UK COLLEGE OF BUSINESS AND COMPUTIN G One of the aims of this unit is to build on learners’ existing knowledge of the basic tools of business analysis such as PESTLE and draw it together so that the learners think strategically.
Unit 7 Business Strategy UK COLLEGE OF BUSINESS AND COMPUTING Module Booklet
Course: EDEXCEL BUSINESS Group: Edexcel Level 5 Module: Unit 7 Business Strategy Module type: Core Module Code: A/601/0796 Module Credit: 15 Teaching Period: (15+6weeks) Level:5 (QCF) Contact Hours: (15*3+6*3 = 63) Lecturers: 15 weeks Revision Clinic: 3 week Feedback and assignment guidance: 3 weeks Lecturer: Mr. K.A Mayah Start date: 27/05/14 Day:
Tuesday
Time:
10:00 – 13:00
Room: 901 Term:
May-Sept 2014
BTEC
(HND)
CONTENTS 1. INTRODUCTION, AIMS AND OBJECTIVES 2. MODULE OUTLINE AND TEACHING METHODS 3. READING AND COURSE PREPRATION 4. LECTURE WITH DETAILED COURSE PROGRAMME AND OBJECTIVES 5. ASSESSMENT DETAILS
1 INTRODUCTION, OBJECTIVES
AIMS
AND
INTRODUCTION One of the aims of this unit is to build on learners’ existing knowledge of the basic tools of business analysis such as PESTLE and draw it together so that the learners think strategically. Learners will be introduced to further analysis tools needed for the process of strategic planning. They will be able to explain the significance of stakeholder analysis and carry out an environmental and organisational audit of a given organisation. Learners will learn how to apply strategic positioning techniques to the analysis of a given organisation and prepare a strategic plan based on previous analysis. They will also learn how to evaluate possible alternative strategies (such as substantive growth, limited growth or retrenchment) and then select an appropriate future strategy for a given organisation. Finally, learners will compare the roles and responsibilities for strategy implementation and evaluate resource requirements for the implementation of a new strategy for a given organisation.
Learners will then be able to propose targets and timescales for implementation and monitoring of the strategy in a given organisation. Aim The aim of this unit is to give learners the knowledge and understanding of how a business unit can strategically organise and plan for likely future outcomes in order to be successful.
Key Objectives Completing this unit will enable the learner to:
Explain the process of strategic planning
Formulate a new strategy
Identify approaches to strategy evaluation and selection
Explain how to implement a chosen strategy.
Learning Outcomes and assessment criteria: On successful completion of this unit a learner will: LO1 Understand the process of strategic planning 1.1 explain strategic contexts and terminology – missions, visions, objectives, goals, core competencies 1.2 review the issues involved in strategic planning 1.3 explain different planning techniques LO2 Be able to formulate a new strategy 2.1 produce an organisational audit for a given organisation 2.2 carry out an environmental audit for a given organisation 2.3 explain the significance of stakeholder analysis LO3 Understand approaches to strategy evaluation and selection 3.1 analyse possible alternative strategies relating to substantive growth, limited growth or retrenchment
3.2 select an appropriate future strategy for a given organisation LO4 Understand how to implement a chosen strategy 4.1 compare the roles and responsibilities for strategy implementation 4.2 evaluate resource requirements to implement a new strategy for a given organisation 4.3 discuss targets and timescales for achievement in a given organisation to monitor a given strategy. Knowledge and Understanding:
Explain the role of strategy and key terminology used in strategy
Know what is meant by strategic thinking
Examine various planning systems and strategic planning issues
Identify strategic planning techniques
Analyse the significance of stakeholders
Analyse major changes in the external environmental impacting on strategy
Evaluate strategic the Strategic positioning of an organisation
Identify alternative strategies relating to substantive growth, limited growth or retrenchment
Know how to evaluate alternative strategies and to select the best strategy for an organisation
Know how to communicate strategic plans to various stakeholders
Identify of team and individual roles, responsibilities and targets;
Identify benchmark targets at differing levels of the organisation
Know how to allocate resource to achieve strategic goals and objectives
Discuss timescales for achievement of a given strategy in a given organisation
Indicative content
1 Understand the process of strategic planning Strategic contexts and terminology: role of strategy; missions; visions; strategic intent; objectives; goals; core competencies; strategic architecture; strategic control Strategic thinking: future direction of the competition; needs of customers; gaining and maintaining competitive advantage; Ansoff’s growth-vector matrix; portfolio analysis Planning systems: informal planning; top-down planning; bottom-up planning; behavioural approaches Strategic planning issues: impact on managers; targets; when to plan; who should be involved; role of planning Strategic planning techniques: BCG growth-share matrix; directional policy matrices; SPACE,PIMS 2 Be able to formulate a new strategy Stakeholder analysis: stakeholder significance grid; stakeholder mapping Environment auditing: political, economic, socio-cultural, technological, legal and environmental analysis (PESTLE); Porter’s 5 force analysis; the threat of new entrants; the power of buyers; the power of suppliers; the threat of substitutes; competitive rivalry and collaboration Strategic positioning: the Ansoff matrix; growth; stability; profitability; efficiency; market leadership; survival; mergers and acquisitions; expansion into the global marketplace The organizational audit: benchmarking; SWOT analysis; product positions; value-chain analysis; demographic influences; scenario planning; synergy culture and values 3 Understand approaches to strategy evaluation and selection Market entry strategies: organic growth; growth by merger or acquisition; strategic alliances; licensing; franchising Substantive growth strategies: horizontal and vertical integration; related and unrelated diversification Limited growth strategies: do nothing; market penetration; market development; product development; innovation Disinvestment strategies: retrenchment; turnaround strategies; divestment; liquidation Strategy selection: considering the alternatives; appropriateness; feasibility; desirability 4 Understand how to implement a chosen strategy
The realisation of strategic plans to operational reality : communication (selling the concepts);project teams; identification of team and individual roles, responsibilities and targets; programme of activities; benchmark targets at differing levels of the organisation Resource allocation: finance; human resources; materials; time Review and evaluation: an evaluation of the benchmarked outcomes in a given time period in relation to corporate, operational and individual targets.
