To critically evaluate impacts on overall sales of CostCutter due to correlation between CostCutter Supermarkets and Murco Petroleum Stations.
Project Background: (Including Rationale for selection)
This research is dedicated to subject area of marketing and mutual agreement impact of the business development. In today term UK supermarket industry is developing significantly and there are certain agreement between organisations enhances the competitive position of the business. While researcher is employing CostCutter, has observed there are significant sales advantages for CostCutter due to Murco Petroleum Stations with them. Most of the CostCutter franchisees run with the mutual agreement between CostCutter and Murco Petroleum organisation. In UK there are 1550+ CostCutter shops and annual turnover in 2010 was £606 million (www.costcutter.com). Out of 1550+ CostCutter franchisees around 80% operating with Murco Petroleum so impact of Murco for CostCutter cannot ignore.
Rationale for selection: The researcher gets good benefit from his own research by exaggerating the knowledge and also he can develop the learning methods for himself. The researcher can also conduct the research to adapt himself for effective study of marketing advantages of mutual agreements. The research will also support the organisation to eradicate the ineffectiveness or weakness of practices. It is mainly used to tackle the risk factors in an organisation. This research can also be used to refer for the people who study the marketing advantage obtain organisation through agreement and they will be benefited by studying this research in future. The proposed research mainly assists the organisation to evaluate the impacts on overall sales of CostCutter and it is used to realise the organisation's strategies which would effectively improve the outputs and accumulate more in profitable manner.
In total today the world population has rose up to 6 billion and when the population is increasing demand for the goods and service also increasing simultaneously. According to www.plunkettresearch.com during the period of 2001-2008 only for the food price has increased by 138% around the world based on the World Bank index. Moreover, today food processing, retailing and agriculture industry become huge competitive industry and total retail market over the world accounted USD 4 trillion (www.plunkettresearch.com) in year 2010. With these changes retail industry became competitive industry and as a single company Wal-Mart USA accounted USD 405 billion revenue in fiscal year 2010 and from which they accounted 51% from food and grocery section. Therefore, numbers suggest that the industry is developing drastically and considering United Kingdom retail business it is dominating by few large players of Tesco, ASDA, Sainsbury's and Morrison and they accounted almost 75% of UK market share. Nevertheless as explained above in the United Kingdom retail industry mainly food retailing considerable markets share which was 25% accounted by the unorganised grocery sellers and supermarkets chain likes CostCutter, Londis, One-Stop, Cooperative and Budgents. In today retail industries are the largest private sector in United Kingdom and it is providing job opportunity for over 2.9 million people across the UK. In addition to that during 2010 year UK retail industry accounted turnover over £ 293 billion and there were 286,680 retail outlets in the country (Biritish Retail Consoritum, 2010).
1.2. (B) Overview of CostCutter
CostCutter is one of the chain supermarket in United Kingdom started in early 1986 in a small level and today it has reached over 1,500 supermarkets across the UK region and the organisation enjoined £ 606 million turnover during 2010 financial year (www.costcutter.com, 2011). The chain of CostCutter supermarkets has been nominated as fasters growing independent company in the UK. Having just seven supermarkets in York area today, company has developed throughout the UK drastically. With the expectation of been a leading supermarket in the region CostCutter operating with the mutual agreements with Murco petroleum organisation. "Proud to be Local, the Costcutter brand is instantly recognisable, standing for 'Fresh, Local, Value'. Costcutter stands at the forefront of convenience retailing and with our dual brands - Costcutter and myCostcutter - we have the perfect retail proposition for your business." (www.costcutter.com, 2011). In today organisation operating with varies customer wining activity and providing petroleum product also one of the strategic decision made by the CostCutter. Most of the retail outlets are having the franchises agreement with individual investors as a part of capital finding. They are providing verity of business opportunities for individual investors in commission basses and the programme is popular among the UK individual investors. Organisation mission is to "be the leading symbol group brand - respected and revered throughout the UK and Ireland by members, consumers, suppliers and the industry alike. We will be the retailer's expert, providing unprecedented support and value, direction proposition, systems, people and advice. Our success will be earned and measured by exceptional member loyalty." (www.costcutter.com, 2011)
However, considering above research the CostCutter have unique features to analyse, because staring as a small retailer organisation went through the successful journey in last 25 years period. When consider other large scale supermarket chain like Tesco or ASDA they are developing their own brand for the petroleum and other products but the CostCutter being in the same market their concept of developing the business is entirely different. Instated of having their petroleum shed or they have tied up with Murco Petroleum Company to distribute fuel to the end consumer. This concept is different than other big established retailers in the UK. Therefore, this background has generated certain questions to the researcher to investigate the difference.
