ioopl: Strategic (Business) Planning in Organisations (Mothercare)

In the name of Allah, the most gracious, the most merciful

Introduction

Mothercare plc is a British retailer which specialises in products for expectant mothers and in general merchandise for children up to 8 years old. It is listed on the London Stock Exchange and is a constituent of the FTSE SmallCap Index. The Mothercare group is comprised principally of two iconic retail brands with international appeal; Mothercare and Early Learning Centre.

The group's brands operate through three distinct channels to market; UK stores, Direct (being the in-home and in-store internet-based businesses and catalogue mail order), and International, under which the group franchises (or participates in joint venture) operations delivering the Mothercare and Early Learning Centre brand retail operations in overseas markets. (MothercarePlc, 2013)

Whilst the principal office of the group is in the United Kingdom, it has invested significant resources in its sourcing and supply chain operations in Shanghai, Hong Kong, Bangalore, Singapore and the United Arab Emirates.

Mothercare’s History

1961 Entrepreneur Selim Zilkha and Sir James Goldsmith open the first Mothercare store in Surrey

1962 Mail order business launched

1972 Floated on the stock market

1982 Merges with Habitat to form Habitat Mothercare

1984 Begins trading overseas through franchise partners

1986 Habitat Mothercare merges with British Home Stores to create Storehouse

2000 Bhs stores sold to Sir Philip Green and Mothercare becomes the sole brand

2007 Acquires Early Learning Centre for £85m

2011 Chief executive Ben Gordon quits. Group unveils UK store closure programme

2012 Simon Calver takes over from Gordon as CEO in April. (Independent, 2013)

Reasons for the decline of Mothercare

While Mothercare's previous management team rapidly expanded its profitable international business to more than 1,000 stores, they took their eye off product availability, pricing and customer service in the UK, to the delight of John Lewis and the big grocers. Mr Calver, the CEO of Mothercare plc has already said it will take three years to restore the UK business to profitability, as it seeks to eliminate £13m of losses by reducing its store numbers from 311 to 200 by March 2015. (Independent, 2013)

Task

For this assignment, I have been appointed as the CEO of the company and my task is to look the factors that cause the decline of Mothercare UK business. In this role I would be conducting various analyses to understand the factors affecting the organisation as well as the root causes of these factors. I would also be taking various actions to eliminate the threats caused to the company and bring the company back to a stage where it could again grow substantially in the UK.

1. Conduct analysis of external environment to understand important factors affecting the environment.

THREATS (External)

• Direct insurance.

• Fierce competition

• Decreasing market share

• The stagnation in affinity group membership

OPPORTUNITIES (External)

• Increased sales through an expansion of the service offerings.

• Increasing credit options for products.

• Many customers buy from affinity groups.

• Can enter a new market (Diversification)

• Increased sales through Tesco’s website

Other opportunities available to Mothercare Plc which affect its external environment are:

Online Advertisement

Online advertising is a huge market and with more and more people searching for their shopping needs online, advertising is the “de facto” of the marketing companies. Advertisng in search engines like Google, Facebook, Yahoo and Bing will give Mothercare Plc an edge over their competitors.

Online advertising is huge and still growing. In the UK it has overtaken television to become the biggest advertising medium and now accounts for 20% of all advertising spend.

Whether selling a product or growing a brand, online advertising is a flexible and cost-effective way of getting the message out.

By advertising on search engines and social media platforms Mothercare can make an impression in the online space. This is an area where companies need to invest a lot considering the time most people spend their time shopping online.

Today that target audience spends time with both online and offline media—internet, video, radio, television, magazines, newspapers, social. And the same advertising messages can be delivered on a mobile device as those viewers, listeners, visitors, and readers go on about their business.

Boasting Online Sales

A survey showed that online sales in UK experienced the highest growth in 2012, recording a huge 17% jump on July 2011. This works out at an annual figure of about £6.5 billion spent online with each person spending an average of £128. Total growth for the 2012 year to date stands at approximately 13%. On average more than 95% of UK shoppers have made an online purchase (Electronic-Payments, 2013)

Mothercare is seeking to boost its online presence in the UK as it looks to reverse months of declining sales. Mothercare hired Simor Claver, an internet and brand specialist, as its new chief executive in 2012. Mr Calver left LoveFilm to join mothercare. Mr Calver has been chief executive of DVD rental service LoveFilm since 2005, during which time the company was bought by online retailer Amazon.

External Threats that affect the Mothercare Plc

Financial Crisis

The economic conditions of the UK retail market have an imperative impact on the Mothercare. Mothercare’s net worth has dropped substantially since March 2011, while it has gone from holding substantial cash reserves to substantial borrowings (HuffingtonPost, 2013). This was also due to the fact that company has to close down many stores in the UK. According to its last financial statement, it made an operational loss in the UK of £24.7m for the year end March 2013, and sales were down 4.6%.

Online Competition

There is a huge market in online sales and there are various competitors competing in the mother and baby care range which poses a great threat to mothercare’s sale. As the online stores offer similar products at a cheaper price so they are a big concern and Mothercare have to compete strategically in this space acquiring more expertise and pushing its online reputation as a global brand in mother and baby child care.

High Street Competitors

Competitors like Tesco and Morrisons pose a continuous threat to Mothercare. Tesco have launched its own range of baby care products.

Mothercare also faces competition from Kiddicare – which is operated by Morrisons superstore as part of their strategy to compete in the baby care market.