Programme Specification Accrediting Body: EDEXCEL Course: BTEC HND IN BUSINESS Unit: 7 Business Strategy Wk
Lecture Schedule
Outcome of session
1
Introduction to the module
Introduction to the module, mode of assessment, awareness of the awarding body, assessment criteria and the mode of assessment
2
3
4
Strategic contexts and terminology: role of strategy; missions; visions; strategic intent; Explain strategic contexts and terminology objectives; goals; core competencies; strategic architecture; strategic control
Strategic thinking: future direction of the competition; needs of customers; gaining and maintaining competitive advantage; Ansoff’s growth-vector matrix; portfolio analysis
Planning systems: informal planning; top-
Review the future direction of the competition , needs of customers gaining and maintaining competitive advantage; Ansoff’s growth-vector matrix; portfolio analysis using a case study
Explain the different planning systems
down planning; bottom-up planning; behavioural approaches Strategic planning issues: impact on managers; targets; when to plan; who should be involved; role of planning
5
Strategic planning techniques: BCG growthshare matrix; directional policy matrices; SPACE, PIMS
Review the strategic planning issues
Explain different strategic planning techniques Addressing the LO and case study
Assignment discussed and revised
6
Stakeholder analysis: stakeholder significance grid; stakeholder mapping
Identify different stakeholders Examine the significance of different stakeholders of an organisation using the stakeholder significance grid and stakeholder mapping.
Environment auditing: political, economic, socio-cultural, technological, legal and 7
environmental analysis (PESTLE); Porter’s 5 force analysis; the threat of new entrants; the power of buyers; the power of suppliers; the threat of substitutes; competitive rivalry and
Analyse the changes in the external environment affecting the business strategy using PESTEL. Analyse changes taking place in the industry using Porter’s Five forces
collaboration
8
Strategic positioning: the Ansoff matrix; growth; stability; profitability; efficiency; market
Analyse the strategic positioning of an organisation
leadership; survival; mergers and acquisitions; expansion into the global marketplace
9
The organisational audit: benchmarking; SWOT analysis; product positions; value-chain
Carry out organisational audit for a given business organisation using appropriate tools and techniques.
analysis; demographic influences; scenario planning; synergy culture and values
Market entry strategies: organic growth; growth by merger or acquisition; strategic alliances; licensing; franchising Substantive growth strategies: horizontal and vertical integration; related and unrelated 10
Diversification
Examine possible alternative strategies relating to substantive growth, limited growth or retrenchment
Limited growth strategies: do nothing; market penetration; market development; product development; innovation Disinvestment strategies: retrenchment; turnaround strategies; divestment; liquidation
11
Evaluate alternative strategies for an organisation using a suitable criteria in terms of appropriateness Strategy selection: considering the alternatives; (suitability); feasibility (viability); desirability (acceptability) appropriateness; feasibility; desirability Select an appropriate future strategy for an organisation
Explain how a new strategy can be communicated to various stakeholders.
12
The realisation of strategic plans to operational reality: communication (selling the concepts);project teams; identification of team and individual roles, responsibilities and targets; programme of activities; benchmark targets at differing levels of the organisation
Identify project teams Identify team and individual roles, responsibilities and targets Identify programme activities Identify benchmark targets at differing levels of the organisation
13
Resource allocation: finance; human resources; Evaluate resource requirements to implement a new materials; time strategy for a given organisation
14
15 16 17 18 19 20 21
Review and evaluation: an evaluation of the benchmarked outcomes in a given time period Carry out a review and evaluation of benchmarked in relation to corporate, operational and outcomes in a given time period in relation to corporate, individual targets operational and individual targets.
