 6. References
Porter, M.E. (2008) "The Five Competitive Forces That Shape Strategy", Harvard
Business Review, January 2008, pp. 79-93
Chisnall, Peter: Strategic Business Marketing, 1995
Johnson G, Scholes K, Whittington R. (2005): The Environment: Exploring Corporate
Strategy, Pearson Education
Kingfisher PLC,2012,United Kingdom, Available (online) www.kingfisher.com, [viewed on
18 March, 2012]
BCG Matrix, Available (online) http://www.bcg.com/about_bcg/history/history_1968.aspx
[viewed on: 15/3/2012]
Johnson G, Scholes K, Whittington R. (2005): The Environment: Exploring Corporate
Strategy, Pearson Education
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16. Appendix 1
PESTEL Analysis
1. Political Factors 1. Political situation in the countries
where kingfisher carrying out its
business operations.
2. Economic Factors 1. Specific economic situation of countries
where kingfisher operate.
2. Monetary and fiscal policies adopted by
the government of those countries.
2. Social/Cultural Factors 1. High demand of new and stylish home
products.
2. Demand in Europe market to home
products.
3. Technological Factors 1. Cutting edge technology used in retail
shops.
2. High demand and recognition of online
sales.
4. Environmental Factors 1. Corporate social responsibility
activities
2. High concentration for sustainability
development
5. Legal Factors 1. Laws and regulations relating to
sale of retail goods.
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