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Royal Mail – SPA and Competitive Analysis

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Published: Wed, 07 Jun 2017

Strategic Process and Competitive analysis on Royal Mail

1.2. Aim

The aim of this study is to carry out a strategic analysis of the Royal Mail to be able to develop a marketing strategy for the company in the UK.

1.3. Objective

The objective of this dissertation is to assess the competitive environment of Royal Mail in the United Kingdom Market. Moreover, certain strategic processes that are associated with the Royal Mail are discussed in detail. The entire analysis is based on the evaluation of secondary sources and a hypothesis is formed which is accepted or rejected on the basis of research.

1.4. Research Questions

This research would cover certain questions which are listed below:

* What services are offered by Royal Mail UK?

* Who are the direct and indirect competitors of Royal Mail UK?

* What are the strategies applied by Royal Mail UK to target its customers?

* What managerial and marketing approaches are adopted by this organization?

1.5. Scope of the Research

The scope of the research is limited because the topic of the research is based on strategic and competitive analysis of a specific organization. An attempt is made to restrict the research to analysis of Royal Mail in United Kingdom only. Emphasis is laid on different strategies that are employed by this organization in order to attract the customers and face the competition.

1.6. Formation of the Hypothesis

The hypothesis that is formed is actually based on a deductive approach and the hypothesis of this research paper is “Royal Mail is the most trusted and affordable mail service provider in the United Kingdom that focuses on quality and reliability”.

1.7. Structure of the report

The entire report consists of certain areas which are listed and discussed below:

Chapter 1: Introduction

This chapter introduces the main aspects of the research. This chapter includes title, aim of the research and what is the objective of research. Besides that it also includes the scope of the research and what are the questions of research. The questions of research are designed in such a way that it gives complete information about the research and what areas are covered in this research. Besides that, this chapter gives background of business operations of Royal Mail. The background information analyzes basic information of Royal Mail and the financials of this organization. Furthermore, the history, business services and certain other related aspects are discussed in this study.

Chapter 2: Literature Review

The literature review section discusses the core aspects that are associated with Royal Mail UK. The entire chapter evaluates the secondary sources which include books, academic journals and certain websites. In the similar manner the competitive analysis of Royal mail UK is evaluated through the analysis of different competitors of Royal mail UK.

Chapter 3: Research Methodology

The research methodology that is used in the research is discussed in this chapter. Although there are different methods of doing the research but due to the limitations of this research only secondary sources are used. Secondary sources are extensively used in this paper and the entire research is based on books, peer-reviewed journals, scholarly articles etc.

Chapter 4: Findings and Analysis

The findings and of the results are included in this chapter and all the results that are achieved are interpreted into meaningful form for further research and analysis. Examples of different competitors of Royal Mail UK will be given. The secondary data is analyzed for finding out the result.

Chapter 5: Conclusion

The findings and of the results are included in this chapter and all the results that are achieved are interpreted into meaningful form for further research and analysis.

1.8. Background of the research

Organizations are changing their normal horizon of working and they are managing their routine tasks in a modernized way. However, emphasis is laid on the core principles of management. Management is basically the process of getting activities done in an effective and efficient way with and through other people. Effective use of management has helped different organizations to achieve their goals. These organizations implemented different theories of management which has helped them to achieve their strategic, tactical and operational goals. An organization that only relies on theoretical approach and doesn’t stress on practical implications of these theories suffer in the long run. That’s the reason why organization must apply these management models and they must implement them for the betterment of their organization. There are different phases of management and in the early days Americans believe that management is all about worker productivity and people in France in the early days focus on organizational efficiency and administration. Organizations measure their effectiveness and devise a proper way of working with the help of management tools (Griffin 2006). These management tools include theories, strategies and measures that help organizations in achieving their tasks. Organizations heavily rely on these strategies because implementing these strategies would help them in both the short and the long run. Organizations implement these tools because of the fact that the efficiency of these tools is measured and they believe that the best tools are those which stands the test of time. Certain researches believe that these management tools and techniques are fashions oriented statements of management and organizations must not implement them because they incur cost and time of an organization. But certain tools possess an attribute to provide a sustainable competitive advantage to the organization.

‘An Organization’ short term and long term objective are quite important for its existence and growth. Strategic management is basically the art of implementing and formulating cross functional decisions for the organization (David 2008). These cross functional decisions include mission, vision, situational analysis, objectives, plans and policies etc.