12.1.1) and the stakeholder expectations

Stakeholders of Mothercare have high expectations from the company. The company is listed on the London stock exchange and is a constituent of the FTSE SmallCap Index. Its stock price is currently declining and there are many shareholders who are also stakeholders of the company.

Keeping the shareholders happy and to understand their expectations is the primary responsibility of the higher management. They would need to be convinced that the company is moving in the right direction in order to keep their interest in the company and to secure their funding.

Mothercare's UK division, which accounts for 40 percent of group sales and is competing with a growing number of online retailers and supermarkets, made a loss of 21.7 million pounds for the year, after a 24.7 million pounds loss a year earlier.

12.1.3) and comment on the major changes taking place in the external environment that will affect the business strategy you intend to formulate for Mothercare plc.

In order to understand the external threats faced by Mothercare, we would conduct PESTEL analysis on the company to underline these factors.

Currently the Mothercare is going through a very special period in time, when there are tough economic situations in Europe and across all UK, people are mostly spending time buying things online, high street retailers have been hit severely by the high interest rates, change in user preferences and shift to cheaper options are a continuous threat to the retailers. So Mothercare is going through a difficult time in their 50 years of trading history.

POLITICAL

UK Immigration Laws

The political environment of Britain is very stable in terms of its government affairs, however the current British government party which is the conservatives part in power have laid tough rules governing the employees and employers. Most employers are actually pushed to hire from UK or EU which creates a potential concern to businesses which are always looking to recruit bright talent from around the world. This is one concern for the Mothercare.

UK Employment Laws

Another political concern for Mothercare is the employment laws which favours the employees and employers are forced to adhere strictly to these laws. Employers are abide by the law to offer minimum wages and other benefits to its employees. This also includes the tax rates like PAYE tax, National minimum wage, Statutory maternity, paternity and adoption pay, statutory sick pay.

UK Trading Laws

Trading laws are also very strict in the UK and employers are subject to follow these laws. Companies are bound to pay corporation tax and VAT which is a big concern for large companies and most companies would like to keep their businesses head quarters in companies like Ireland where these corporation and other tax rates are low.

British economy

British economy is going through tough times; companies need to move forward while keeping their eyes on the global threats that might affect them. In current times, when the global economy is in a standstill, it’s very difficult for companies to invest in new ideas and businesses.

In 2008, the global financial crisis plunged the UK into its longest and deepest recession. More than a million people lost their jobs as businesses - from shops to manufacturers and banks - either closed or laid off staff.

The credit crunch and job fears meant consumers cut spending, deciding to pay off debt and save instead (BBC, 2013)

Financial Crisis

The impact of economic and financial crisis of the Europe and the UK economy is very pertinent on Mothercare plc.

With the UK and rest of the world plunging into the global financial crisis in the second half of 2008, many high street retailers found themselves in financial difficulties.

In just last 5 years alone many high street retailers have suffered the consequences of financial crisis including:

1. HMV, the UK's music retailer, collapsed in January 2013 after months of financial crisis. It was hit hard by tough competition from online rivals, supermarkets and digital downloads.

2. Woolworths went into administration in January 2009 with debts of £385m. According to one researcher it couldn't offer the prices that the discount stores such as Primark, Lidl and others could actually offer.

3. JJB Sports went into administration in September 2012. According to the news and media and researchers, the JJB lost its vision, core values and drive and it couldn’t keep up with its rival’s competition.

4. Comet Group an electrical retail chain went into administration in November 2012.The chain struggled to cope with the drop in consumer spending in the UK since 2008. (RetailResearch, 2013)

So the threat of economy on Mothercare is continuous and real and it shadows them throughout. Mothercare would need to learn from the past experiences of the retailers who have gone out from business and to learn lessons from these companies.

ECONOMICAL

Challenge of Global Recession

Global economic recession poses the unique challenge to the Mothercare plans to expand. Mothercare as an organization have to be equipped to handle the recession because of its brand name, reputation and market share. In tough economic times, companies need to move forward while keeping their eyes on the global threats that might affect them.

UK Immigration Laws

With UKBA laws on work permits, most companies including Mothercare find it difficult to recruit talented international individuals who graduate from the UK universities but due to limitations on visa imposed by immigration laws companies cannot recruit them.

Many talented students are just kicked out of the country just because of their visa status, even if the companies want to hire them as they bring fresh ideas into the company.

UK Business Legal Requirements

Ensuring legal compliance with labour and tax law is a vital part of ensuring the Mothercare’s continued existence. The local government where the business operates impose mandates on companies regarding the working hours of employees, tax allowances, required break times and working hours, minimum wage amounts and policies on discrimination. Being aware of these laws and policies and working to keep the organization completely legal at all times is an essential for Mothercare business.

Social

Health consciousness

The population of UK are becoming more aware of health in recent years with the governments initiates to educate about health issues. Expectant mothers now have more prior knowledge than they use to have 20 to30 years ago. The health rate of UK population is also very good. Life expectancy at birth m/f (years) is 79/82. The Probability of dying under age of five (per 1000 live births) is 5 in UK according to World Health Organisation. Total expenditure spent on health is 9.3 % of GDP (WHO, 2013).UK Population growth rate is 0.553% as of 2012.

These are good signs that a nation is conscious about its health and hence there is potential opportunity for maternity and baby care products in market.

