Waitrose Case Study – International StrategyEssay Preview: Waitrose Case Study – International Strategy1 rating(s)Report this essayINTERNATIONAL STRATEGY ASSIGNMENTCase Study – WaitroseINTRODUCTIONWaitrose was setup at Acton in 1904; it was founded by Wallace Waite, Arthur Rose & David Taylor. In the year 1906 Taylor left the firm, the first shop named “Waitrose” was formed. The company was later acquired by John Lewis Partnership in the year 1937. At that time it had 10 small service food shops and had a turnover of 150000 GBP. After the acquisition, Waitrose now are specialist Supermarkets, having more than 175 supermarkets all over UK mainly in the south-eastern region. It now boasts a work-force of over 37000 employees and many new stores. They offer fresh produce, poultry, bread & meat. Waitrose is a company known for providing high and good quality products and it targets the higher class with its good and high quality products. Even though it’s a comparatively smaller company than its competitors (Tesco & J.Sainsbury, Iceland), it was successful in its business and was a profit making firm, this was all because they use to perform things strategically.
KEY EXTERNAL FACTORS IN THE WAITROSE ENVIRONMENTThere are many external factors which can be identified, which affect the working culture and environment of the company & in this case Waitrose. One can categorize these factors by use of PESTEL ANALYSIS. Here we look at the various external factors under various heads in the analysis such as Political, Legal, Socio-cultural, and Environmental.
The POLITICAL factors provide some important key drivers of change for Waitrose. The company Waitrose faced two political environments, one in the United Kingdom and the other in South Africa. The government was stable in the UK and in South Africa but there was still different in many ways, which in turn create drivers of change. South Africa was chosen by the company to outsource its citrus fruits. In order to maintain the quality of products Waitrose created a Foundation in South Africa for the welfare of the farmers. The trade policies, foreign trade regulations were favourable for the growth of Waitrose as the company believed in quality and honest pricing; they also hold a Royal Warrant with Queen. The political factors are very important for Waitrose because maximum of its seasonal products are imported, thus they have to abide by the laws of the home country as well as the exporting country.
The Political factors in Waitrose
Although the company is still independent, Waitrose operates with no third-party control and, as a result, they have no official control over any aspect of the supply chain.
The political factors for the company mean its customers are mostly from the south of the country and a small number of working-class workers are directly affected by political considerations. They’re also the main supporters of the company’s efforts. The political factors mean: • political forces play a significant role in politics – the party often wins by beating a perceived political opponent with popular support, and the company has to rely more on the political parties to maintain its balance. • political institutions can often be strengthened – while the government can often be undermined. • social welfare is often more important. • the supply of labour can be improved. • a strong working or immigrant base is often desirable. • political influence in a country can also be weakened – although, there is often a good reason why local, foreign and non-governmental interests may influence the company, not only for good political reasons but also as a means of influencing government in policymaking. • the business’ reputation can be damaged. The social problems are usually resolved by government.
The LEGAL aspects that affect the working environment of Waitrose are factors such as competition law, employment law, health & safety. Waitrose is one company which keeps quality of products as one of the most important aspects in the working of the company. The
Employment laws in the UK are highly regulated, such that the company has to abide by the disability, racial, sex discrimination, pension laws etc. These laws in turn affect the working of Waitrose, and it has to device policies in accordance to these laws. Health and safety is an important external factor for Waitrose. An example of their policy was to help the farmers in South Africa; the company gave them educational facilities, disease knowhow for their benefit. This gave a positive effect on Waitrose, the people there trusted them and this increased their goodwill in the country. The competitive law is also a stringent one which affects the working environment of Waitrose.
SOCIO-CULTURAL factors affect the working of Waitrose in many ways. The UK market was demanding for better quality and healthy food. This did affect Waitrose and they did reciprocate to the need of the people. They were the first to launch organic food in the UK. Education was a not a factor for Waitrose in UK but it was definitely one in South Africa. The farmers were very poor and thus were not very well educated. Population demographics look into many factors such as income (as in the minimum wage rate in the UK), age, sex, mobility, location. These factors do influence the policies and functionality of Waitrose externally. Income distribution is also seen as an important factor because the products have to be within the reach of the targeted customer.
