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Corporate Strategy For Kingfisher Plc

2245 words (9 pages) Essay in Commerce

03/05/17 Commerce Reference this

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This paper shall discuss about the financial management of Kingfisher Plc. This report shall include the background information of the organization which will tackle the brief history of the organization’s formation and development, its mission statement, and its organizational values. The major stakeholders shall also be examined and their powers and function shall be evaluated as well. An environmental analysis of the organization shall also be conducted. The company shall also be appraised by means of a SWOT analysis. Finally, the organization’s strategy shall be identified and evaluated.

History of Kingfisher Plc

The origins of the company can be traced back in the year 1982 when FW Woolworth was acquired by Paternoster. This deal came with a small chain of home improvement stores. This was the start of the creation of Europe’s biggest retail company. In 1984, the company bought the chains of Cornet electrical and the health and beauty stores of Superdrug in 1987.

During the 1990’s, the company’s B&Q continued its expansion when it opened its Warehouse style stores in the year 1994. On the year 1998, B&Q merged with France’s leading home improvement retail store, Castorama. The following year, B&Q opened its first store in China. The decade also marked other acquisitions such as Screwfix.

The year 2000, the organization has decided on focusing its expansion on its home improvement stores. Woolsworth was demerged and Superdrug was sold towards the end of the year. On the year 2002, the remaining stakes at Castorama was acquired in order to continuously develop the home improvement chains in Europe. The organization has focused in expanding internationally such as creating new businesses in Turkey, Spain and Russia. Core businesses were also developed in the United Kingdom, France and Poland. Towards the end of the decade, the organization has a total of 830 stores and eight markets across Europe and Asia.

The organization’s mission statement is delivering more value for the shareholders of Kingfisher by focusing on three key priorities namely: management; capital and returns. SCC is geared towards providing an environment that encourages and gives merit to team efforts. They are committed in having consultative and participative management instead of directive management. They also encourage appropriate authority delegation and decision making on the lowest possible member of the organization. Collective effort and teamwork is being insisted. It is Kingfishers’ belief that a rich network of communication which is informal and open can lead into greater trust, learning and innovation. Kingfisher supports the concept of attractive compensation to a great performance.

Kingfisher cultivates a set of beliefs that are shared within the organization wherein all policies and actions are based. It is believed that success is the goal for each effort and that determination in improving and innovating are constant challenges and stimuli. It is also believed that integrity, objectivity and fair play in business as well as in relationships with staff are very important. Mutual trust and respect are also very vital culture being practiced. Work in the company is perceived as enjoyable. Finally, Kingfisher believes with the perpetuity of its organization.

Organizational Values

The organization aims in achieving sufficient profit so that it can provide very attractive returns to is shareholders as well as financing the company’s growth. For the company, profit is the organization’s reward for their effort in offering the consumers the right kinds of products and services. For the long term, profit is the one absolute measure of their corporate performance. It is the organization’s belief that in continually meeting their profit objective, other corporate objectives shall follow as well.

Kingfisher believes that as a company is their duty in providing clients with quality products and services. The organization values that customers shall always come first. The customers’ interest should be the company’s interest as well, and this should provide them with a long-term partnership with one another. The organization is committed in earning a preferred position with each of their clients by offering a consistently highest quality and reliability of service. Kingfisher ensures that they products always represent the best value for money. It is Kingfisher strategy in exerting its efforts only to those markets, industries and products wherein the organization can excel.

Kingfisher believes in providing its people an environment wherein they can excel, develop and have growth in the company. Kingfisher considers its human resources as its most important asset. It aims in attracting people, developing them and retaining those with the highest foundations of character and competence. It does its best in providing training and opportunity to the people for development in improving themselves so that they could expand in their career opportunities. It is expected that their manpower will be full of initiative and drive and is eager in staying and growing with Kingfisher. It ensures that the people of Kingfisher get the recognition they deserve and that the people should be grateful with their accomplishments and that the company has its best choice with them.

Examination of Major Stakeholders

Stockholders elect the members of the board and they represent the stockholders’ interests in the company. Board members are at the apex of the decision making body of Kingfisher. They ensure that corporate strategies are met and are all in the interest of the stockholders. They can also do sanctions such as voting against nominees for the board of directors. Further, the board of directors has the authority in hiring, firing and compensating corporate employees.

Authorities are centralized at Kingfisher. The managers in the organization’s upper levels have retained the authority in making decisions. Decision making that is centralized is easier to coordinate with regards to organizational activities in order to carry out the strategy of the company. This also means that the organization’s decisions are fit with the organization’s objectives. In times of crisis, this decision making gives strong leadership that is focusing with one person or group. It allows a faster decision making process and a concerted response throughout the organization.

Kingfisher clusters its people through groups of common expertise and experiences. This is called Functional Structure which has several advantages. First, the employees perform together and from this they can learn from each other. Employees become more productive on something that they do.

Second, employees can monitor on their tasks and make sure that they are giving their best and do not let their responsibilities shrink. The result of this is that the work process becomes more effective.