Revision, and assignment guidance addressing all learning outcomes Assignment support Assignment support Assignment support Assessment and feedback Assessment and feedback Assessment and feedback
Revision and guidance addressing LO1-4 Assignment support and guidance Assignment support and guidance Assignment support and guidance Feedback given to the learner Feedback given to the learner Feedback given to the learner
2.1 Recommended text and links: Recommended textbooks Johnson G et al – Exploring Corporate Strategy: Text and Cases, 8th edition (Financial Times/Prentice Hall, 2007) ISBN: 9781405887328 BPP Learning Media – Business Essentials – Unit 7 Business Strategy (BPPLearning Media, 2013) ISBN: 978-0751744798 Grant M R – Contemporary Strategy Analysis (Wiley-Blackwell, 2007) ISBN: 9781405163095 Journals and newspapers The Financial Times and other quality newspapers. Many business stories will appear in the news sections. Harvard Business Review (Harvard Business Publishing) The Economist (The Economist Newspaper Ltd)
Websites www.bized.co.uk resources www.bloomberg.com
Bized provides a selection of teaching and learning Bloomberg – Business and Financial news
www.businessballs.com Business balls - a free ethical learning and development resource Free materials, articles and ideas for team roles and leadership www.emerald-library.com www.fsb.org.uk www.ft.com www.hemscott.net information
Independent publisher of global research The Federation of Small Businesses The Financial Times business sections Share prices, stocks, investing and company
Videos Television news, current affairs and business programmes will also provide useful additional and up to date material on business and the economy often with special features on particular business environment subjects. Many programmes are archived and can be viewed on demand. Campus: Wentworth houseLecturer: Mr. K.A Mayah Contact details: Assessment: The module will be assessed meeting all the LO as specified by the awarding body, Ed Excel. Please read the instructions carefully while addressing the tasks specified. Contribution: 100% of the module Outline Details: Individual report approx 4000 words. Details enclosed in the assignment brief.
2.2 Teaching and Learning Activities
The module tutor(s) will aim to combine lectures with tutorial activities. This environment will provide opportunities for the student to understand the course material through case study and text and to apply it in a practical way. The intent is to facilitate interactive class activities, and discussion about the significant role of research in a global and local business environment.
2.3 Teaching Ethos The college’s approach towards teaching and learning is simple and effective. The main aim of UKCBC is to assist learners in maximising their potential by ensuring that they are taught clearly and effectively. This will enable students to engage in the learning environment and promote success in both their academic studies and subsequent career.
2.3.1 Methods of Delivery: LECTURES: These will be developed around the key concepts as mentioned in the indicative course content and will use a range of live examples and cases from business practice to demonstrate the application of theoretical concepts. This method is primarily used to identify and explain key aspects of the subject so that learners can utilise their private study time more effectively. SEMINARS: These are in addition to the lectures. The seminars are designed to give learners the opportunity to test their understanding of the material covered in the lectures and private study with the help of reference books. This methodology usually carries a set of questions identified in advance. Seminars are interactive sessions led by the learners. This method of study gives the learner an excellent opportunity to clarify any points of difficulty with the tutor and simultaneously develop their oral communication skills. CASE STUDIES: An important learning methodology is the extensive use of case studies. They enable learners to apply the concepts that they learn in their subjects. The learners have to study the case, analyse the facts presented and arrive at conclusions and recommendations. This assists in the assessment of the learner’s ability to apply to the real world the tools and techniques of analysis which they have learnt. The case study serves as a supplement to the theoretical knowledge imparted through the course work. Plagiarism: Any act of plagiarism will be seriously dealt with according to the colleges and awarding bodies’ regulations. In this context the definition and scope of plagiarism are presented below: Plagiarism is presenting someone’s work as your won. It includes copying information directly from the web or books without referencing the material; submitting joint coursework as an individual effort; copying another student’s coursework; stealing coursework form another student and submitting it as your own work. Suspected plagiarism will be investigated and if
found to have occurred will be dealt with according to the college procedure. (For further details please refer to the plagiarism policy and the student code of conduct.)
Assessment: The module will be assessed meeting all the LO as specified by the awarding body, Ed Excel. Please read the instructions carefully while addressing the tasks specified. Contribution: 100% of the module Outline Details: Individual report approx 4000 words. Details enclosed in the assignment brief .
ASSESSEMENT Unit: 7 – Business Strategy Learning Hours: 60 Hours. Self-learning hours: 90 hours. Course: HND Business – Level 5 CREDIT VALUE: 15 CREDITS Term: Lecturer: Mr. K A Mayah Verifier: Mrs. Sunita Kotta
Learners Name Registration Number Learners Declaration: I certify that the work submitted for this unit is my own: Signed: Hand out Date:
Submission Date:
The Following Sections to be completed by the assessor: Center Name: Center Number:
UKCBC
Please note that the assessors signature below denotes conformation that he/she has in no way influenced the outcome of the assessment:
Assessors Name: Assessors Signature:
K.A Mayah
Has the unit been Internally Verified?
Y/N
Date of verification: Internal verifiers signature: Internal verifiers assignment brief:
Due Dates Issue Date Due Task- 1 Due Task- 2 Due Task- 3 Due Task - 4
23/06/2014 11/07/2014 01/08/2014 15/08/2014 26/09/2014
Deadline for JAN 2013 intake where E-learning will be blocked
01/12/14
Deadline for May 2013 intake where E-learning will be blocked
06/03/15
Unit Outcomes
Outcome
Evidence for the criteria to pass.