Organizations have to incorporate all these aspects in order to achieve their objectives in both the short and the long run. There are different organizations that have achieved strategic advantage and a competitive advantage by following these strategies. Royal mail is considered as an organization that have incorporated most of these strategies and that is the reason why they are quite successful in both the short and the long run.

Royal Mail is considered as national postal service of Britain and British government is considered as the major shareholders of this organization. There are 160,000 employees of the company and there are total nine divisions of this organization. The strategic headquarters of this organization is based in London (Tjepkema 2002). This organization is a public limited company and that is the reason why the secretary of state for business enterprise and regulatory reform own about 50,004 ordinary shares. Royal Mail in the United Kingdom is responsible for international mail collection and delivery in the UK. The letters are deposited in a wall box or a pillar which is ultimately taken to a post office. The deliveries are made at least once in a day except bank holidays and Sundays. This organization caters all the areas that are covered in the United Kingdom. This organization is progressing day by day and it delivered 84 million items every working day. The network of this organization is extremely vast and it has 14,376 post offices which gives revenue of £9.056 billion. In the similar manner the profits after tax were £312 million in the year 2006 (Royal Mail Holdings 2006).

The history of this organization is quite wide and varied and the traces of this organization range back from 1516 when the Henry VII established “Master of the Post”. This service of Royal mail was first inaugurated by Charles I on the 31 July, 1635. At that time the postage was paid by the recipient and in the similar manner the General Post Office was officially established by Charles II in the year 1660 (Marshall 2003). In the era of 1719 and 1763 a postmaster at Bath actually signed a series of contracts with the general post office in order to expand the postal network of Britain. He co-operated with different organizations that assisted him in the scenario of sending and receiving mails. In this period certain mail coaches were formed which were quite successful in both the short and the long run. The entire GPO in the year was changed from the government department to a proper public corporation and after that the position of the postmaster general was abolished. That is the reason why certain changes were incorporated into post office and the post office renamed itself as ‘Consignia’. However, this change was considered as an unpopular change among the people and even the employee were not satisfied with this change. There were different individuals in the organization that boycotted the name.

After that the organization focused on the change management and the name of the entire organization was transferred and it was named as Royal Mail Group plc. There are certain operational divisions of this organization which are given below:

* Delivering Letters to the customers.

* Delivering parcels to the customers.

* Managing the retail outlets in the country which were termed as retail outlets.

Chapter 2: Literature Review

2.1 Introduction

According to Weihrich and Koontz (1993) “Management is the process of designing and maintaining an environment in which individuals working together in groups efficiently accomplish selected aims”. They further explain this definition by stating that the process of management involves the functions of planning, organising, staffing, leading and controlling. Management applies in every type of organisation and in all organisational levels. They imply that management is involved with effectiveness and efficiency which is directly linked with productivity. Efficient and effective management has always been the success factor for organisations operating in various types of industries throughout the world. Organisations are growing day by day as their workforce and operations widen to cover various aspects of manufacturing and services. The globalisation phenomenon has also affected the way companies manage their operations in various parts of the world in a diverse cultural environment. As the size of an organisation increases in terms of economy and work force the need for improved management also increases. The need for effective management and strategies has been stressed by many individuals and researchers throughout the years. Effective management not only increases the profitability of the firm but it also gives the company a competitive edge over other organisations as objectives are achieved and accomplished more effectively and employees are much more motivated which entails employee satisfaction and directly affects customer satisfaction (Chi and Gursoy 2009).

Importance of management in organisations in today’s world has increased substantially as companies grow larger and larger and issues in organisations get more complex. The phenomenon of globalisation has also impacted the style of management and how functions are performed in an organisation. In order to cope with the changing environment and complexity of issues companies need to implement effective management and marketing strategies. As the current research analyses the strategic process in Royal Mail United Kingdom and its competitive analysis the theories and concepts relevant to this dissertation are highlighted and explained in this chapter. This chapter covers theoretical concepts of strategic process and management including the steps in the strategic process and implementation of strategic change, ways of achieving competitive advantage and an overview of United Kingdom mail services industry with an introduction of Royal Mail United Kingdom.

2.2 Strategic Planning Process

The strategic planning process involves various strategies such as formulation, implementation and evaluation strategies to complement the functional design of an organisation. In today’s world organisations and processes in organisations are changing at a very rapid rate which makes strategic planning even more important for organisations to cope with these changes and to compete effectively in an industry (Swayne, Duncan and Ginter 2006). The competition in various industries has risen to significant levels especially in wake of the recent financial crisis where consumer spending figures have dropped significantly especially in United Kingdom which is the sixth largest economy of the world (Mahalakhsmi 2008).