Most of all, the Functional Structure gives the manager a greater control of the activities within the organization.

Environmental Analysis – Five Forces Model and PESTLE Analysis

According to Michael Porter (2009), there are five competitive forces that shape strategy. These are the established rivals; supplier power; customer power; new entrants; and the substitutes. According to Porter, customers dictate to lower the prices by playing the organization and its rival against one another. Suppliers on the other hand can hinder an organization’s profit if they charge higher prices. The aspiring new entrants are armed with much newer capacities and are hungry for a share in the market can ratchet your investment in keeping Kingfisher in the market. The offered substitutes can just drive customers away.

Porter has suggested tactics designed in reshaping these forces for your organization’s favor. In neutralizing the power of the supplier, specifications of your organizations should be standardized so that shifting to other vendors can be easy. Customer power can be countered by expanding the organization’s services so that it will be hard for the customers to leave. In tempering wars established by rivals, organizations should invest heavily with products that are different with that of the rival’s. New entrants can be scared away by elevating your organization’s fixed costs like increasing your organization’s research and development. Threats brought about by the substitutes can be limited by offering products with greater value.

Figure 1 is the PESTEL analysis for the organization of Kingfisher. Political factors such as regulations and politicians often affect an organization’s strategy. This is the same as the legislative factors which includes legislation from the European Union and directives from the United Kingdom. Fortunately over almost twenty years in the business Kingfisher is able to adapt through these changes in policy. Economic trends which include world trends as well as that of the United Kingdom and homebuilding industry also affected the strategies of Kingfisher. But through the means of effective planning and execution of strategies, it was able to address the ever changing trends of these factors. Technology has always been a factor in advancements. Kingfisher was able to meet the demands of this fast paced factor. It was able to deliver a more effective service and product to its consumers. Social factors that is very important. Based on the strategies of the company their relationships with its stakeholders are of utmost importance. Activities in promoting and practicing corporate social responsibility were ensured to be given top priority. Finally, the environmental factors such as public opinion, cost implications and sites and locations were ensured that adherence to guidelines were followed.

SWOT Analysis

Kingfisher’s greatest advantage is its very adept experience in its line of business. Through extensive research and continuous development, it is able to produce top of the line products. With an over 100 operations all over the globe, it has a great marketing advantage over its competitors. Its greatest advantage is its workforce. Kingfisher ensures that the manpower it appoints has the advantage in handling its operations both culturally and technically. Kingfishers’ most valuable capability is its ability to produce great products and its marketing expertise all over the world. It is best that they would continue to do research for the continual improvement of its products towards customer satisfaction worldwide.

Threats to the organization’s operations are small homebuilding businesses especially in the local scenarios. These businesses would often offer cheaper prices and its managements are often run by locals that are undeniably more knowledgeable of the local market.

Since the firm’s strength is its efficient product and very capable marketing ability, it is better to continue developing its products to address the ever changing needs of homebuilding industry. The only weakness that can be derived on this case study, based on the facts given, is its inability to train people for future succession plans. The threats are the local competitors in China which in all factors, know the Chinese market very well than anyone. It is with this given threat, that opportunities such as training more competent employees that are culturally and technologically adept should be considered.

Evaluation of Organization’s Strategy

The article of Sveiby focuses on the very little development of strategy in firms that are not in the manufacturing industry. It also emphasised on the notion that strategies were juts formed and developed for the manufacturing industry. It was imposed on this article regarding knowledge intensive companies – those in the service industry. This sector is a phenomenon of all types of companies that range from organizations that took the effort in refining and packaging their outputs. Knowledge industries are the ones in the service sector. Heavy investment in knowledge and highly innovative. An ongoing process of solving the problems of the customers by the producers is the emergence of service. Roos, G. R. (1997) came to the conclusion that standardized service or package was only appropriate on a short term base. The provider of the service is an expert while the customers want their problems to be solved by the expertise of the provider. It is therefore fitting that the knowledge industries know how to treat their clients as individuals.

According to Morton (2010), when strategy and strategic planning is defined, it should always include as taking all the proactive approaches in evaluating all activities basing it in how well the activity moves towards the core goal of the business. More specifically, strategies are the plans for reaching a business’ objectives and goals. The concept of shaping strategies was discussed by John Hagel in his article Shaping Strategies. According to Hagel (2008), shaping strategies are strategies that use positive incentives in mobilizing and focusing thousand of participants to shape a specific desired industry or market. The elements that come together in this strategy are the compelling shaping view in providing focus for the participants of investments, a very power platform that will shape the economic leverage of the participants, and the shaper’s sets of acts and assets in communicating conviction and capabilities to potential participants. Hagel (2010) believes that shaping strategies hold a great promise in the business world as business executives hold a greater freedom in shaping their target markets and industries during these times of high uncertainty and rapid change.

For the case of the Kingfisher’s organization, its strategy is on focus strategy. Over the years it has developed new products engaged in businesses, merged with other companies and many other business ventures. All of these decisions are focused on what they do best – to provide the consuming public with the best home improvement products and services that they can give.

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