Assessors decision
Internal verification decision. (agree, disagree)
TASK 1: You are required to carry out a research by using supportive materials like books, annual reports, websites, etc., to explain strategic contexts and terminology, review the issues involved in strategic planning, and explain different planning techniques and give findings on P1.1, P1.2, and P1.3. You can draw examples from Mulberry or any other organisation(s) of your choice. Answers without application to an organisation(s) or appropriate examples will be referred. P1.1 - Explain strategic LO1Understand the contexts and terminology – missions, visions, objectives, organisational goals, and core competencies purposes of with reference to Mulberry or any other organisation of your businesses choice.
P1.1
P1.1
(P,M,D)
(P,M,D)
P1.2 -Review the issues involved in strategic planning with reference to Mulberry or any other organisation of your choice. P1.3 - Explain different planning techniques such as BCG growth-share matrix; directional policy matrices; SPACE, PIMS using examples from Mulberry or any other organisation(s) of your choice.
P1.2
P1.2
(P,M,D)
(P,M,D)
P1.3
P1.3
(P,M,D)
(P,M,D)
Summarized Feedback for Task 1(reflecting 1.1, 1.2, and 1.3, Pass, Merit and Distinction.) IV comments towards Task 1
TASK 2 You are required to carry out a research by using supportive materials like books, websites, etc., to produce an organisational audit, carry out an environmental audit, and explain the significance of stakeholder analysis for Mulberry and give an individual report of the findings on P2.1, P2.2, and P2.3. Answers without application to Mulberry or appropriate examples will be referred.
LO2Understand the P2.1-Produce an organisational nature of the audit for Mulberry
P2.1
P2.1
(P,M,D)
(P,M,D)
P2.2
P2.2
(P,M,D)
(P,M,D)
national environment in which businesses operate
P2.2- Carry out an environmental audit for Mulberry
P2.3 – Explain the significance of stakeholder analysis to Mulberry
P2.3
P2.3
(P,M,D)
(P,M,D)
Summarized Feedback for Task 2(reflecting 2.1, 2.2, 2.3, Pass merit and distinction.) IV comments towards Task 2
TASK 3 You are required to carry out a research by using supportive materials like books, websites, etc., to analyse possible alternative strategies relating to substantive growth, limited growth or retrenchment and select an appropriate future strategy for Mulberry and give an individual report of the findings on P3.1, and P3.2. Answers without application to Mulberry or appropriate examples will be referred.
LO3Understand the behaviour of
P3.1- Analyse possible alternative strategies relating to substantive growth, limited growth or retrenchment for Mulberry
organisations in their market environment Summarized Feedback for Task 3(reflecting 3.1, 3.2, Pass Merit and Distinction.) IV comments towards
P3.2- Select an appropriate future strategy for Mulberry
P3.1
P3.1
(P,M,D)
(P,M,D)
P3.2
P3.2
(P,M,D)
(P,M,D)
Task 3
TASK 4 You are required to carry out a research by using supportive materials like books, websites, etc., to compare the roles and responsibilities for strategy implementation, evaluate resource requirements to implement a new strategy for Mulberry and discuss targets and timescales for achievement at Mulberry to monitor a given strategy and give an individual report of the findings on P4.1, P4.2 and P4.3. Answers without application to Mulberry or appropriate examples will be referred.
P4.1 Compare the roles and responsibilities for strategy implementation at Mulberry
P4.1
P4.1
(P,M,D)
(P,M,D)
P4.2
P4.2
(P,M,D)
(P,M,D)
TASK 4 P4.2 Evaluate resource requirements to implement a new LO4Understand how to implement a strategy for Mulberry chosen strategy.
P4.3 Discuss targets and timescales P4.3 for achievement at Mulberry to monitor a given strategy. (P,M,D)
Summarized Feedback for Task 4(reflecting 4.1, 4.2, 4.3, Pass merit and distinction.)
IV comments
P4.3 (P,M,D)
towards Task 4
Merit grades M1 awarded Distinction grades D1 awarded Any other comments
M2 D2
M3
P1 D3
P2
P3
P4
Resubmit :
Grade given by the Assessor: Pass
Merit
Distinction
Assessors Signature:
Date:
IV Grading Check:
Comments if any:
Agree Disagree
Modify grade to
IV signature: Date:
Students feedback: Student Signature:
Date:
Plagiarism: Any act of plagiarism will be seriously dealt with according to the colleges and awarding bodies’ regulations. In this context the definition and scope of plagiarism are presented below: Plagiarism is presenting someone’s work as your won. It includes copying information directly from the web or books without referencing the material; submitting joint coursework as an
individual effort; copying another student’s coursework; stealing coursework form another student and submitting it as your own work. Suspected plagiarism will be investigated and if found to have occurred will be dealt with according to the college procedure. (For further details please refer to the plagiarism policy and the student code of conduct.)