Demography of UK

According to the 2011 census, the total population of the United Kingdom is around 63 million.6.2 % of this population is between the ages of 0 to 4 years. UK is the third-largest in the European Union (behind Germany and France) and the 22nd-largest in the world. Its overall population density is one of the highest in the world at 674 people per square mile, due to the particularly high population density in England (currently over 1000 people per square mile). The United Kingdom's literacy rate is 99% (ONS.GOV.UK, 2013)

Age structure for men and women in 2011

Age group	UK Population			%
Age group	Male (million)	Female (million)	Total (million)	%
0–14	5.681	5.419	11.100	17.6
15–64	20.751	20.953	41.704	66.0
65+	4.597	5.781	10.378	16.4
All ages	31.029	32.153	63.182	100

Social Media

Social Media is going to play a huge role in next 2 years for Mothercare. The company needs to be fully aware of the trends in the online social media and be proactive in this space.

Technology

Research and Development

Technology has a huge impact on how Mothercare is structured and how work flows. With supply chain system across the world, companies like Mothercare face competition from their competitors who are also make use of advancements in technology.

Technology is now making it possible for small companies to compete with large companies just by making an online store. Technology can create opportunities for Mothercare and it can eliminate positions.

With more and more companies encouraging their universities to research in bio technology and bio chemistry, it is now possible for new innovative products to compete with Mothercare baby products range.

Trade Marks and Patents

With more and more companies now becoming aware of trade marking and patenting their new research, it is becoming constantly difficult for companies to copy the products of their competitors and whoever gets the patent first leads the market. So its very critical for Mothercare to invest in R&D areas.

Mothercare would need to constantly innovate in its products in order to keep ahead of its competitors.

Online Competition

Mothercare also faces tough competition from online shop stores like amazon and ebay and with other stores like Tesco and ASDA offering similar baby care products which are cheaper than Mothercare. With GAP Maternity offering clothing range for infants and expectant mothers, competition is tough for Mothercare in Online and Offline space.

Conclusion

Online competition and low economic situation are going to have major effect on the business strategy of Mothercare.

Mothercare have to build its own brand name and products that would create difficulty for it’s competitors to replicate. It could make use of the expertise and knowledge it has about the baby care and expectant mothers and use the knowledge to innovate exclusive products.

2. Perform necessary analysis on Mothercare plc to identify the effects of its current business plan (12.2.1) (12.3.2), its position in the market (12.2.2) and evaluate the competitiveness of its current business strategies (12.2.3)

When all the products/services of the company are put in four cells (thus it actually provides an opportunity reassess the entire position of the company).

High

BCG Matrix of Mothercare

Stars–High market share in and a High Market Growth - fast-growing industry.

(Invest for growth of these)

- Early Learning Centre (Baby Toys)

- Gurgle (Modern parenting brand for mums)

Low

Mothercare Baby and Me Club (Advice & information website)

Question Marks- Low Market Share and High Market Growth

(Keep it going and Improve, carefully)

- Mothercare Photo

- Mothercare Blog

- Mothercare Clothing Range

Cash Cows- High market share and Low Market Growth - slow growing industry.

(Milk to fund other projects/businesses)

- Mothercare Department Stores

Dogs - Low Market Share and Low Market Growth - mature, slow-growing industry. (Liquidate,Kill or Sell off these projects)

High

Market Share

Low

Market share (Cash Generation)is the % of customers held by company in market.

Market / Industry GROWTH RATE is how much more growth a company can have. Lower Industry Growth means there is not much room for company to grow in this market. It already has ample share of that market and there is not much room to grow more. High Growth Rate means there is still room for company to grow.

The basic idea behind it is that the bigger the market share a product has or the faster the product's market grows the better it is for the company.

Cash Cows: Cash cows are units with high market share in a slow-growing industry. These units typically generate cash in excess of the amount of cash needed to maintain the business. This is the area which has Low Growth Rate but High Market Share.

The Mothercare has High market share of Baby and Maternity Departments Store, however the Industry Growth Rate is low – so there is not room left to grow now. Mothercare needs to capitalize from this area.

The cash cow areas for Mothercare are its Department stores in high streets open to public which offer wide range of consumer goods for baby care and maternity consumers like clothing, appliances, prams, pushchairs, feeding and safety etc. They could use these department stores to cash other online projects.

Star: Stars are units with a high market share in a fast-growing industry. The hope is that stars become the next cash cows. Sustaining the business unit's market leadership may require extra cash, but this is worthwhile if that's what it takes for the unit to remain a leader.

Star units means company has a decent(High) market share in this area (product or service) and there is High Growth Rate – which means there is more room for growth.

Mothercare’s services that fell in the quadrant of star are:

- Early Learning Centre (Offer Baby toddler Toys, gifts, playsets, learning materials, books, puzzles, gifts, games and other creative accessories) available at www.elc.co.uk. ELC became part of the Mothercare Company in June 2007 and it has stores throughout the UK. ELC offers services like Big Birthday Club which help parents organize their children’s birthday parties.

