The Irish Clothing Retailer

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1.0 EXECUTIVE SUMMARY

Primark Stores Limited is an Irish clothing retailer. Its stores are located in various regions like United Kingdom, Ireland, and Spain. Within this area of responsibility, Primark stores outnumbered other clothing retailer business, with one hundred sixty one stores overall distributed in three major regions: one hundred twenty-five in the United Kingdom, thirty-four in Ireland and eight in Spain. The company positions itself as marketing fashionable at cutthroat prices.The original clothing store was established by Arthur Ryan and his collaborator Micaela Mitchell in Dublin Ireland in 1969. After various success in clothing business, great profits and gross income led them to open stores in local and regional areas. It acquired various premises in different business centers within its local and regional areas which eventually generate more profits and income.

Primark is known for selling clothes at the budget end of the market. Its success is based on sourcing supply, making clothes with simple designs and fabrics and targets young, fashion-conscious individuals ages 35 below, offering them simple yet high quality clothes and apparels.

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Hence, these successes brought significant changes on Primark's retail business. The relevance of global trends and consumers' demands on lifestyle made Primark Store Limited reinvent its business scheme and management structure.

2. BACKGROUND

Primark is a retail group in the value sector and operates a total of 187 stores in Ireland (where it trades under the Penneys brand),Holland , Spain and the UK. Primark employs in excess of 27,500 people. In GB, in terms of market share, TNS ranks Primark as GB's second largest clothing retailer by volume and Verdict Research now places Primark as the leading retailer in value clothing. Primark was voted 'Best Value High Street Fashion' by GMTV and ITV viewers.

Primark Stores Ltd., is a subsidiary of Associated British Foods. Associated British Foods is a diversified international food, ingredients and retail group with global sales of £8.2bn, and 96,000 employees in 44 countries.

In the financial year 07/8 (September 2007 to September 2008), twelve new stores were opened for trade. Seven of the new stores were in Spain.

Primark now operates from 5.4 million sq ft of selling space. Primark has 23 stores trading from over 50,000 sq ft of which five trade from over 70,000 sq ft.

Primark is successful because it offers:

  • Super-competitive prices (the result of technology, efficient distribution, supply and volume buying)
  • Mainstream market product quality • High Street locations • Superior store fit • Clear focus on the target market.
  • There are two distribution centres - a 650, 000 sq. ft. unit at Magna Park in Leicestershire, and a 200, 000 sq. ft unit at Naas.

2.1 Key Aims of Primark

Primark is a member of the ethical trading initiative. This is an alliance of companies, trade unions and non profit organizations that aims to promote respect for the rights of people in factories and farms worldwide. As a member of ETI, Primark has committed to monitoring and progressively improving working conditions in the factories that supply Primark's merchandise.

3.0 ORGANISATIONAL ANALYSIS

3.1 Primark Operational Strategies

"Primark set itself a goal to become the world's most successful retails group. In order to achieve this, primark has focused on reasonable quality in other words a value for money strategy and in competitive terms, primark is pursuing a classic focus cost leadership.

3.2. SWOT Analysis

According to Robbins (2008:85), "SWOT is an analysis of an organization's strengths, weaknesses, opportunities and threats in order to identify a strategic niche that the organization can exploit". In a strategic level, it usually combines an analysis of external environmental factors with an internal analysis of the organisations capabilities and limitations.

Real opportunities exist when there is a close fit between environment, values and resources. Similarly the resources and culture will determine the extent to which any potential threats become a real threat.

Strengths

  • Primark is the second biggest retail store in UK.
  • Primark operates a total of 187 stores in Ireland.
  • Primark has 23 stores trading from over 50,000 sq ft of which five trade from over 70,000 sq ft.
  • Affordable-competitive prices.
  • Mainstream market product quality.
  • High Street location.
  • Clear focus on the target market.
  • A strong consumer proposition has been developed for the Primark brand and embodied in the line "Look Good, Pay Less".
  • 28 days refund policies.

Weaknesses

  • Employees overwhelmed by the amount of work to be done.
  • Primark purports less value on ethical matters.
  • Exploitation of the employees and abuse on labour force.
  • Poor working conditions.
  • The primacy of autocratic and rigidity on standard structures.
  • Child labour.
  • The primacy of autocratic and rigidity on standard structures.

Opportunities

  • Primark is a parent company for ABF.
  • Primark's energy consumption in Great Britain is sourced against the green power generated and sold into the grid by sister company, British Sugar.
  • Primark shares many of its suppliers with its competitors on the high street.
  • New super stores in the pipe line

Threats

  • Financial crisis- credit crunch.
  • Cheap quality product.
  • The primacy of autocratic and rigidity on standard structures.
  • Increasing competitive pressure: matalan, peacock, H & M.

3.3 ETHICAL SRTATEGY

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Primark defined its Ethical Trade Strategy in 2006. In 2008 we have entered the second phase of its implementation. Implementation of phase 2 will ensure that factories making 80% of all purchases are assessed. 135,120 workers employed in these units have had their working conditions assessed, and improved where necessary.

Audits are conducted by Primark's own regional based Ethical Trade Managers and third party specialist auditors. 38% of our initial audits to date have been unannounced, and the rest take place within a pre agreed window.