ASSIGNMENT TASK 1 to TASK 4: You are required to follow the instructions as specified towards each task and support with a research by using supportive materials like books, websites, etc., and give a feedback on the findings. TASK 1: You are required to carry out research by using supportive materials like books, annual reports, websites, etc., to explain strategic contexts and terminology, review the issues involved in strategic planning, and explain different planning techniques and give findings on P1.1, P1.2, and P1.3. You can draw examples from Mulberry or any other organisation(s) of your choice. Answers without application to an organisation(s) or appropriate examples will be referred. LO1 Understand the process of strategic planning 1.1 Explain strategic contexts and terminology – missions, visions, objectives, goals, and core competencies with reference to Mulberry or any other organisation(s) of your choice. 1.2 Review the issues involved in strategic planning with reference to Mulberry or any other organisation(s) of your choice. 1.3 Explain different planning techniques such as BCG growth-share matrix; directional policy matrices; SPACE, PIMS using examples from Mulberry or any other organisation(s) of your choice. Case study for task 2, task 3 and task 4: Individual report Mulberry Group PLC the English luxury brand is a United Kingdom-based holding company incorporated in 1974 and is listed on the Alternative Investment market (AIM). The group currently employs approximately 943 employees. The Company is engaged in the design and manufacture or sourcing of luxury accessories, clothing and footwear and their subsequent sale through wholesale channels or its own stores and concessions in home and export markets. It operates in two segments: the Retail business and Design business.
The Retail segment is engaged in the sale of Mulberry branded fashion accessories, clothing and footwear through a number of shops and department store concessions. The design segment includes brand management, marketing, product design, manufacture, sourcing and wholesale distribution for the Mulberry brand. It invests in design and development in order to develop and market accessory, clothing and footwear collections for Spring/Summer and Autumn/Winter each year. The Company's wholly owned subsidiaries include Mulberry Company (Design) Limited, Mulberry Company (France) SARL and Mulberry Company (Europe) Limited. MULBERRY GROUP PLC ("Mulberry" or the "Group") PRELIMINARY RESULTS FOR THE YEAR ENDED 31 MARCH 2013 FINANCIAL HIGHLIGHTSFOR THE YEAR ENDED 31 MARCH 2013
Total revenue of £165.1 million (2012: £168.5 million)
Retail revenue up 8% to £107.2 million, up 6% like-for-like
Wholesale revenue down 16% to £57.9 million, reflecting European account rationalisation and destocking by Asian partners
Profit before tax of £26.0 million (2012: £36.0 million), reflecting an investment in directly operated international stores and a contraction in gross margin
Basic earnings per share of 32.2p (2012: 43.9p)
Proposed dividend of 5.0p per share (2012: 5.0p per share)
OPERATING HIGHLIGHTS FOR THE YEAR ENDED 31 MARCH 2013
Opened17 new international stores,
Construction of second UK factory completed on 3 June 2013
Enhanced product range including bags, small leather goods and men's accessories
Established regional structure and invested in talent across the business
CURRENT TRADING AND OUTLOOK
Retail revenue up 9% for the 10 weeks to 8 June 2013, like-for-like sales up 6%
Modest growth in wholesale sales expected for 2013/14
Three new stores (Berlin, Vienna and Palma de Mallorca)opened since 31 March 2013; targeting 15 to 20 new stores during 2013/14
BRUNO GUILLON, CHIEF EXECUTIVE, COMMENTED: After three years of rapid growth, we have had a year of consolidation during which we have laid the foundations for the transition of Mulberry from a UK success story into a global luxury brand. In particular we are increasing UK production and enhancing both our retail experience and product range. Mulberry has a well-established business in the UK and a growing presence in Europe. With over 80% of ITS sales derived from these markets where the economic climate remains difficult, Mulberry's challenge for the future is to accelerate our brand awareness in the USA and Asia. Greater visibility in Asia will allow us to benefit from tourist traffic in Europe and the USA at the same time as growing our business locally." MULBERRY GROUP PLC STRATEGY Mulberry's four long term strategic themes and progress made by management over the last 12 months: 1. Reinforce luxury positioning:
Made in England: second factory in Somerset, UK, was completed during June 2013, and it will double our UK production capacity; and
Distribution: opened retail stores in prime locations with an updated store concept and rationalised the wholesale distribution network in Europe.
2. International expansion: Mulberry management continues to focus on prime retail locations complemented by high quality wholesale accounts. During the year Mulberry:
Improved Mulberry retail and franchise store network:
Opened seven directly operated stores and ten partner stores in prime retail locations, in line with our target of 15-20 stores per annum. This brings our global store footprint to 115 stores, including directly operated and partner stores;
Consolidated Mulberry Middle East franchise operations, appointing Chalhoub Group to operate business in the region (excluding Qatar) and accelerating the store opening plans over the next two to three years; and
Increased the quality of multi-brand distribution network through a European account rationalisation, continuing to build and maintain strategic partnerships with key department store accounts.