- Mothercare Baby and Me Club is an Advice & information website for mothers. They have a dedicated website at www.mothercarebabyandmeclub.com. The club offers advice and suggestions to mothers about baby dressing, feeding, changing, bathing, weaning, safety, baby fashion and other various handy tips for mums. It offers advice and information as baby grows. They also conduct special in store events and great offers

- Gurgle is the modern parenting brand for mums and mums-to-be. They publish a bi-monthly magazine and a website at www.Gurgle.com. Gurgle is the magazine that is dedicated to mums. It delivers everything they need to know about caring for their babies and toddlers – while inspiring them to have fun, feel fab and look fit in the process! Gurgle recognises a modern mum’s appetite for absorbing all the best new ideas out there and serves them up in a super-stylish package (Gurgle, 2013)

Question Mark: Low Market Share and High Market Growth. These are the opportunities that no one knows how to handle. They aren't generating much revenue right now, because you don't have a large market share. But they're in high-growth markets, so they could become Stars or even Cash Cows if you can build market share.

However, if company cannot increase market share, Question Marks could absorb a lot of effort with little return. Question Mark units have the worst cash characteristics of all, because high demands and low returns due to low market share. If nothing is done to change the market share of these Units, then question marks will simply absorb great amounts of cash and later, as the growth stops, a dog.

Question marks are growing rapidly and thus consume large amounts of cash, but because they have low market shares they do not generate much cash. The result is a large net cash consumption. A question mark has the potential to gain market share and become a star, and eventually a cash cow when the market growth slows.

If the question mark units does not succeed in becoming the market leader, then after perhaps years of cash consumption it will degenerate into a dog when the market growth declines. Question marks must be analyzed carefully in order to determine whether they are worth the investment required to grow market share.

They are those units of company which need attention as they have High Business growth rate but low market share so the company needs to invest in this areas as they may have potential for growth.

The star units for Mothercare are:

- Mothercare Photo (mothercare-photo.com)

- Mothercare Blog (mothercareblog.com)

- Mothercare Clothing vs Gap Maternity, and other clothing companies

Since these areas have a high market share however the Market growth is higher too which means that there is much to be done in this market.

Dog: are units with low market share in a mature, slow-growing industry. These units typically "break even", generating barely enough cash to maintain the business's market share. These units should be sold or written off or be invested in a very strategic manner.
The units that come in this section of matrix are Early learning Centers of Mothercare.

SWOT ANALYSIS

SWOT stands for strengths, weakness, opportunity and threat analysis and it’s an internal and external organisational analysis tool.

The opportunities and threats analysis of swot deals primarily with external factors affecting any organisation. Below is the comprehensive SWOT analysis of Mothercare.

Strength

Dealing in a Niche Market

If we analyse the main strengths of the company we find that the company deals with products for mothers, especially expectant mothers and offer products for infants, baby toddlers and children up to 8 years old. This in itself is a very niche market and it’s a very lucrative market.

Considering the UK birth rate is 12.26, (12.26 births/1,000 population) which is an average annual number of births during a year per 1,000 persons in the population (CIA, 2013)

The Total Fertility Rate (TFR) of UK is 1.90 (CIA, 2013). TFR gives a figure for the average number of children that would be born per woman if all women lived to the end of their childbearing years and bore children according to a given fertility rate at each age.

So considering these statistics we know that there is market for products to be offered for expectant mothers and newborn babies and Mothercare can capitalise on that.

Global Brand

The name Mothercare is associated with mothers and babies throughout the world. Mothercare have been able to tap into all the markets associate with maternity and child care.

It now offers a wide range of maternity and children's clothing, furniture and home furnishings, bedding, feeding, bathing, travel equipment and toys through its retail operations in the United Kingdom, and also operates internationally through franchises in Europe, the Middle East, Africa and the Far East under the 'Mothercare' brand name.

Mothercare opened 115 new shops overseas this year, bringing the total number to more than 1,000. International sales rose 15.5pc in the year to March 30, despite weakness in the euro zone.

Weakness

Threats from Online Retailers

Mothercare closed 56 unprofitable UK stores this year(2013), mostly Early Learning Centre outlets, as the focus shifts online and to an expanding international business, where it enjoys double-digit sales growth. It plans a further 55 closures in the next two years to shrink its UK chain to 200 stores. (Telegraph, 2013)

Poor Customer Services

Customer services plays a huge role in any company. Mothercare have been blamed to have neglected the customer services as part of their cost reduction programme. Also the management were focusing on the global expansion of the company. This created a huge downfall in its UK

The retailer is accused of chasing overseas glory – it has stores in 59 countries including Nigeria and Kazakhstan – but forgetting about shoppers at home, losing its competitive edge on pricing and letting customer service deteriorate.

Opportunities

1. Designer Baby Products Range

There is an opportunity for Mothercare to offer the designer children wear range in posh areas of UK high streets.

Designer wear like Kid Space, Alex and Alexa.com are already in the market but there is not a fierce competition in this area.

This will ensure that Mothercare will cater the needs of the wealthy label conscious people and this would also enable Mothercare to cater the needs of those parents who cannot afford high price products but still prefer an above average product for their children.

The way this could be achieved is that if Mothercare could struck a deal with few designer labels and then using their name with expertise of Mothercare in the baby product range. Then using the joint venture advertising campaigns with those designers – Mothercare could promote its products along with the designers brand image.

2. Online Advertisement

Online advertising is huge and still growing. In the UK it has overtaken television to become the biggest advertising medium and now accounts for 20% of all advertising spend.

Whether selling a product or growing a brand, online advertising is a flexible and cost-effective way of getting the message out.

3. Boasting Online Sales

Mothercare is seeking to boost its online presence in the UK as it looks to reverse months of declining sales. Mothercare hired Simor Claver, an internet and brand specialist, as its new chief executive in 2012. Mr Calver left Lovefilm to join Mothercare. Mr Calver has been chief executive of DVD rental service LOVEFiLM since 2005, during which time the company was bought by online retailer Amazon.