Objectives: (Intended outcomes/significance and scope of the project)
The above research primarily designs to evaluate sales and marketing benefits arrive to the CostCutter supermarket chain due to mutual agreement between CostCutter Supermarkets and Murco Petroleum Stations. The researcher prime aim is to understand significant impact of overall sales of CostCutter due to Murco Petroleum Stations with them.
Scope of the project: The work primarily carries out the CostCutter Supermarkets point of view. Because, researcher is working with the CostCutter Supermarkets and he can have easy access to more relevant data about the organisation. Due to powerful personal network with the organisation employee's researcher is limited his research scope CostCutter Supermarkets with Murco Petroleum Stations. As mention bellow in data collection section, he is going to evaluate overall sales impact of CostCutter supermarkets due to Murco Petroleum products.
The outcomes of this project are
In the research, researcher going to meet following objective as research outcomes,
Whether there are any overall sales advantages for CostCutter Supermarkets due to mutual agreement between two companies.
What are the possible advantages of having Murco Petroleum Stations with CostCutter Supermarkets?
What are the possible disadvantages of having Murco Petroleum Stations with CostCutter Supermarkets?
How Murco Petroleum Stations bring overall marketing advantages to the CostCutter Supermarkets franchise owners.
Therefore, the research will be going to meet those central researcher objectives as overall objectives of the work.
Morrison (2006) refers that the businesses are vast area of economic activity, in which goods and services are supplied in exchange for some payment, usually money. Businesses are falling in fundamental economics categories of manufacturing, services and agricultural areas. However, in general businesses are operate with the objective of shareholder wealth maximization and some specific businesses are more focus on community service rather wealth maximization. But in general can agree with Morrison (2006) argument because it said businesses are vast verity of economical activity.
Nieuwenhuizen & Rossouw (2008) argued businesses are playing important role in the economy by fulfilling in multiple human needs and entrepreneur make sure, make profit from business and satisfy society multiple needs. Based on the argument businesses are impacting to countries economical boom and development of economical growth. Moreover, it is helping countries verity of economical and social sectors. According to Nieuwenhuizen & Rossouw (2008) it is not only providing countries social benefits but also it increase shareholders wealth. In today most of the companies are looking for higher sales and profit growth through various strategies such as agreements, partnership, mergers, acquisitions and different marketing and operational strategies.
Considering the business of Costcutter it has been observed where ever Murco Petroleum shed is there it is tied up with Costcutter supermarket. According to www.murco.co.uk they have developed concept of 'ShopStop' in 1990s but when it was alliance with Costcutter Supermarket Group in 1996 that has resulted in the major growth of the 'shopping experience' on Murco forecourts. In the same time most of the Costcutter supermarkets also obtain huge advantages due to this alliance between Costcutter and Murco Petroleum.
DePamphilis (2011) explained business alliance is an alternative for mergers and acquisition activities. According to him motivation includes for business alliance are risk sharing, gaining access to new market, new product introducing, globalization, marketing advantages, and more simple rules and regulation than mergers and acquisition. Further adding DePamphilis (2011) said alliance agreements are more flexible and based on the empirical evidence it is more with the same industries. Business alliances are kind of business agreements which expect both parties to obtain operational and marketing advantages in long run through flexible contractual agreements.
USA Department of Justice (2007) outlined the business alliance process and they have said business alliances formally started in 1992 to help community to improve economy through self-sufficient and stimulate entrepreneurships. According to them business alliances was voluntary organisation of individual business or individual investors for commercial, financial, economy or any other community purpose. Moreover, they have argued business alliances brought advantages for both communities by providing jobs and development, and to businesses by providing risk capital, knowledge and verity of other services. So, in conclusion USA Department of Justice (2007) explained business alliances initially began to support both community and individual organisations.
