Operational Strategy For the River Island - MyAssignmenthelp.com

Question: Discuss about the Operational Strategy For the River Island. Answer: Introduction River Island is one of the largest and famous fashion retailing brands in the United Kingdom. The organization has more than 60 years of experience in the retail market sector and it is considered to be one of the most loved and well-known brands on High Street. River Island is one of the most renowned retail brand for affordable and stylish fashion. The unique features that are brought to the collection help the brand to stand out from the other retailers on High Street. The customers are able to rely on the occasional wear of the brand and going-out looks as well (Aghdaie Alimardani, 2015). The other products of the organization include, denims, shoes and bags as well. River Island can aim to bring the original and new fashion to the customers along with great design. The products of the organization are designed within the premises as River Island has one of the biggest teams of designing and they proudly deliver fabulous fashion related items in the stores as well as on the onli ne platform. River Island has more than 350 stores in the United Kingdom and Ireland. The organization also has its operations in the Middle East, Europe and Asia. The company has around six online websites that operate in more than four currencies (Aguirregabiria Suzuki, 2015). The report is based on the expansion plans of River Island in Malaysia. The operational strategy of River Island in the new area of expansion will also be discussed in the report with the help of which it can continue its functions in Malaysia. Market Entry strategy for River Island in Malaysia The analysis is based on the plans of River Island related to expansion in Malaysia. The market entry strategy is the most important factor related to the expansion of any organization. The strategy related to market entry can be defined as the method related to the delivery of the services or goods to a relevant target market in a new country. The organizations which plan for expansion need to devise appropriate strategies for market entry so that they can increase their profitability (Ahi et al., 2017). The major aims of an organization when they enter a new market are, mainly, to increase their sales, to get business stability and to increase brand awareness as well. The market entry strategies need to be developed by the companies by analysing the competitors and the potential customers or target market. The major factors which are relevant in deciding the viable entry to the market include factors like, localized knowledge, competition, price localization and export subsidies. E ntry of an organization to a completely new market is related to many types of risks which include systematic risk, weather risk, sovereign risk, liquidity risk, cultural risk and foreign exchange risk (Blackburne Buckley, 2017). The major competitors of River Island in UK are H M Clothing Company, Asos, Forever 21, Gucci and Topshop. The closest competitor of River Island amongst all these retail organizations is the H M group. The H M Group is a Swedish multinational organization who also have their operations in the clothing retail sector. The major target related to growth of H M group is to increase their sales by 10 to 15% within a year and increase their profitability as well (Cavusgil et al., 2014). The company had opened its stores in 2017 six new locations in the world including Taiwan, Turkey, Macau, Hong Kong, Malaysia and Singapore. The online store of the organization has also been expanded into as many as 41 new markets. The expansion strategy that is adopted by River Island clothing retail store for the expansion plans in Malaysia is franchising. Franchising can be defined as the process by which an organization can aim for rapid expansion in the markets. Franchising is the best possible way to enter a new market area with the least investment. This process is applicable for business models which are repetitive in nature and are easily transferrable to other markets (Chen et al., 2017). The two major aspects of the business that are required for franchise model are, strong recognition of the brand of the organization in market and future competition to be created in the franchisee. Franchisee is mainly done in a long-term partnership basis and the nature of relationship can be maintained based on the responsibilities that are taken by the partners. A fee related to license or purchase fee is paid by the franchisee to the franchisor (De Villa, Rajwani Lawton, 2015). River Island can adopt this method to expand its business in Malaysia as this is a complete new market for the organization and they need to understand the needs and desires of the customers of that area. Therefore, franchising is the best possible manner of expanding the business in this area. River Island can further think of making a greater investment in this area after they have a created a base for their products (Deutschmann, 2014). Strengths and Weaknesses of River Island Strengths of River Island River Island is a clothing retail organization which is in the business for more than 60 