4. Improve Store Services

Mothercare needs to improve its stores and delivery services as well as lowering prices in a bid to wrestle back cash strapped customers from supermarkets like Morrisons Kiddicare and online retailers like amazon and ebay. They would need to offer better services in store in order to provide better services to its customers. This would involve offering New range and innovative products for baby care. Improved value, choice and service for customers would give an edge to Mothercare over its competitors.

5. Mobile Apps and Advertisement on Mobile Apps

The transition to a new online platform and mobile apps is another area where Mothercare can further increases its sales. By offering new products via mobile phone and mobile phone advertisement would give them an opportunity to tap into the market as most people in UK holds a mobile phone.

6. Making use of Data and Analytics

Supermarkets are combining their loyalty card data with social media information to detect and leverage changing buying patterns. For example, it is now possible for retailers to predict that a woman is pregnant simply based on the changing buying patterns. This allows them to target pregnant women with promotions for baby related goods.

Using Big Data combined together with social media to detect the changes in buying pattern and offering product offers before anyone else is a potential opportunity for Mothercare.

7. Value Product Range

There is an opportunity for Mothercare to introduce cheap/value products given the current economic situation of the country. With companies like ASDA, Tesco and Morrisons bringing their value range Mothercare should plan to sort out its basic commercial housekeeping, matching rivals' prices and, given the straitened economic climate, should introduce a value range.

This would encourage middle class parents to buy products from Mothercare rather than looking for cheaper products elsewhere.

8. Email Marketing

Email Marketing is another media by which Mothercare can tap into the online market. By carefully defining it email marketing campaign during festive seasons and offering its products to its well targeted customers Mothercare can make use of this medium effectively.

9. Revamping Stores

Mothercare has taken measures to revamp its remaining UK stores, adding Costa Coffee concessions and play areas, and is trying to push online sales. This is a positive change and is one needed by Mothercare to offer more services to expand and retain its customers.

10. Involvement in Digital Media, Social Media Networks

Using Social Media, Mothercare can instantly identify emerging and important trends that are likely to impact its brand. Trace a trend’s origins, amplify what’s beneficial, curtail what’s not, and pinpoint opportunities to drive new trends favorable to the business.

Social network websites continue to aggressively positioning their sites as a link between consumers and merchants. Both fixed and mobile social networks tend to market themselves as a tool for merchants to connect with consumers and promote brands – rather than just as services for connecting friends.

Social media developments are fascinating and exciting. They show the great potential of the new communication and tools that are becoming available thanks to the Internet, Web 2.0, email and broadband infrastructure. However, for these new social media tools to succeed, they need to become fully and totally integrated into our daily communication. With 3 out of every 5 minutes spend online is on a social networking site, this is a huge phenomenon and Mothercare would need to fully make use of this medium (Buddle, 2013)

Mothercare could use social media to reach its potential new customers and engage them into interesting conversations about baby and child care products.

11. Using Social Media to Influence Mothers

Using dedicated Social Media teams to educate women about baby care and pregnancy can also improve the chances to of winning the trust of consumers and then using this opportunity to sell them the products.

Threats

Financial Crisis

Online Competition

There is a huge market in online sales and there are various competitors competing in the mother and baby care range which poses a great threat to Mothercare’s sale. As the online stores offer similar products at a cheaper price so they are a big concern and Mothercare have to compete strategically in this space acquiring more expertise and pushing its online reputation as a global brand in mother and baby child care.

High Street Competitors

Competitors like Tesco and Morrisons pose a continuous threat to Mothercare. Tesco have launched its own range of baby care products.

Mothercare also faces competition from Kiddicare – which is operated by Morrisons superstore as part of their strategy to compete in the baby care market.

Mothercare baby clothing range faces tough competition from Gap Maternity.

3. Inline with your future pan for Mothercare Plc, propose two strategic options available for Mothercare Plc. (12.3.1)(12.3.3)and discuss how you will include the stake holders in the new structure you propose in the process, and its resource implications. (12.4.1, 12.4.2, 12.4.3)

The proposed strategic options comes under a new product development category based on Ansoff’s product/market growth matrix.

Product development: Product development is the name given to a growth strategy where a business aims to introduce new products into existing markets. This strategy may require the development of new competencies and requires the business to develop modified products which can appeal to existing markets. (tutor2u, 2012)

Market penetration: Market penetration is the name given to a growth strategy where the business focuses on selling existing products into existing markets.

Market penetration seeks to achieve four main objectives:

•Maintain or increase the market share of current products – this can be achieved by a combination of competitive pricing strategies, advertising, sales promotion and perhaps more resources dedicated to personal selling

•Secure dominance of growth markets

•Restructure a mature market by driving out competitors; this would require a much more aggressive promotional campaign, supported by a pricing strategy designed to make the market unattractive for competitors

•Increase usage by existing customers – for example by introducing loyalty schemes

Out of the 11 potential strategies identified in the opportunities section above, the two most important ones are

1) Introduction of Cheap/ValueMothercare Products Range(Product Development) and

2) Investment in the Online Marketing Strategy (Market Penetration)

1. Value Product Range (Product Development)

This would encourage middle class parents to buy products from Mothercare rather than looking for designer products elsewhere.