Environmental factors are affecting the external working of Waitrose. The factors under this are environmental protection laws, waste disposal and energy consumption. It is because of the change in climate due to pollution and other environmental issues that the governments have introduced very stringent environmental laws. Waitrose is affected by these environmental changes because they are mainly into fruit & vegetable and it products, which are in turn affected by these changes. Thus they have to keep a close eye on these issues. Waste disposal is also has its impact on the environment, there are many scientific reasons supporting this argument. For this Waitrose has reduced miles driven year on year, it tries to source electricity from renewable sources. This helps to reduce the energy consumption.
The Waitrose government says that the average person has a carbon footprint of about 14 tonnes a day. Therefore, they say, “we need a number of measures to ensure that people can get their daily dose of the renewable energy provided by the Waitrose supply chain.” This is the basis why other countries need to look into this. The Waitrose government also says that the average person has a carbon footprint of 25 tonnes a day. The average person also has the benefit of a better climate but its a carbon footprint of 25.5 tonnes a day which is far greater than the global average which is 30.9 tonnes.
The Waitrose government states that the average person has about 15 tonnes a day of emissions and they can generate around 22.1 gigatonne CO2 per year from the renewable energy they are creating. Which is enough to power 5,000,000 homes in Queensland.
Waitrose then offers a more in-depth explanation of what changes climate is causing. They say, “climate change, which is the biggest greenhouse gas effect ever, is a major factor that could result in major impacts on the environment at large and in Queensland.”
The government of Queensland says, “The state has had to adapt its energy policies to the environment and environmental impacts from new developments and new technologies. While the industry already has reduced its emissions, the government has put greater pressure to meet its emissions target. The increased costs associated with new energy sources are expected to drive prices down, while greenhouse gas pollution and the cost of electricity are likely to reduce household consumption.”
The government also says, “our government does not believe that changes to the energy mix are needed to mitigate the risks resulting from climate change. The average person should be able to afford to use less electricity. But the Government has also recommended that we stop using existing energy sources and stop using renewable sources.” This could mean not using the Waitrose supply chain at all for the first part of 2013 and this can result in the introduction of new renewable energy which, if it was implemented, could provide a huge boost to Australia’s energy sector. This could also push demand higher because it means Waitrose will not be able to produce as much as it used to.
The Waitrose government has mentioned that, after the previous government, they would not be using Waitrose equipment when it comes to carbon emissions. The answer lies in the Clean Energy Technology Act. The Clean Energy Technology Act was passed to help reduce emissions from power use and, since 2003, the Waitrose supply chain is still the largest contributor to reduced carbon dioxide emissions. If the Energy Minister were here, he could have stopped the Renewable Energy Target to 2020 at this point. He could instead have taken this opportunity to invest in Renewable Energy Industries.
Waitrose has been criticised for saying that Renewable Energy Industries would only be used on the public network within the public authority. This statement may not quite make sense but it certainly does appear on the Waitrose website and on the waitrose.com.au website. At least Waitrose made clear that it is going to buy into renewable energy technology.
When asked whether the Energy Minister intends to sign this, then waitrose has said, “We have a long-term agreement where the energy efficiency of our fleet will be the key factor
Thus these are the external factors which are identified in the working of Waitrose and the Environment around it.KEY INTERNAL FACTORSFor identifying the internal factors of Waitrose we use the PORTER’S FIVE FORCES. Here we look at the following concepts RISK ENTRY BY POTENTIAL COMPETITORS, RIVALRY AMONG ESTABLISHED COMPANIES AND SUBSTITUTE PRODUCTS. By using these concepts we identify the internal drivers for change in Waitrose.
SUBSTITUTE PRODUCTSWaitrose does have substitutes to their products but they have an edge over their competitors in this context. This is because firstly their quality and brand equity have a good hold over their customers, secondly they do not target the entire market. Cull says: “Because this is our business, we want the very best for the customers to ensure future success. It was a key decision to feature partners in the campaign, which uses them as a point of difference, distinguishing us from our rivals (www.guardian.co.uk ). The targeted customers of their products are richer class. The most important reason that they have loyal customers is because of the quality they provide. The customers of Waitrose believe in the company, such that even if they get the same goods cheaper in other stores (Tesco, Azda) they will still stick to Waitrose. In the product line the fruits and vegetables they put on the market are priced at a premium. “For anyone who enjoys food and can afford to pay a bit extra, it is easy to understand why