Bruner et al., (2003) highlighted for types of business alliances and in this categorization they have used the purpose of business alliances as category. However, in this categorization they have identified four main categories of,
Product Development: according to Bruner et al., (2003) these business alliances for the purpose of product development. In some situation organisations are entering business alliance agreements to share technology, share experience, and for the purpose of certain specific contract etc. So these types of business alliances are consider as product development purpose business alliances.
Supply chain: some situation where organisations are working together to manage their supplier network. To keep the same competitive position some of the business organisations are entering business alliance agreements with other organisations to keep the supplier chain exclusively for them. To have this type of authentic and reliable supplier source organisations are entering such kind of agreements.
Sales channels: however, Bruner et al., (2003) explained some orginisations are entering business alliance agreement for the purpose of development of sales channel. To develop effective marketing and sales promotional activities.
Logistics: same like above in here they have argued that organisations are entering the business alliance agreements for the purpose of logistics development. In such case organisations are entering the business alliance agreement to develop logistics activity in the company.
As an overall orgnisations are entering business alliances for different purpose and some organisation for the production purpose, some are supplier and logistics purpose and some are marketing and sales purpose. However, each of these times there are certain advantages and disadvantages associated with business alliances. In the following section of this chapter it will be discussing these particular areas in detail.
DePamphilis (2011) highlighted business advantages due to strategic business alliance. However, his arguments mostly related to the two countries business alliances. According to him business alliances provide better understanding and gain better access to attractive country market from host country's government to import and market the products locally. Further, considering this arguments it is explaining marketing and entering advantages to the other country company. If overseas company goes operate in new market they need to have proper understanding and awareness about the market. Coming through business alliance agreements, it is providing opportunities of better approach to local government due to local partner. Since local partner is aware of the local market, they can market the product and import the product more cost effectively and with high productivity. Considering above mutual agreement between Costcutter and Murco has same kind of relationship which is explain by the DePamphilis (2011). Murco is a USA based petroleum refined company and Costcutter is United Kingdom based retail chain. Having a mutual agreement between these two companies are providing more advantage to the Murco Company to do their business effectively in UK. Since, Costcutter is local organisation they have better understanding, awareness, and knowledge about the UK market so this will bring advantages to the Murco group.
Culpan (2002) explain similar concept to the DePamphilis (2011). According to Culpan (2002), having a strategic business alliance, it is providing proper knowledge about the government officials in host country. When conducting business highly vital to have proper understanding about the local government and maintained proper relationship with the government. In the above scenario Costcutter is having far better understanding and work experience of the UK local authority's rules and regulations. Therefore, by conducting above mutual agreement will flow the further benefits to the Murco.
Allen (2009) explained business alliance will provide economic of scale advantages in production and marketing when business are operating together. When businesses are operating together they can use same floor space for operating, machine or equipments to produce products and use the same marketing channel for the both products. So according to the Allen (2009) concepts above agreement between Costcutter and Murco provide marketing and operational advantages to both the companies. Working together will provide opportunity of saving rent, opportunity of reducing marketing cost for both the companies. Since, both companies are working together they can rent local properties at cheaper rate, and rather than they are renting individually. Moreover, same setup of employees can work for both the companies which reduce employees cost associated with both companies. In addition to that, considering Allen (2009) original argument this will provide more marketing opportunities than doing individually. Fundamentally, both the companies can share their marketing budgets, promotional cost, advertisement and printing cost and much more marketing cost associate with the both organisation. Since these two companies in the service sector there is no production associated with these two companies. So considering Allen (2009) argument part of the benefits is relevant for both companies and part of the benefits are not relevant for both companies. However, as conclusion proper business alliance provides economic scale of advantages to the organisations.
Tian (2007) highlighted business alliance provides technical experience, expertise or knowledge for both companies by sharing their individual expertise. According to him by having structural business agreements such as business alliance provides advantage for both companies by sharing knowledge between each other. In this situation, Costcutter and Murco sharing their knowledge, between each others for better productivity improvement. Moreover, both companies sharing their expertise to get advantages from each other. However, in this situation it is purely depend on each company acquired knowledge. In this mutual agreement this two companies are in different business sectors so it is highly questionable at which extend they can share the knowledge. But in general it is advantage of mutual agreements.