This will ensure that Mothercare will cater the needs of the middle class people and this would also enable Mothercare to cater the needs of those parents who cannot afford high price products but still prefer a fair quality product for their children.

2. Online Advertisement (Market Penetration)

Second recommended strategy for Mothercare is the use of Online advertising campaigns to advertise its products on search engines so that when potential customers searches for products related to infants, baby and mother care products then they should be presented with relevant ads pertaining to Mothercare products. This could have a huge ROI as online advertising have worked for many brands that suffered a back lash from fierce competition and these companies turned the table against their competitors by online advertising.

Online advertising is huge and still growing. In the UK it has overtaken television to become the biggest advertising medium and now accounts for 20% of all advertising spend.

Whether selling a product or growing a brand, online advertising is a flexible and cost-effective way of getting the message out.

According to Nielsen’s latest Global Trust in Advertising report, which surveyed more than 28,000 Internet respondents in 56 countries, 92 percent of consumers around the world say they trust earned media, such as recommendations from friends and family, above all other forms of advertising—an increase of 18 percent since 2007. Online consumer reviews are the second most trusted source of brand information and messaging, with 70 percent of global consumers surveyed online indicating they trust messages on this platform, an increase of 15 percent in four years (Nielsen, 2013).

Involving Stake Holders in the Process

Stakeholders are defined as those individual, group or bodies that have an interest in an organisation. Stakeholders can affect or be affected by the organization's actions, objectives and policies. An example of key stakeholders are creditors, directors, employees, government (and its agencies), owners (shareholders), suppliers, unions and the community from which the business draws its resources. To involve stakeholders in the process the most important task is to identify and prioritise the key stakeholders.

Stakeholders have interest in the company and they can be affected by the company's actions, objectives and policies. There should be awareness among stakeholders before any process is propagated. It’s all about letting stakeholders know that why a process is needed now and what will be the advantages associate to it. This helps stakeholders to accept that a change is needed because the current situation is not suitable. It’s about creating an awareness among the incumbent that compel them to unfreeze from their current state.

Stakeholder engagement strategy

Mothercare stakeholder engagement strategy should establish the objectives of stakeholder engagement through the plan preparation process and indicate how the involvement of stakeholders is achieved at each stage of the plan preparation/dissemination process.

Since it’s an “adopt or die” situation for Mothercare Plc in the current UK market and the stakeholders would need to realize that change is for their own benefit.

Once the key stakeholders have been recognised, then they are prioritised, their interests and objectives are taken into consideration and a strategy is planned to articulate process strategy to them. The way this could be achieved is:

· The designed systems are considered to address the issues within the stakeholders.

· The systems suggest issues and their priorities to be considered within the stakeholders.

· The systems are designed to receive reports and proposals from the stakeholders.

· Meeting held periodically throughout the change process.

· Provides comment on proposals being made by the stakeholders.

· It’s a well known fact that Incentives derives behaviours. Setting up mechanisms to reward employees otherwise there is a potential risk that employees may be drifted to old ways.

The stakeholder engagement strategy builds up trust and understanding between key stakeholders. Stakeholders are offered an opportunity to participate in decision-making process. It also helps in identifying points of dispute at an early stage. Stakeholders achieve a real sense of the problems to be overcome during the change process.

Resource implications

There are numerous resource implications for an organisation related to the strategic processes. These implication could be Human resources, Physical resources and Financial resources. If the organisation does not address these resource implications then this will affect its entire operating strategy so its imperative that the company respond to these implications.

Human resources

To maintain a healthy, successful and efficient work place, Mothercare should collaborate with its employees to create a relax working environment for all its employees. Motivation, encouragement and maintaining employee’s satisfaction and well-being at work are vital for Mothercare to perform at its best. Mothercare leaders should collaborate with its employees within formal and informal networks to allow ideas to be exchanged easily.

Financial Resources

The resource implications of brining a new product in the market is high cost and also The resource implications of advertising is high cost. Mothercare would need to consider these financial implications and how they would be secured.

For Online Advertising

Mothercare would have to heavily invest in the online marketing campaigns. They would have to set a budget and would then need to back it up with powerful marketing tools and data analytics to see which advertising campaigns have worked for them.

4. Using the appropriate model, examine the factors affecting Mother Care’s strategy plan (12.5.1),

To examine the factors affecting Mothercare strategy plan we will make use of PESTEL analysis tool to underline these factors.

POLITICAL

British economy

For Mothercare to start a value range of products is good in a sense - as most people are not earning as much as they use to earn. While economy is at a standstill people are not prepared to spend more and are happy with cheap but cheerful products.

Since 2008, the global financial crisis plunged the UK into its longest and deepest recession. More than a million people lost their jobs as businesses - from shops to manufacturers and banks - either closed or laid off staff.

The credit crunch and job fears meant consumers cut spending, deciding to pay off debt and save instead (BBC, 2013)

Economical

Challenge of Global Recession

The investors are now very careful when it comes to investing in new ventures.

Global economic recession poses the unique challenge to the Mothercare plans to expand or to invest in new ideas which offer better value for money to their customers.

Mothercare as an organization have to be equipped to handle the recession because of its brand name, reputation and market share. In tough economic times, companies need to move forward while keeping their eyes on the global threats that might affect them.

Financial Crisis

The impact of economic and financial crisis of the Europe and the UK economy is very pertinent on Mothercare plc. For any company to expand and to invest in new ideas they need cash and loan from banks and since banks are not offering loans on easy terms – this creates a huge barrier for companies to grow.