years and they offer affordable fashion for the consumers of the United Kingdom. The major strength of the company lies in the large window area that they can display their products in a proper way. The largest store of River Island is located on Oxford Street and this store provides huge variety for the citizens of UK. The stores of River Island have more than four locations of cash desk. The fitting room of the stores are located in the first floor of the stores so that the footfalls of both the floors can increase (Frambach, Fiss Ingenbleek, 2016). The structure of the stores is pleasing to the eyes and the entire is properly lit along with the display of huge variety of menswear, womenswear and kidswear. The visibility of the staff available in the stores is quite high on the major areas of service in the stores. River Island has great brand recognition which can be of immense help for the e xpansion plans of the organization. The stores of River Island are quite customer friendly and the customers can also relax in the areas within the store (Gollnhofer Turkina, 2015). The other internal strengths of River Island include, the strong builds of the outfits which are displayed by the organization in the carriages and the walls. The denim department of the stores is strong in a visual manner and the shopping experience of the consumers is quite good. The boutique line offered by the stores has the ability to make the brand feel more exclusive for the organization. The layout of the floors and the placement of fixture makes the store look more appealing to the customers (Holtgrave Onay, 2017). The company offers packages and offers related to the products all throughout the year. The standards of the stores are quite high as compared to the size. The quality and customer friendliness of the stores of River Island are the major factors for strength and recognition of the o rganization. The external strengths of clothing retail store include, the huge number of footfalls per week in the stores. The average footfall in the stores of River Island per week amounts to 4 million and the annual footfall amounts to around 200 million (Kim, 2018). The stores are located in the prime area of the city which is able to attract many customers as the restaurants and many other entertainments related organizations are not quite far away. Weaknesses The layout of the stores is seasonal in nature which can affect the sales of the products and the profitability of the organization. The knowledge of the staff regarding the different products is not that high which can affect the customer base of River Island. The build of the store is not that strong. The interaction of the staff with the customers is not strong enough so as to attract more and more customers to the store. The staff who are present in the stores are not proactive enough to interact wisely with the customers (Kim, Min Chaiy, 2015). The major weakness that has been analysed in the report is the weak customer service of the organization which can lead to a loss of loyal consumers for the store. The strengths that are already possessed by River Island can be improved so that they can gain customers in the new market area. The attractive stores of the organization will be able to attract customers in Malaysia and the company can use its brand recognition to attract more customers towards the stores (Miller Yang, 2016). The major weakness of the organization related to customer service needs to be improved as this is the major and most important part of the business for any retail store. This will help the organization in creating a new customer base and increase their profitability. Corporate Objectives of River Island Corporate Objective is essential in nature for River Island Company as this helps in setting realistic and defined goals that is necessary. The corporate objectives have to be analysed, as that will help in influencing the strategic objectives and decisions of company. They can gain the corporate objectives with analysis of specifying the period for achieving the desired goals in an effective manner. The steps have to be analysed by the employees of the organization that will lead to improvement of the assessments that is made by the company. Protection and improving the position of River Island in such a manner that helps them in becoming number one retail stores both online along with offline Building a strong momentum in the growing fashion retail market as this will help them in making their position in fashion retail market Intensifying the efforts of the organization in developing the needs and wants of the customers in the competitive market (Slack, 2015) Exploring the market in such a manner that this helps River Island for the different products that are designed in such a manner that will suit the requirements of different customers in the market (SekaranBougie, 2016) Manage along with direct the market along with international business of the company as this will continue the development (Slack, 2015) River Island needs to continue the drive for increased margins with help of inventory management and deliver better products in the market as well Operational Strategy There are different