What am I required to do in this assignment?
This assignment assesses your ability to critically analyse the operating environment of a small company and identify the short-term strategic risks and issues that it is facing. Furthermore, you need to assess the potential impacts that the identified risks and issues have upon the company’s current strategy. This task assesses your ability to critically evaluate the usefulness and relevance of a company’s strategic objectives and capabilities in the light of industry developments. Being able to use appropriate analysis to understand the key risks and issues and make decisions relating to strategy is one of the key skills of strategic thinking.
You will analyse a company and its operating environment making use of creativity and strategy tools in order to frame
understanding of the risks and issues facing the company. Time will be spent in the first two weeks of the unit to understand the demands of the assignment.
You will work to understand the strategic risks and issues facing the company and to assess how these might affect the company in the near future. You will produce an individual report that makes use of this analysis
The assignment submission is individual.
The company which we will study is:https://www.silverbirchflorist.com/
It is a local florist company. For you early research you should explore the company and start to investigate competitors and competitor segments.
You must identify the company’s current strategy (Note: Where hard data is not available the use of assumptions with the inclusion of supporting rationale is permissible)
You will analyse the business environment and industry of the company. You should consider the main competitors and their
competitive position: market details(value, share etc.),current trends in the market, future trends in the market and objectives of the business
You must make appropriate use of carefully selected tools and frameworks to help you to conduct and structure your analysis, clearly highlighting risks and issues
Notes:
You must include:
Appropriate appendices that support your analysis
You must NOT contact the company directly as part of this assignment
What do I need to do to pass? (Threshold Expectations from UIF)
Deliver a report that includes a detailed analysis that identifies the strategic risks and issues facing a company
Analysis requires you to demonstrate an understanding of how key trends and developments are likely to affect the industry
segment and the company’s current strategy
Develop and support your analysis by ideas and techniques drawn from academic theory and up to date research
Ensure your arguments are backed up by evidence
How do I produce high quality work that merits a good grade?
We will be filling this section in together in class on make sure you have downloaded/printed out the Assignment Brief and bring it to the session with you.
SOLUTION
Analysis of Silverbirchflorist
Table of Contents
2.0 Description of Sliverbirchflorist UK current strategy. 3
2.0 Industry analysis and business environment overview.. 4
3.0 Description and discussion of the major risks and issues facing Sliverbirchflorist 6
1.0 Introduction
This is an evaluation of operating environment of Silverbirchflorist company which is a small florist company operating in the United Kingdom. The intention of this evaluation is to assess the Silverbirchflorist’s business strategy including the challenges and risks that operating environment poses to Silverbirchflorist operations. The florist industry is major industry with many players and many risks which need to identified and explored carefully. The first part of this report is introduction followed by evaluation of company’s strategy and the industry analysis. It also includes risk assessment and conclusion.
2.0 Description of Silverbirchflorist UK current strategy
To effectively evaluate the strategy used by Silverbirchflorist company in UK, the most appropriate framework is the Ansoff matrix which is as shown below. The framework demonstrates that a company can apply four types of strategies which are market penetration, development of new markets, development of new products and diversifying into new markets and products (Aghazadeh, 2016).
Figure 1: Ansoff matrix
Source: Aghazadeh (2016)
In the case of Silverbirchflorist, its main strategy is new market development. Its current market is the Bedfordshire town market. The company’s customer base is mostly UK based customers especially those located in Bedfordshire (Silverbirchflorist, 2020). Lately, the company is seeking to expanded its operations to the entire United Kingdom by establishing online operations that enable customers from the UK to make online purchases. The objectives of the business which is to become a leading florist company in the United Kingdom (Silverbirchflorist, 2020). The company has online delivery system that helps it to deliver flowers to customers at their convenient location.
Silverbirchflorist is located in Luton Street in Bedfordshire in the United Kingdom. The company is family owned company which employees less than 100 employees to run its operations. The company scale is small as it has less than 10 full time employees while the rest are employed on part time basis (Silverbirchflorist, 2020).
The company’s main products are floral products such as bouquet flowers, anniversary flowers, wedding flowers, get well soon flowers, birthday or any other occasion based flowers. Apart from flowers the company other products that include vases, vase design, bowl plants, candles, floral tables and gift sets (Silverbirchflorist, 2020). This ensures that the company is one stop shop for all floral needs.
2.0 Industry analysis and market details
2.1 Industry environment
The following is industry analysis of the floral industry. As per Pearce and Robinson (2011) the industry can be evaluated using the porters five analysis framework which evaluates various market factors that affect the industry players such as Sliverbirchflorist in UK. The porters five evaluates five factors which are the customers, suppliers, competitors, new entrants and substitutes.