With the UK and rest of the world plunging into the global financial crisis in the second half of 2008, Mothercare, like many high street retailers have found themselves in financial difficulties.

Social

Social Media: Social media websites such as Facebook, Twitter, Linkedin and Pinterest represent a huge opportunity for Mothercare to grab the attention of customers while simultaneously building a brand image. There are plenty of tactics that Mothercare can employ to do this including the creation of brand profiles on social networks such as Facebook fan pages and creative advertising via branded podcasts and apps.

It is worth noting that individuals trust the opinions of their peers far more than a glossy magazine advert. Millions of people review products and services directly via social media sites using video through Youtube, which in many cases is then shared and disseminated via various other social media websites. As a consequence, the public increasingly look to social media to find reviews on various products and services to help them to make buying decisions. As a result, companies can and do provide products to popular Youtube users to review for their subscribers as well as create their own branded Youtube channels with branded videos about their products.

Social media has had and is continuing to have a huge influence on business, marketing and on how businesses engage with their target market. The use of social media to share and engage with others continues to grow at an astounding rate, so it would be wise for any business to develop and implement a sustainable social media strategy in order to successfully take advantage of this rapidly changing environment.

Social Factors: Environmental protection and Health & Safety can become major issues in the UK for Mothercare. A variety of regulations and laws are imposed which may unfavorably affect the company's financial condition and results by requiring a safe disposal or recycling Mothercare’s products.

Technological

The technological impacts have a profound effect on Mothercare specially with its new initiatives.

More and more small companies are coming online and competing with the large brands, the online advertising industry have all of the sudden given this unique ability to small startups to start competing with global giants.

Now with web even the small companies can operate globally and this is a concern for large multi-nationals. Large companies not only face fierce competition from their rivals but also from small startups. Hence online advertising is an important investment that have to be utilized in a very strategic way.

Mothercare also faces tough competition from online shop stores like amazon and ebay and with other stores like Tesco and ASDA offering similar baby care products which are cheaper than Mothercare. So in the wake of all of that Mothercare have to invest fiercely to win its place in the online space.

Develop appropriate vision and mission for the future (12.5.2, 12.5.3)

Vision:

A vision statement identifies where the organization wants or intends to be in future or where it should be to best meet the needs of the stakeholders. It describes dreams and aspirations for future.

A vision is the potential to view things ahead of themselves. It answers the question ―where we want to be. It gives us a reminder about what we attempt to develop.

A vision statement is for the organization and its members, unlike the mission statement which is for the customers/clients.

It contributes in effective decision making as well as effective business planning. It incorporates a shared understanding about the nature and aim of the organization and utilizes this understanding to direct and guide the organization towards a better purpose. It describes that on achieving the mission, how the organizational future would appear to be. An effective vision statement must have following features:

• It must be unambiguous.

• It must be clear.

• It must harmonize with organization‘s culture and values.

• The dreams and aspirations must be rational/realistic.

• Vision statements should be shorter so that they are easier to memorize.

In order to realize the vision, it must be deeply instilled in the organization, being owned and shared by everyone involved in the organization.

Vision: outlines what the organization wants to be, or how it wants the world in which it operates to be (an "idealised" view of the world). It is a long-term view and concentrates on the future. It can be emotive and is a source of inspiration (rspublication, 2013).

Mothercare current vision

• To be the leading specialist retailer for mothers to be & parents of young children.

• To have expertise and service at the heart of the offer.

Mothercare New vision

• To be the leading specialist online retailer for mothers to be & parents of young children.

• To provide affordable, quality products to its customers.

• To have expertise and service at the heart of the offer.

Mission:

Defines the fundamental purpose of an organization or an enterprise, succinctly describing why it exists and what it does to achieve its vision. For example, the charity above might have a mission statement as "providing jobs for the homeless and unemployed".

Features of a Mission

• Mission must be feasible and attainable. It should be possible to achieve it.

• Mission should be clear enough so that any action can be taken.

• It should be inspiring for the management, staff and society at large.

• It should be precise enough, i.e., it should be neither too broad nor too narrow.

• It should be unique and distinctive to leave an impact in everyone‘s mind.

• It should be analytical i.e., it should analyze the key components of the strategy.

• It should be credible, i.e., all stakeholders should be able to believe it. (rspublication, 2013)

Mothercare Current Mission Statement

Mothercare mission is to meet the needs and aspirations of parents for their children, worldwide.

Mothercare Future Mission Statement

Mothercare mission is to meet the needs and aspirations of parents for their children, worldwide.

To become one of the leading producers of children and expectant mother accessories, offering great products and services at affordable prices.

To become one stop shop for mothers for all their baby care needs.

And the necessary corporate objectives and comment how you will measure your strategic plans (12.5.4)

Mothercare aim to offer its customers products that comprise a compelling mix of strong design, exceptional quality and great value for money.

Following is the list of necessary corporate objectives that have to be implemented and executed.

· Expanding in the right Markets.

· Launching Right Products.

· Investing in Research and Development to create an edge over its competitors.

· Online Business Strategy.

· Offer much broader and cheaper range online to compete with growing number of competitors.

· Investing in the right products.

· Listening and Responding to Customer feedback.

· Customer Engagement Strategy online and offline.

· Demos on High streets to raise awareness among new mums and expectant mothers.