kind of operational strategies that has been adopted by River Island fashion retail store. With the help of development of different kind of operational strategies, the respective organization can examine along with implement efficient and effectual systems for usage of different resources for the work process. There can be different low cost strategies that are helpful in gaining sustainable competitive advantage in the future. This kind of strategy will help in improving the loyalty towards the potential customers in the market. This will help in reducing the inventory and ordering cost and gain profitability in the entire market (Grant, 2016). Proper stock keeping and be customer centric in nature is essential as this will provide different essential information. River Island needs to provide convenience in selection of different products in such a manner that this will help them in customizing the products and services provided by them (Wu et al., 2015). Proper mass customization is essential in nature, as this will help in providing opportunity to offer different collection of clothes along with accessories. As River Island is operating in both offline and online market, it is necessary for them to attract the customers in so that this will help them to generate profit. Proper relationship with the customers is essential in nature, as this will allow them to gain competitive advantage in respect with other companies. The different operating models can be used by River Island in such a manner that this will help in generation of integrated operations. The introduction of e commerce solutions by designing website in a different manner (SekaranBougie, 2016) Organizational design of River Island The process by which the organizations can achieve the perfect combination with the help of integration and differentiation related to the operations of the organization with respect to the uncertainty in the external environment. The two types of organizational designs that are implemented on the organizations are, traditional and contemporary. The traditional type of organizational design includes, simple structure, divisional structure and functional structure. The contemporary structure includes, team structure, project structure, matrix structure, learning organization and boundary less organization (Ozalp, Horwitz Malerba, 2014). The type of organizational design that is applicable for River Island in Malaysia is the Matrix Structure. The management staff will be recruited from the United Kingdom so that they can take care of the different operational processes and take decisions related to financial investments and staffing as well (Griffin Pustay, 2013). The customer servic e staff will be recruited from the local employee base so that they can connect successfully with the customers and increase brand loyalty. The employees will be selected based on the specialised fields so that they can maintain the operations and increase the profitability of River Island (Stevens Makarius, 2015). Scope for expansion of River Island in Malaysia Malaysia has proved itself to be a great market for retail business after China and India. Malaysia has been placed in the third position with respect to retail investment in the whole world. The sales in the retail industry has grown by 3.8% in the year 2016 and the sales was driven by the 6.1% increase in the private consumption of the products (Upson, Sanchez Smith, 2017). The retail market of Malaysia has been growing for the last few years after overcoming the slight fall in the domestic market. River Island therefore has huge prospects in this country to grow and increase their profitability as well. Financial requirements of River Island The franchising of an organization requires different types of costs which can involve low investment or high investment as well. The major cost related to this type of business is the cost of entry which varies greatly. The franchise fee is another major factor related to the financial requirements of the organization. The staff requirement is another major factor that affects adds to the costs of the company (Yoboue, Yi Antwi, 2017). The other major costs include the taxes that are needed to be paid, the establishment costs. The cost of entry 20 million Malaysian ringgit The cost related to staff 10 million Malaysian ringgit The establishment cost 50 million Malaysian ringgit Staffing policy of River Island in Malaysia The staffing of the management of River Island will be done in an ethnocentric manner, which means that the management staff will be hired from UK itself as they have knowledge related to the processes of the organization. The management staff need to understand the needs and desires of the other staff. The organizational structure can be designed properly with the help of the management staff (Slack, 2015). The staffing of the customer care executives or the sales executives needs to be done in a polycentric manner. The major reason being that the Malaysian staff will be able to understand the needs and the desires of the Malaysian customers can much easily and they can interact properly with them. The major weakness of River Island related to poor customer