Buckley et al., (2004) said having mutual agreement both the parties can share distribution facility and dealer's network, use the same agent or retail to reduce the logistic cost and market penetration easily. Moreover, both companies can put together their technical and financial resource to compete with revels. So according to this explanation organisation can put together their resources in one portfolio to get competitive advantages. In the business of Costcutter and Murco, Murco is a USA based financially reach company, they have more freedom to access large amount of risk capital. With compare to Murco, Costcutter does not have that much of capability to access risk finance. Therefore, this agreement benefited for Costcutter to access risk finance. Considering UK retail business it is dominating by three major players of Tesco, ASDA, and Sainsbury. To compete with this kind of large players, Costcutter should have sufficient financial support. Having such agreement will provide cheaper access of large amount of risk capital. According to Buckley et al., (2004) the organisations are getting benefits from these kinds of mutual agreements.
Hoskisson et al., (2008) came up with the argument of advantages of business alliance according to him business can compete effectively if they have proper mutual understanding between each other companies. As per them direct combined competitive energies towards defecting mutual revels the biggest advantage of the mutual agreement. Based on this argument if organisation working together they can defeat there revels effectively by sharing their resources by sharing their experiences, and effective planning. In the Costcutter and Murco business there are facing huge competitive threat from outside market. For Murco, they have big competitors like British petroleum, Tesco, Shell and Total. In the same time Costcutter have big competitor of Tesco, ASDA, Sainsbury and many more organized retail sellers. By combining both of this companies of Murco and Costcutter they can effectively compete with these competitors with together.
Procedures: (Details of techniques, data collection, data recording, etc.)
The researcher referring to the work done by Saunders et al (2007), on research methodology identifies that every research has a determined research approach; this research approach decides the course of actions, techniques and methodology that would be employed by the researcher to arrive at the desired outcome. The researcher keeping this literature into consideration would be making a deductive research approach, under this approach the researcher would first collect information secondary in nature, identifying the key models, theories and concepts , the researcher would then through critical analysis would narrow down the research findings bringing it in line with the specific research findings from the CostCutter case analysis arriving and at conclusions and recommendations that have been established earlier in researches, but still being specific to this research.
Data Collection: The researcher for this research would be employing both the primary and secondary sources of data collection. The primary source of secondary information would be through academically recognised sources like books, journals etc that can be obtained from university library and ethos e-source. The researcher would also look to collected primary data, which would reflect on the different elements that generate and drive of overall sales increase. The researcher proposes a sample size of 15 surveys, with general population as target population, located in different locations in London and Norwich.
Target groups : For the above research I'm going to collect information from one regional manager, different CostCutter franchises owners and four sales managers to get fill questioner. However, most probably I will interview regional manger to get more information.
Resources for the research: For the above work I'm going to use my personal computer and personal network as resources.
Research Analysis : The researcher would be conducted data analysis employing a qualitative research approach, the researcher for this research would be critically evaluating the primary information collected from various sources, addressing theoretical models, literature and previous researcher on franchasies and sales development. The researchers approach would be purely qualitative, where the researcher would establish the research questions and achieve the objectives defined by the researcher, through valid and reliable links between theory and primarily findings. However, for the purpose of data analysis I am going to use Microsoft Excel software and the facilities available with the software to analyse data. Moreover, Pivot table facility available with the program software.
Possible limitations to the research :The researcher at this level is a student with limited availibity of financial resources. The researcher feels this limitation has led the researcher to only employ one technique of primary data collection, with a smaller sample size, and a limited sampled location.
Dissertation Plan and Time Frame
Time-scale (Plan of action)
Resources required (Equipment, software, personnel etc)
Library, Internet, Personal Computer (PC)
Library, Internet, PC
Library, Internet, PC and Personal Network
Saunders, M., Lewis, P., & Thornhill, A. (2009). Research methods for business students (5th Edition ed.). Harlow: Prentice Hall.
Trochim, W. M. (2006, October 20). Deduction & Induction. Retrieved July 5, 2011, from The Research Methods Knowledge Base: http://www.socialresearchmethods.net/kb/dedind.php
www.costcutter.com. (n.d.). www.costcutter.com. Retrieved September 5, 2011, from www.costcutter.com: http://www.costcutter.com/Corporate/About%20Us.aspx