· Advertising in Media, TV, Radio, Web and Mobile.

· Seminars and other public awareness programs like Gyms and Health Clinics.

· Compensating GPs, Doctors and Nurses to recommend and promote Mothercare Baby and expectant mother care products.

· Improve Customer Satisfaction level.

· Promote Brand Name by advertising on Buses and Train Stations.

Measure Strategic Plans

The best way to measure strategic plans are by making use of Data and Analytics. Major High street retailers and Supermarkets are combining their loyalty card data with social media information to detect and leverage changing buying patterns. For example, it is now possible for retailers to predict that a woman is pregnant simply based on the changing buying patterns. This allows them to target pregnant women with promotions for baby related goods.

Mothercare can measure its strategic plans by quantifiable performance statements, performance indicators, statistical analysis, profit and loss statements and other tracking methods.

Using Big Data combined together with social media to detect the changes in buying pattern and offering product offers before anyone else is a potential opportunity for Mothercare.

5. You have done all necessary preparations to take the leadership of Mother care Plc. by executing all the tasks above. Please present a schedule for implementing a most suitable strategy (12.6.1),

Based on an intensive research on Mothercare, it is evident that Mothercare needs improvement in lots of areas in order to gain its market share and to be in a much comfortable state. They need to convince their customers that they are offering much better baby and maternity products at much cheaper price and high quality than their competitors.

The most suitable strategy for Mothercare is to compete in the online space where it faces tough competition. For that it would need to setup its online media strategy.

Customer Reviews: It is worth noting that individuals trust the opinions of their peers far more than a glossy magazine advert. Millions of people review products and services directly via social media sites using video through Youtube, which in many cases is then shared and disseminated via various other social media websites. As a consequence, the public increasingly look to social media to find reviews on various products and services to help them to make buying decisions.

Mother should provide product review videos on Social Video websites like Youtube, Vimeo etc so users can review and comment on product reviews.

Social media and Social Media Video channels is continuing to have a huge influence on business, marketing and on how businesses engage with their target market. The use of social media to share and engage with others continues to grow at an astounding rate, so it would be wise for Mothercare to develop and implement a sustainable social media strategy in order to successfully take advantage of this rapidly changing environment.

Feedback collection from customers online and in stores should be implemented from first quarter of 2014.

(12.6.2) Create appropriate dissemination process to gain the stakeholder’s commitment

Mothercare is fully committed to protecting its customers, people making its products and the environment by ensuring efficient use of raw materials, optimising the use of energy, encouraging recycling and sustainability, and engaging business partners and stakeholder groups. (Mothercare, 2013)

Acceptability is concerned with stakeholder expectations of Mothercare to earn more profit in future and the expected outcomes of implementing the strategy to become the market leaders.

Stakeholder engagement strategy

A stakeholder engagement strategy should establish the objectives of stakeholder engagement through the plan preparation process and indicate how the involvement of stakeholders is achieved at each stage of the plan preparation/dissemination process. It should indicate how the process of policy making will be undertaken and transparency delivered. As part of delivering transparency, the strategy should be made publicly available. The strategy should include

1) The vision for stakeholder engagement and

2) The details of purpose, players, methods and responsibility. Guiding principles include inclusivity, transparency, appropriateness, clarity and comprehensiveness.

· The designed systems are considered to address the issues within the stakeholders.

· The systems suggest issues and their priorities to be considered within the stakeholders.

· The systems are designed to receive reports and proposals from the stakeholders.

· Meeting held periodically throughout the change process.

· Provides comment on proposals being made by the stakeholders.

· It’s a well known fact that Incentives derives behaviours. Setting up mechanisms to reward employees otherwise there is a potential risk that employees may be drifted to old ways.

(12.6.3) And design suitable monitoring and evaluation system for the implementation of your proposed strategy plan

Once all the stakeholders are involved in the strategy, the next stage is to put the plan into action. The Mothercare Management Committee is responsible for monitoring all areas of the organisation's activity, and for evaluating it to determine the impact, quality and effectiveness of its proposed strategy.

In particular, the Management Committee will want to determine if the organisation is:

• Achieving its aims and objectives;

• Showing progress towards its mission/purpose;

• Meeting the needs of its beneficiaries;

• Using its resources efficiently and to the greatest effect;

• Complying with the law; and

• Working within its policy framework. (DiyCommitteeGuide, 2013)

Constructing robust measures is the first step to developing Mothercare’s performance scorecard. Measures are quantifiable performance statements, and they must follow certain guidelines. Monitoring measures should be:

• Relevant to the Corporate Goal and Strategy

• In context of a target to be reached in an identified time period

• Capable of being tracked after intervals

• Ownership taken by the People who are in charge of implementing

Monitoring mostly involves keeping track of what is going on. By undertaking this regularly, the Management Committee have the opportunity to adjust the project to ensure that the above concerns are addressed. This is usually carried out through consideration of regular operational and financial reports on the organisations activities. For purposes of accountability, the Management Committee should ensure that this reporting is regular and that discussions on these are properly documented.

Organisations evaluate in order to:

• Encourage ongoing improvement;

• Provide evidence of the impact of their activities; and

• Provide an informed basis for decision making and planning.

Evaluation and review should be an ongoing process of learning, embedding a process of continual improvement and development (DiyCommitteeGuide, 2013).

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Wednesday 9 October 2013

Strategic (Business) Planning in Organisations (Mothercare)

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