If companies do not implement the strategic planning process and follow traditional planning and management methods they are bound to fail in today’s post modern era where the rate of change and competition are both quite high. The strategic planning and management process has become a necessity in identification of various functions of an organisation such as objectives, mission, vision, internal resources, external resources, threats and factors. Organisations implement strategic planning and management to cope with increasing competition and changes in consumer behaviour where strategic planning and management enable companies to achieve their objectives effectively and efficiently (Napier, Sidle and Sanaghan 1997). The strategic planning and management need not be implemented only on an organisational level but companies can also improve the image and sales of their brands as well by implementing strategic management techniques (Chernatony 2006).

The concept of strategic planning and management process is not new for managers as it has been around for more than 30 years and companies have implemented top-down strategic planning models to achieve effectiveness and efficiency in all organisational functions which eventually lead to the accomplishment of organisational objectives (Khosrowpour 2003). Companies and executives employed by these companies have implemented the strategic planning and management process for a long time which involves developing the mission and vision of a company based on its short term and long term objectives, analysis of current situation and resources, analysis of external factors, formulation of a strategy, implementation of this strategy and evaluating and controlling the strategy implemented in the organisation (Bryson 2004).

The strategic planning process includes the following five stages.

1. Development of vision and mission

2. Situational analysis

a. Internal factors

b. External factors

3. Strategy formulation

4. Strategy implementation

5. Strategy evaluation and control

Although it can be applied at any organisational level the process of strategic planning is most appropriate at a business unit level. In larger organisations strategies are formulated and implemented at the corporate level and are primarily concerned with portfolio management of the business. The strategic planning process at corporate level involves many key decisions such as allocation of resources, selection of business units or departments for growth purposes, creating and developing synergies through combination of business units, subsidiaries or departments and decisions involving mergers and acquisitions (Havaldar 2005). The strategic planning process at a lower level incorporates decisions such as selection of raw material for production, development and implementation of policies and procedures, devising marketing strategies and product mixes and deciding what services will b offered to the customers (Clark 2008). The individual aspects of the strategic planning process are explained in the following sections.

2.2.1 Mission, Vision and Objectives

The mission of a company is the primary reason the company has been incorporated and it is the reason why a company exists. The mission of a company is articulated as its mission statement and is usually included in a company’s important documents such as policies and annual reports. The mission statement of a company communicates the sense of purpose of a company’s existence and the overall aims of the company including the specific purposes of various projects and employees. Creating a mission statement is the first stage of a company’s strategic planning process (Pakroo 2009). The vision of a company on the other hand is a statement of a company’s long term objectives and expresses where the company envisions itself after a period of 10-20 years. The objectives are the short term goals and aims of departments, individuals and the organisation as a whole which enable the company to complete its mission and attain the level of performance which has been devised in the vision statement. Objectives are created for individuals, departments and business units to accomplish the mission and vision and managers also perform controlling activities based on these objectives (Roussel, Swansburg and Swansburg 2006).

2.2.2 Situational Analysis

After the mission, vision and objectives have been developed and established the company focuses on a situational analysis to review the current situation of the company regarding internal and external factors which include analysis of resources, environment, opportunities, threats, strengths and weaknesses. During the situational analysis the company implements various techniques such as a SWOT analysis, PEST analysis and porter’s five factor analysis. After the situational analysis a company acquires information about its limitations and capabilities regarding operations and functions (Henry 2008). The situational analysis is performed to evaluate the internal and external factors of an organisation so that future strategies can be implemented and formulated based on the current situation of a company. One of the most important aspects of a situational analysis is the analysis of the overall industry environment especially in the context of major competitors of an organisation (Hillestad and Berkowitz 1991). The external analysis of a company includes factors such as strengths, weaknesses, opportunities, threats, customers, competition and overall industry environment whereas an internal analysis covers aspects such as company culture, image, structure, employees, resources, brands, and financial position (Jackson and Schuler 2004).