3. Product development A number of product development initiatives have been completed by Mulberry during the year which includes the launch with the AW13 collection in stores from June to September 2013. For example:
In the women's bags category Mulberry have reinforced their core and entry level offerings under £1,000 with additional leather, colour and component offerings and the continued introduction of new styles. The price architecture of the offering has also been extended at the higher end of the Mulberry range, with the introduction of handbags priced between £1,000 and £1,700;
Increased the colour and style options for small leather goods, belts and fashion accessories; and
The men's accessories category has been significantly reinforced, with a 50% increase in product lines for AW13 compared to AW12. Growth of this category is an area of opportunity for the brand, particularly in Asian markets.
4. Leverage operations to support growth One of Mulberry key strategies is to maintain a balanced investment programme including new stores, factory facilities and IT systems. During the year to 31 March 2013 Mulberry invested in all three areas with £8.8 million in capital expenditure spent on stores, £4.4 million on Mulberry UK factories and £2.9 million on IT systems. Mulberry management has also enhanced the organisation structure with an investment in talent throughout the organisation and a move to regional reporting lines from 1 April 2013. Regional heads have been appointed for Europe and North America and the new structure is designed to bring consistency and co-ordination between the retail and wholesale channels and drive international growth through regional focus and accountability. During the year Mulberry management completed a review of Mulberry supply chain. The management have implemented an improved wholesale ordering timetable and commencing a project for the implementation of a new integrated supply chain system which is expected to be completed during the financial year ending 31 March 2015. While investing for future growth, Mulberry management continue to carefully manage investments and costs throughout the business. Business review
Total revenue for the year to 31 March 2013 was £165.1 million, down 2% from £168.5 million in 2012, reflecting growth in retail sales offset by a decline in wholesale sales. RETAIL Mulberry own stores and concessions saw continued growth with revenues up 8% to £107.2 million (2012: £99.7 million) and up 6% like-for-like. This was achieved against a backdrop of very strong growth last year of 36% and a challenging economic climate in the UK and Europe as well as a reduction in tourist spending in the London stores.
UK retail sales were up 6% to £91.8 million (2012: £86.9 million);
International retail sales were up 20% to £15.4 million (2012: £12.8 million).
During the period Mulberry opened seven new directly operated stores in the USA, Germany and Switzerland;
Online sales, which are included in the segments above, were up 21% to £17.6 million, accounting for 11% of Group sales (2012: 9%).
WHOLESALE
Wholesale revenue was down 16% to £57.9 million (2012: £68.8 million), reflecting two key factors:
The quality of the European wholesale channel was improved through rationalisation of accounts; and
A slowdown of demand in Asia following very strong sales over the last two years driven by certain key products. This resulted in a period of destocking and cautious re-ordering by our Asian franchise partners during the year to 31 March 2013.
Although these factors have resulted in lower wholesale sales this year, the steps that we are taking to improve the quality of the wholesale distribution network are expected to have a positive impact on both the retail and wholesale businesses in the future. During the year Mulberry opened ten partner stores: a flagship store in Singapore, five stores in Korea, and one store in each of Shanghai, Beijing, Nagoya and Bahrain. FINANCIAL Gross margin was 63.3% for the year to 31 March 2013 (2012: 66.2%) due largely to a catch-up in product related overheads relative to sales which have normalised this year after rapid sales growth in the previous two years. In addition, gross margin was affected by higher raw materials costs which were not reflected in prices until November 2012.
Net operating expenses for the period increased by £2.9 million to £79.0 million (2012: £76.1 million). This includes £6.3 million additional costs related to new directly operated international stores offset by cost savings in other areas. Profit before tax fell 28% to £26.0 million (2012: £36.0 million) this was due to the reduction in gross margin and the investment in directly operated international stores. Capital expenditure for the period was £16.9 million, of which £8.8 million related to new stores, £4.4 million to factories and £2.9 million to investment in IT systems. Inventories have increased to £35.7 million from £32.5 million at the start of the period partly reflecting new store openings but also lower sales than originally anticipated. Overall, the Group balance sheet remains strong with cash of £21.9 million at 31 March 2013 (2012: £27.3 million) and no debt. The cash generated from operations for the year amounted to an inflow of £24.2 million (2012: inflow of £30.1 million). Basic earnings per share for the year decreased by 27% to 32.2p (2012: 43.9p). The Mulberry Board is recommending the payment of a dividend on the ordinary shares of 5.0p per ordinary share (2012: 5.0p) which will be paid on 9 September 2013 to shareholders on the register on 16 August 2013. CURRENT TRADING AND OUTLOOK The outlook for both the retail and wholesale businesses for the year to 31 March 2014 remains challenging given Mulberry's heavy reliance upon the UK and European markets where