After the initial audit our Ethical Trade specialists work with the suppliers to support them through remediation. Training is offered to suppliers and their makers on particular issues and best practice, at regular intervals. Follow-up audits are conducted after 3mths from the initial audit.

Primark recognises that shared learning and collaboration is one of the most successful ways to achieve sustained positive progression with its supplier's factories. Primark participate in the ETI- supported National Home worker Group in India and are one of the founder members of the Wages Group.

3.4 COMPETITIVE ADVANTAGE

  • Super-competitive prices (the result of technology, efficient distribution, supply and volume buying)
  • Mainstream market product quality • High Street locations • Superior store fit • Clear focus on the target market.

There are two distribution centres - a 650, 000 sq. ft. unit at Magna Park in Leicestershire, and a 200, 000 sq. ft unit at Naas.

5.0 APPLICATION OF MANAGEMENT THEORY TO PRACTICES

5.1 APPLICATION OF JIT TO PRIMARK

There is no denying the fact that Primark is the second largest retailer in UK. The fact that Primark has made success in sales is evident in the fact that various theories and approaches have been applied in their day to day business. One of the theories evident in their business is just in time approach. Primark's approach reduces and minimizes waste, this has led to them devising systems to identify problems. They emphasize holding little stock, this leads to reduction in storage space and saves rent and insurance cost. As a result of this, less working capital is tied up in stock since stock is obtained when it is needed.

Primark has been able to strive for simplicity, that is, simpler systems are used. This makes workers, supervisors and managers understand and manage easily and very less likely to go wrong. They(Primark) make use of simple tools to 'pull' products and components. Primark has been able to use Just In Time (JIT) approach effectively. There is good house keeping, thus there is ethic of work cleanliness and organisation.

5.2 APPLICATION OF TQM TO PRIMARK

Primark makes good use of total quality management in the process of their business. They have encouraged a strategic approach to management at the operational level through involving multiple departments in cross-functional improvements and systemic innovation process. Thus, this has provided high returns on investment by improving efficiency. They have been able to provide better quality products at lower cost and deliver them faster. This has provided customer satisfaction and resultantly, this has increased sales and profit.

6.0 CONCLUSION

Primark Strategies have helped in the business development. Manufacturing in poor countries has contributed in the development in vulnerable countries and achieve a competitive price for customers. Primark has built various programs to constantly improve the quality standards of the clothing this allow them to rapidly respond to the market changes.

Primark wide range of designs and affordable prices provide the company a sustainable profitability and a good market place over others retailers.

The cost of maintaining leadership is very low as they do not have to spend in advertising campaigns, promotions and marketing. The main stores are in high streets where the brand sells for itself.

Primark is making a significant offer to its customers and is growing success is proof of that achievement. Primark's customer are enthusiastic about the brand and are more happy than not with goods and services. However, while budget goods may be very popular at the moment, primark may want to consider extending the quality of some goods to satisfy customers that want that little bit extra.

7.0 RECOMMENDATIONS

  • There were allegations of slave labour about primark, the company could raise wages, happiness of staff is first in virgin's strategy that's why primark should change strategy.
  • Primark should put people before profit; it is the second biggest seller of clothes in UK after Marks and Spencer.
  • Primark should pay good wages of staff to motivate them because it protects the company name and performance.
  • Maintaining good relation with respect to political scientists and analysts will upgrade the changing forms of the legislation in different countries by which Primark can be advantageous with respect to its development globally.
  • Business solutions can be comparatively effective for the development and review of Primark with the advanced updates of pest analysis.
  • Innovative expansion and growth of the industry depends on the qualitative supply.
  • Demand increases by providing the cost effective products to the supplier which in turn gives high market value within the organization and as well as external environment.

9. REFERENCES

  • Armstrong, M. (2006) A Handbook of Management Techniques, 3rd Edition Revised Edition. London: Kogan Page.
  • Boddy, D. (2008) Management an Introduction, 4th Edition. Spain: Prentice Hall, Financial Times
  • Feist, W.R. and Heely, J.A. (1999) Managing a Global Enterprise: a Concise Guide to International Operations, 1st edition, Quorum Books
  • Grant, R. (1991) The Resource-Based Theory of Competitive Advantage. Implications for Strategy Formulation. California Management Review, 33(3).
  • Hill, C.W.L. (2008) Global Business Today, 5th edition, Prentices Hall
  • Jenifer, M & Gareth, R (2008) Organizational Behavior, 5th Edition. New Jersey, Prentice Hall
  • Mullins, L & Carter, L. (2008) Essentials of Organisational Behaviour, 2nd Edition.England: Prentice Hall, Financial Times
  • Robbins, S & DeCenzo, D. (2008) Fundamentals of Management, Essential Concepts and Applications, 6th Edition. New Jersey, Pearson Prentice Hall
  • Pettinger, R. (2007) Introduction to Management, 4th Edition.
  • London, Palgrave Macmillan
  • Thompson. J. L(1997) Strategic Management, Awareness and change, 3rd Edition, Internatinal Thomson Business Pres, Boston.
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