2.2.3 Strategy Formulation

The company formulates a strategy after the situational analysis has been performed and completed. The strategy is formulated based on the evaluation of current resources, opportunities, threats and strengths of the organisation. The company designs and develops various strategic options and alternatives which can be implemented to take advantage of the opportunities and steer clear form threats. The development of alternatives depends heavily on the specific environment of a company and these alternatives may differ from company to company and situation to situation. The strategic alternatives are designed in the context of competitors and their strategies as well (Martin, Porter and Schwab 2004). Michael Porter recommended three basic strategic alternatives which are cost leadership, differentiation and focus. Porter identified these three alternatives which can be implemented in organisations depending on the internal factors and external factors such as competitive forces. Porter suggests that only one out of the three alternatives should be used instead of a combination of these strategies to achieve most effective results (Bowersox and Cooper 2004).

2.2.4 Strategy Implementation

The strategies are formulated and stated in terms of priorities, policies, procedures and preferences on how various objectives will be accomplished. If the alternatives defined during strategy formulation are to be implemented effectively then the terms, policies and procedures need to be clearly explained so that individuals in all organisational levels can understand these strategies easily. The personnel and staff of various departments need to be educated regarding these strategies during the implementation phase for effectiveness and efficiency. The implementation stage of the strategic planning process also involves the identification of available resources and applying these resources to organisational functions. The strategies need to be implemented in specific departments and areas such as production, human resources, marketing, research and development and procurement (Flood 2000).

2.2.5 Strategy Control and Evaluation

The last stage after the implementation of strategy is the control and evaluation phase where the results of the implemented strategy are evaluated and measured to check if these strategies have resulted in any improvements to previous conditions. In order to evaluate and manage the controlling phase of the strategic planning process control systems are developed and implemented. These control systems use various predetermined standards of performance. The actual performance is matched with standards to evaluate any deviances and relevant management actions are taken to remove variances and ensure that objectives are achieved efficiently and effectively (Doole and Lowe 2008).

2.3 Achieving competitive advantage

Competitive advantage is the advantage a company possesses over its competitors and keeps makings profits and maintains an aggressive position against its competitors. In order to become successful in an industry or segment companies need to achieve competitive advantage over their competitors and once they have achieved this advantage they need to sustain it in order to benefit from increased sales and profits. If a company in a specific industry has competitive advantage over other companies than it can achieve a higher amount of sales which eventually turn into higher profits which entail a company’s success (Coker, Del-Gaizo and Murray 2000).

There are various strategies through which companies can achieve competitive advantage over competitors and other companies in the same industry and the theory of generic strategies which were explained in the previous chapter are some of the strategies which can be implemented to gain a competitive advantage. The three strategies for gaining competitive advantage presented by Porter include cost leadership, differentiation and focus. The three strategies can be implemented by organisations to gain competitive advantage over their competitors (Armstrong 2000).

The first strategy is cost leadership which means that companies sell same products and services as their competitors but lower their costs which gives them a cost advantage over their competitors and consumers are attracted to products and services of lower cost (Lusch and Vargo 2006).

The second strategy is differentiation where companies can achieve competitive advantage by providing goods and services of higher quality with same prices as that of their competitors. The high quality at similar prices also attracts customers to the company which is offering higher standards and quality. Cost leadership and differential advantages are collectively referred to as positional advantages as both of these strategies result in a company’s better position in an industry wither through lower costs or higher quality of goods and services (Wit and Meyer 2005).

The third strategy suggested by Porter is the focus strategy which entails the implementation of a focussed strategy on a specific segment of a market referred to as market niche where a company focuses on implementing the cost leadership strategy or differentiation strategy in a particular segment. This gives the company a competitive edge in that segment but does not enable the company to gain competitive advantage throughout the industry. Although this strategy does not give the company a competitive advantage throughout the industry but enables the company to gain an advantage in various sectors or segments of the industry (Mintzberg, Ahlstrand and Lampel 2006).

Apart from these strategies there are various other strategies which an organisation can implement to gain competitive advantage such as achieving competitive advantage through replicable management standards such as installing and using ISO 9000 and previous studies show that implementing ISO 9000 gives a company a significant level of competitive advantage over its competitors (Naveh and Marcus 2005). Another study indicates how competitive advantage can be achieved through implementation of group technology in companies (Fraziera and Spriggs 1996).

A white paper published by the Oracle Corporation explains how competitive advantage can be achieved through enterprise planning. The company explains how enterprise planning can be implemented to achieve competitive advantage where organisations can not only reduce their costs and eventually decrease selling prices but can also improve the quality of their products and services. The paper suggests that businesses can optimise their resources and take full advantage of opportunities if the management of the company is involved in analysis of data rather than information gathering and processing (Oracle Corporation 2008).