the economic climate continues to be difficult. The trading conditions in Mulberry's more developed domestic market highlight the importance of our international growth strategy. Mulberry management continue to take the necessary steps to build Mulberry businesses in the USA and Asia, opening stores in prime retail locations and investing in marketing initiatives that highlight the brand's heritage and craftsmanship. The Asian customer is important globally as tourism continues to be a critical component of luxury sales, and we are particularly focused on raising our brand awareness in this market. During the 10 weeks to 8 June 2013, total Retail sales were 9% above the same period last year (like-for-like sales up 6%). The wholesale order book for SS14 is building satisfactorily and Mulberry management expect modest growth in wholesale sales for the year to 31 March 2014. Since 31 March 2013 Mulberry management have opened directly operated stores in Berlin and Vienna and a partner store in Palma de Mallorca. Mulberry management target is to open 15 to
20 new international stores per annum, being a combination of both directly operated and partner stores. Capital expenditure for the year to 31 March 2014 is expected to be in the order of £20.0 million, subject to the timing of new store openings and other investments. This continues to be funded from internally generated cash flow. During the year to 31 March 2014 the management will continue with Mulberry global expansion strategy, focusing on the transition of Mulberry from a UK success story into a global luxury brand. Available from http://www.mulberry.com The following articles below shows how the British press have reported on Mulberry’s recent performance for the year ending 31/03/2013: QUESTOR SHARE TIP: AVOID MULBERRY AS IT STILL HAS MUCH TO PROVE Garry White, The Telegraph 16 June 2013, Available fromhttp://www.telegraph.co.uk If Mulberry pulls off its plans the shares are undervalued, but it still has much to prove. Questor says avoid. Shareholders in Mulberry get a 20pc discount on its handbags. If you are paying £1,000 plus for the latest must-have accessory, this is something well worth having. However, shares should not be bought for perks alone and, with the shock departure of its creative director Emma Hill last week, what now for the British upstart luxury goods retailer? Bruno Guillon, who has been chief executive for just over a year, thinks profits can rebound in 2013, after they slumped 28pc last year. This followed destocking of its “Alexa” line in Asia, where the bag is more famous than the “Mulberry” brand itself. It also reflects the fact that 80pc of sales are in Europe. The long-term plan is to turn Mulberry from an essentially domestic brand into a global brand. This will take a lot of investment in brand awareness in Asia and the US. The luxury goods consumer has not escaped the downturn, with disappointing results this year from French giants LVMH and PPR underscoring issues in the sector. Some investors had been concerned that the brand may be about to move too upmarket. However, 60pc of its products are still below £1,000, which is regarded as “entry level”. Ms Hill’s departure is also a concern, but a brand and a company are never one person alone and she has built up a well-regarded design team during her tenure.
Burberry sells a plethora of items, Mulberry’s product range is much more limited. This means that if its designers fail to hit or lead a fashion trend, there could be big trouble. Burberry has a wide products range that does not depend on one category’s success. But its brand is supported in its home market by the fact that it makes 25pc of its products in England, a number that is set to increase substantially when it opens its second factory. However, it is the international market that is key to its future share price performance and that will take a substantial amount of investment. Last year, the group opened 17 new international stores and retail sales at the unit rose 20pc to £15.4m. The truth is that the jury is still out on whether Mulberry can meet its strategic ambitions and repeat its UK success elsewhere. We are now entering a period of investment for the group and also one of design uncertainty against a subdued European market backdrop. This would represent a share price challenge for any company, but it is especially relevant for luxury goods groups such as Mulberry. Even after two profit warnings and the fact that the shares are more than 60pc below their peak, the current-year earnings multiple is 24.4. This is pricing in a lot of growth. So, Questor feels more evidence of delivery is needed before a buy rating is appropriate, so avoid for now. http://www.telegraph.co.uk/finance/markets/questor/10121246/Questor-share-tip-AvoidMulberry-as-it-still-has-much-to-prove.html Emma Hill: Designer who made Mulberry a global player packs her bags for good Laura Chesters, Theindependent, Monday 10/06/2013 Available fromhttp://www.independent.co.uk Emma Hill theCreative director credited with turning the Somerset-based firm into an international fashion powerhouse loved by celebrities has quit in a management disagreement. Mr Guillon has been trying to expand the awareness of the brand overseas but critics have said his desire to make the brand even more expensive will alienate its loyal following. In its heyday of 2010/2011, a Mulberry handbag sold for around £600 but now its latest design – the Willow – sells for between £1,250 and £1,500. The London-based brand has issued three profit warnings in the past year and results on Thursday are forecast to see a 28 per cent drop in profits. Mr Guillon is hopeful of a turnaround, with the expansion of new product categories including clothes and shoes and its new Willow handbag, created by Ms Hill.