service can also be overcome with the help of this strategy of staffing (SekaranBougie, 2016). Conclusion The report can be concluded by stating that River Island has huge prospects in the Malaysian retail market. The organization has some strengths related to the recognition of its brand and experience in the retail market for more than 60 years. On the other hand, the company has a major weakness which is related to the weak customer services and interaction with the customers as well. This type of customer service has resulted in the loss of many customers of the organization. The staff have less knowledge related to the products and services that are offered in stores. This issue related to the company can be solved with the help of recruitment of local staff in the store that River Island is planning to open in Malaysia. The budget related to the opening of the new store also has been decreased by franchising its operations in Malaysia. Therefore, it can be said that Malaysia is the suitable market area for the expansion of River Island. References Aghdaie, M. H., Alimardani, M. (2015). Target market selection based on market segment evaluation: a multiple attribute decision making approach.International Journal of Operational Research,24(3), 262-278. Aguirregabiria, V., Suzuki, J. (2015). Empirical games of market entry and spatial competition in retail industries. Ahi, A., Baronchelli, G., Kuivalainen, O., Piantoni, M. (2017, March). International Market Entry: How Do Small and Medium-Sized Enterprises Make Decisions?. American Marketing Association. Blackburne, G. D., Buckley, P. J. (2017). The international business incubator as a foreign market entry mode.Long Range Planning. Cavusgil, S. T., Knight, G., Riesenberger, J. R., Rammal, H. G., Rose, E. L. (2014).International business. Pearson Australia. Chen, P. L., Kor, Y., Mahoney, J. T., Tan, D. (2017). Pre?Market Entry Experience and Post?Market Entry Learning of the Board of Directors: Implications for Post?Entry Performance.Strategic Entrepreneurship Journal. De Villa, M. A., Rajwani, T., Lawton, T. (2015). Market entry modes in a multipolar world: Untangling the moderating effect of the political environment.International Business Review,24(3), 419-429. Deutschmann, M. (2014). A system of country market and entry strategy choice: a new Holistic Model of internationalization.Global Management Journal,6(1/2), 31-42. Frambach, R. T., Fiss, P. C., Ingenbleek, P. T. (2016). How important is customer orientation for firm performance? A fuzzy set analysis of orientations, strategies, and environments.Journal of Business Research,69(4), 1428-1436. Gollnhofer, J. F., Turkina, E. (2015). Cultural distance and entry modes: implications for global expansion strategy.Cross cultural management,22(1), 21-41. Grant, R. M. (2016).Contemporary strategy analysis: Text and cases edition. John Wiley Sons. Griffin Pustay, (2013), International Business- A Managerial Perspective (Global Edition)- 8th edition, ISBN: 9781292018218 Holtgrave, M., Onay, M. (2017). Success through Trust, Control, and Learning? Contrasting the Drivers of SME Performance between Different Modes of Foreign Market Entry.Administrative Sciences,7(2), 9. Kim, J. (2018). Market entry strategy for a digital platform provider.Baltic Journal of Management. Kim, N., Min, S., Chaiy, S. (2015). Why Do Firms Enter a New Product Market? A Two?Dimensional Framework for Market Entry Motivation and Behavior.Journal of Product Innovation Management,32(2), 263-278. Miller, D. J., Yang, H. S. (2016). The dynamics of diversification: Market entry and exit by public and private firms.Strategic Management Journal,37(11), 2323-2345. Ozalp, H., Horwitz, J. R., Malerba, F. (2014, January). Trade-off between Types of Experience and the Role of Learning Trajectories in New Niche Entry. InAcademy of Management Proceedings(Vol. 2014, No. 1, p. 13783). Academy of Management. Sekaran, U., Bougie, R. (2016).Research methods for business: A skill building approach. John Wiley Sons. Slack, N. (2015).Operations strategy. John Wiley Sons, Ltd. Stevens, C. E., Makarius, E. E. (2015). Overcoming information asymmetry in foreign entry strategy: The impact of reputation.Global Strategy Journal,5(3), 256-272. Upson, J. W., Sanchez, M. S., Smith, W. J. (2017). Competitive Dynamics of Market Entry: Scale and Survival Abstract: Market entry is the essence of strategy and is largely viewed as a dichotomous event: entry or no entry. What has not been acknowledged is the uniqueness of each market entry. Our study highlights the scale of market entry in the context of multipoint competition. We assert that entry scale varies based on the risk of market incumbent retaliation. Theory suggests that when risk associated with retaliation are low, firms enter with large ....Management and Economics Review,2(1), 118-132. Wu, S., Wallace, S., Brix, H., Kuschk, P., Kirui, W. K., Masi, F., Dong, R. (2015). Treatment of industrial effluents in constructed wetlands: challenges, operational strategies and overall performance.Environmental Pollution,201, 107-120. Yoboue, W. K., Yi, K., Antwi, H. A. (2017). New Paradigms in International Market Entry: A Reflection on the Present and the Future.