Figure 1: Porters five forces
Source: Pearce and Robinson (2011)
In regard to the customers, the power of customers is quite high in UK. This is because the floral products are perishables and have to be sold fresh to customers. In addition, it is estimated that there are over 15,000 florists in UK which increases the force of buyers due to large numbers of florists (The Telegraph, 2020).
In regard to the force of competition, competition is very high in UK. There are large number of competitors in the country such as departmental stores, supermarkets and specialist floral retailers. This increases competition among the florists. The company’s main competitors in Luton, Bedfordshire are Fleurette, Tufty’s Flowers and Flower Girl which are located on the same street as Silverbirchflorist. Nationally, its main competitors are: Interflora.com, moonpig.com, eflorist.com, and funkypigeon.com (Salience, 2020). The flower market in UK has a market value of £2.5 billion. Silverbirchflorist has a market share that is less than 1% of the entire UK flower industry (Salience, 2020). It mostly positions itself as a one stop shop for all flower needs especially bunch of flowers for occasions such as wedding, ceremonies and public events (Silverbirchflorist, 2020).
In regard to the power of suppliers, the power of suppliers has been high in this year due to covid-19 restrictions which has reduced the suppliers from foreign countries (Sofuoglu, 2020). Suppliers have been unable to ship in huge consignments of flowers into the country due to travel restrictions.
Concerning the threat of substitutes, the main substitutes that florists face is artificial flowers and interiors that are gaining acceptance among consumers. As per Bloomberg (2020) the natural flowers are nowadays viewed as luxury and price conscious consumers may prefer the less expensive artificial flowers.
The threat of new entrants is high. This is because the cost of entry is low. With increasing growth of online florists who only have to set a website and few bouquets of flowers, the cost of getting onto the business has been heavily subsidized (Salience, 2020).
2.2 Business environment
Then there is business environment that is determining the trends that are taking shape in the flower industry and may have implications on the floral industry and on small florist companies in UK. These trends can be effectively examined using the PESTEL framework shown below to examine how the macro factors impact the consumers and flower companies in UK (Aghazadeh, 2016).
Figure 2: PESTEL model
Source: Aghazadeh (2016)
Politically, there have been social distancing rules that have been imposed due to covid-19 which has restricted many social events. The social distancing rules have seen reduction in gatherings and occasions such as weddings, burials, and public events which increased demand for flowers. Consumers are not as outgoing as they were previously which has seen reduced demand in live flowers cuts and flower accessories (Bloomberg, 2020).
Economically, there has been increased levels of unemployment mostly due to covid-19 restriction on various industries especially on restaurants, entertainment and travel industry that have been worst hit by covid-19 (Thomas, 2020). This has reduced demand for flowers as they are considered to be luxury accessory.
Technologically, one of the trends is the increased adoption of the of internet and online shopping. This has resulted in large number of customers preferring to make online purchases. As of 2019, £200 billion worth of sales were made through online platform and this is expected to grow to £225 billion as of 2020 (Send Cloud, 2020). This is brought about by the increasing number of consumers who are using internet to make purchases thus positively impacting florists who have online platforms such as Silverbirchflorist.
Socially, there is increased use of social media networks in UK. It is estimated that 93% of internet users in UK access social networks on a monthly basis. This has seen increased social interactions happening on social media instead of physical platforms (Talkwalker, 2020). This has moved advertising and marketing from the traditional media to the new media. This is seen as advantage to florist companies as it is expected to minimize their market promotion costs.
Ecologically, growing number of customers are interested in the company’s upstream supply chain and its sustainability. This environmental mindedness has seen suppliers especially flower farms adopt modern farming techniques that use less water and energy. These initiatives have been costly and thus costs have been transferred to customers (Social Value UK, 2020). There is also increased demand for exotic plants rather than the actual flowers which is increasing among consumers who have exotic tastes.
Legally, the United Kingdom has limited restrictions that are imposed by the government when it comes to florist businesses apart from licenses. This makes it easy for new entrants to get into the business (Bloomberg, 2020). This has seen increased number of supermarkets and departments stores offering flowers and floral services to customers. This is a huge challenge to the specialist florists because it supermarkets are favoured by customers as they are conveniently located and customers can also purchase on impulse (Sufuoglu, 2020).
Based on evaluation from the external environment, the future trends of florist business included growth of the ecommerce market. This implies that most flowers would be sold through online platforms in future. The second trend is the reduced number of social events which are likely to reduce demand for occasion based flowers in future. The third trend is increased environmentalism which is expected to force flower companies to consider ecological factors such as water conservation in flower firms (Salience, 2020).
3.0 Description and discussion of the major risks and issues facing Sliverbirchflorist
Competition is one of the major risks. This risk is brought about by lack of barriers of entry which increased number of players in the industry. The industry has more than 15,000 participants making it one of the most competitive industry that is filled with small companies due to low barriers of entry (The Telegraph, 2020).