The concept of lean marketing which was first implemented by Toyota has been applied by several other companies to achieve competitive advantage in their respective industries. The concept of lean thinking is based on the elimination of wastes from the manufacturing process which directly implies the efficient allocation and use of resources. The lean thinking strategy can also be implemented in service oriented organisations to achieve competitive advantage such as financial institutions, banks, travel and tourism services and mail and courier services. This means that the concept of lean thinking is not only applicable to manufacturing companies but to service oriented organisations as well to achieve competitive advantage in their respective industries (Appiotti and Bertels 2006).

Although companies can achieve competitive advantage over their competitors but the real challenge is to transform this competitive advantage into sustainable competitive advantage also referred to as SCA. In order to sustain a competitive advantage companies need to formulae strategies that cannot be duplicated by competitors. The strategies should be quite flexible regarding affects of change on competitive advantage. The company can sustain competitive advantage for a long period of time if it implements effective strategies which cannot be easily imitated. In the post modern era trends and fashions tend to change quite rapidly which means that companies need to implement sustainable competitive advantage strategies which are flexible and can be amended with changes in trends and consumer behaviour (Barney and Clark 2007).

2.4 Overview of United Kingdom mail services industry

The mail services and logistics industry in the United Kingdom is based mainly on same day delivery services of mail and parcels. There are many companies in United Kingdom that offer same day or next day courier and logistics services. These companies include Royal Mail U.K., FedEx, UPS, DHL, TNT, City Link and local divisions of worldwide courier services including APC Overnight. Apart from these giants there are also quite a few smaller freelance mail and courier service providers which are pretty popular in the country as well. There are thousands of small scale local courier service providers in the United Kingdom which provide same day or next day courier services delivering mail, documents and parcels to different parts of the country. These smaller companies operate on a small budget and usually provide mail and courier services through a small number of vehicles operating within a city. Research carried out by Data Monitor indicates that the value of logistics and courier market of United Kingdom increased by 2.6% in 2008 and reached a total value of $11.1 billion. The research also indicates that the volume of the industry increased by 3.2% in 2008 and reached 1,162.1 million units (Datamonitor 2008).

2.5 Royal Mail United Kingdom

Royal Mail Group Ltd. is a postal and courier service company with various subsidiaries which include Royal Mail, Post Office and Parcel-force Worldwide. The company offers various services through these entities which include postal mail services, general products and services related to post, parcel delivery systems and general logistics systems. Royal Mail United Kingdom focuses on letters and packages which can be delivered to any part of the world by all regions in the United Kingdom. The company has 113,000 post boxes and 14,300 post office branches throughout the United Kingdome which collect items like letters, parcels and packages directly from more than 87,000 businesses. These letters and packages are processed through 70 mail centres, 8 regional distribution centres and 3,000 delivery offices. These items are collected through a diverse transportation and collection network which includes 30,000 vehicles and 33,000 bicycles (Royal Mail Group Ltd 2009).

2.6 Summary

This chapter of the dissertation report provides a review of the literature used in the research stage of the study. The literature review is important in this particular dissertation as the research completed for this dissertation is primarily based on data from secondary sources. The secondary reviewed in this chapter was collected from various sources such as books, periodicals, articles from journals, previous research reports and websites. The chapter explained the strategic planning process in detail with brief descriptions of the stages of this process. The methods and strategies through which companies can achieve competitive advantage and how these companies can sustain this competitive advantage were also explained in this chapter. The last parts of the chapter provided a brief overview of the United Kingdom postal and logistics industry with a specific overview of Royal Mail.

Chapter 3: Research Methodology

3.0 Introduction

The methods implemented to study and assess the data collected for research are examined and analysed in this chapter. The concept of research methodology, various paradigms and methods used in research and explanation of these methods and paradigms is covered in this chapter. The data collection techniques utilised for secondary research are also analysed in this chapter.

3.1 Research Methodology

The process of assessing past data from previous researches, books, articles and other sources while carrying out personal research in order to present original ideas which increases human knowledge on a specific topic is research methodology. The main aim of a research is to increase the knowledge in a specific area and present or prove some other facts in any subject area or discipline. Research methodology is based on interpreting researches performed previously and explanation of details of those studies. It also includes the examination and analysis of a specific part of a discipline to provide a fresh and new viewpoint (Kumar 2002).

It is not possible to carry out an effective research just by collecting and interpreting data. This analysis should be backed by conclusion from other researches as well. The methods through which data is collected, analysed and results are presented should be r


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