Covid-19 restrictions have also minimised number of events that need flowers at large scale such as weddings, and public events. Also the underperforming economy that has reduced consumers’ disposable income. The covid-19 has adversely affected the global economy including the UK economy adversely especially due to reduced travel and social gathering which are some of the drivers of florist industry (Bloomberg, 2020). this reduced demand poses a risk to the small florist companies such as Silverbirchflorist company.
The other risk is the supply chain disruptions that can be occasion by a second or third wave of covid-19. This is likely to increase the shutdowns and lockdowns that are likely to see major shutdowns by flower farmers and suppliers thus affecting the florist companies adversely (Thomas, 2020).
The other risk is posed by the environment conscious customers and organizations which can incite customers against a florist companies due to violation of some environmental rules such as water conservation. Environment issues such as energy, water and natural resource consideration is huge consumer trend that poses a risk to the existing florist companies (Social Value UK, 2020).
4.0 Conclusion
In conclusion, this report identified the operational environment by looking into strategy used by Sliverbirchflorist where it noted that the company used was positioned as florist company for Bedfordshire and UK residents. The operational environment using the two frameworks the first one being Porters five and the PESTEL model. It was noted that the operational environment was very competitive due to large number of competitors, increased threat of new entrants, heighted power of buyers and suppliers as well as existence of substitutes. The trends in the environment were identified through PESTEL where it was noted that there was increased number of online shoppers due to technology. There was also increased number of environment and ethical purchases. The legal environment was favourable to florists even though political and social environment were hostile due to covid-19 restrictions. The main risks that were identified were heightened competition from existing flower companies which were operating in UK. The other threat was the covid-19 restrictions which were likely to shut down the supply chain and also educe demands of live cut flowers and flower accessories. The other risk was the threat of new entrants which intensified competition in the industry and reduced the profits margins earned by retailers. The other risk was the ethical and environment minded customers who were interest in the flower companies supply chains and were likely to increase cost of production.
References
Aghazadeh, H. (2016) ‘Business, Market, and Competitive Analysis (BMCA) Tools and Techniques’, Principles of Marketology, 1(1), pp. 187–247.
Bloomberg. (2020) The Crash of the $8.5 Billion Global Flower Trade. Available at: https://www.bloomberg.com/features/2020-flower-industry-crash/ (Accessed 27 October 2020).
Floral Daily. (2020) The impact of the coronavirus on the floristry industry in the UK. Available at: https://www.floraldaily.com/article/9211675/the-impact-of-the-coronavirus-on-the-floristry-industry-in-the-uk/ (Accessed 27 October 2020).
Pearce, J. and Robinson, B. (2011) Strategic Management: Formulation, Implementation, And Control. 12thedn. Boston, MA: McGraw-Hill Irwin.
Salience. (2020) 2020 UK Florist Retailers Market Report. Available at: https://salience.co.uk/insight/reports/florist-retailers-market-performance-report/ (Accessed 27 October 2020).
Send Cloud. (2020) E-commerce statistics 2020: Insights from the UK. Available at: https://www.sendcloud.co.uk/ecommerce-statistics/#:~:text=E%2Dcommerce%20statistics%202020%20%E2%80%93%20The,billion%20in%20sales%20in%202019.&text=We%20surveyed%20over%208%2C000%20consumers,1%2C000%20in%20the%20UK%20alone (Accessed 27 October 2020).
Silverbirchflorist. (2020) About us. Available at: https://www.silverbirchflorist.com/about-us.htm (Accessed 27 October 2020).
Social Value UK. (2020) British Consumers Value Environmental Sustainability Higher Than Brand Loyalty. Available at: http://www.socialvalueuk.org/british-consumers-value-environmental-sustainability-higher-than-brand-loyalty/ (Accessed 27 October 2020).
Sofuoglu, M. (2020) How the pandemic made the flower business wilt across the world. Available at: https://www.trtworld.com/magazine/how-the-pandemic-made-the-flower-business-wilt-across-the-world-35660 (Accessed 27 October 2020).
Talkwalker. (2020) Social media statistics in the UK. Available at: https://www.talkwalker.com/blog/social-media-statistics-in-the-uk (Accessed 27 October 2020).
The Telegraph. (2020) Why are Britain Florists disappearing. Available at: https://www.telegraph.co.uk/finance/newsbysector/retailandconsumer/11285713/Why-are-Britains-florists-disappearing.html#:~:text=There%20are%2015%2C000%20florist%20businesses,employ%20between%20one%20and%20nine (Accessed 27 October 2020).
Thomas, D. (2020) Unemployment rate hits highest level in three years. Available at: Unemployment rate hits highest level in three years (Accessed 27 October 2020).