Earlier this year Mr Guillon told The Independent that he wanted to “catch the new luxury customers” and shoppers in Asia, including Singapore and China, were top of his list to attract to the brand. Luca Solca, managing director of luxury at Exane BNP Paribas, said: “Mulberry is trying to reposition itself to the high-end – and emulate recent successes of brands like BottegaVeneta and Celine. I think this is not obvious for a brand like Mulberry.“Mulberry in my view should be cheaper than Burberry and Gucci. There is now little choice for handbags priced between £250 and £600 with only a handful of players such as Longchamp and Coach and market results indicate that Mulberry’s upmarket ambitions are facing hurdles.” http://www.independent.co.uk/life-style/fashion/news/emma-hill-designer-who-made-mulberrya-global-player-packs-her-bags-for-good-8652419.html?origin=internalSearch TASK 2: Be able to formulate a new strategy You are required to carry out a research by using supportive materials like books, websites, etc., to produce an organisational audit for Mulberry, carry out an environmental audit for Mulberry, and explain the significance of stakeholder analysis to Mulberry and give an individual report of the findings on P2.1, P2.2, and P2.3. Answers without application to Mulberry or appropriate examples will be referred. LO2 Be able to formulate a new strategy 2.1 Produce an organisational audit for Mulberry. 2.2 Carry out an environmental audit for Mulberry. 2.3 Explain the significance of stakeholder analysis to Mulberry. TASK 3 You are required to carry out a research by using supportive materials like books, websites, etc., to analyse possible alternative strategies relating to substantive growth, limited growth or retrenchment and select an appropriate future strategy for Mulberry and give an individual report of the findings on P3.1, andP3.2. Answers without application to Mulberry or appropriate examples will be referred. LO3 Understand approaches to strategy evaluation and selection 3.1 Analyse possible alternative strategies relating to substantive growth, limited. growth or retrenchment for Mulberry 3.2 Select an appropriate future strategy for Mulberry. Task 4
LO4 Understand how to implement a chosen strategy You are required to carry out a research by using supportive materials like books, websites, etc., to compare the roles and responsibilities for strategy implementation, evaluate resource requirements to implement a new strategy for Mulberry and discuss targets and timescales for achievement at Mulberry to monitor a given strategy and give an individual report of the findings on P4.1, P4.2 and P4.3. Answers without application to Mulberry or appropriate examples will be referred. 4.1 Compare the roles and responsibilities for strategy implementation at Mulberry 4.2 Evaluate resource requirements to implement a new strategy for Mulberry 4.3 Discuss targets and timescales for achievement at Mulberry to monitor a given strategy.
Assignment Guidelines:
Use a standard report structure, Word-process the report and use Normal script of a proper font size 12.
Produce an academic report, detailing the above issues with an approx word limit of 4000 to 4500 words.
Complete the title page and sign the statement of authenticity.
The Assignment sheet should be attached in the front.
Submit the document in a folder in the form of a file as well as a soft copy on the submission date.
It should be uploaded on E-Learning platform before the deadline and submitted to -------- and sign the submission form of the college.
Assignments submitted after the deadline will not be accepted unless mitigating and may be entitled for a late fee.
Collusion and Plagiarism must be avoided.
Start each answer on a new page and pages should be numbered. Highlight each question clearly.
Include a Bibliography at the end of the assignment and use the Harvard referencing system.
All work should be comprehensively referenced and all sources must be fully acknowledged, such as books and journals, websites (include the date of visit), etc.
Try to give the page numbers, publishers' details and the year of publication
In order to pass you need to address all the LO
In order to get a merit you need to address the characteristics of a pass and then M1, M2,M3
In order to get a Distinction you need to address the characteristics of pass, merit and then D1, D2 and D3.Use a common format for the questions, for example:
Introduction (analyze the question.)
Underpinning Knowledge (write about the relevant theory/points)
Applied knowledge(Data Analysis)
Conclusions and Recommendations (summarizing the whole scenario keeping in view pass, merit, distinction criteria.)
Student feedback form with the Assessment Grid indicating their pass, merit and distinction: Name:
Registration Number:
Unit 7: Business Strategy Outcomes/criteria:
Indicative characteristics
Possible evidence
LO1 Understand the process As per the assessment criteria Task 1 of strategic planning specified for pass
LO2 Be able to formulate a new strategy Do Task 2
Feedback
LO3 Understand approaches to strategy evaluation and Do selection
Task 3
LO4 Understand how to implement a chosen strategy. Do Merit Description: . Relevant theories and techniques have been applied. . Effective judgments have been M. Identify and apply made. strategies to find appropriate . Complex problems with more solutions. than one variable have been explored. . An effective approach to study and research has been used. . A range of methods and techniques has been applied. . A range of sources of information used. M2. Select/ design and apply . The selection of methods and appropriate methods/ techniques justified. techniques. . Complex information/data have been synthesized and processed. .Appropriate learning methods/ techniques applied. . Appropriate structure and approach has been used. . Logical and coherent arguments have been presented . Technical language accurately M3. Present and communicate used. appropriate findings. . A range of methods of presentation has been used. . Familiar and unfamiliar
Task 4
contexts have been used. . It is appropriate for familiar and unfamiliar audiences. Distinction Description: . Synthesis has been used to generate and justify valid conclusions . The validity of results has been judged D1. Use critical reflection to . Self-criticism of approach has evaluate own work and justify taken place. valid conclusion. . Evaluation has taken place using defined criteria . Realistic improvements have been proposed against defined characteristics for success. Autonomy/independence demonstrated Substantial activities/projects or investigations have been managed and D2. Take responsibility for planned, organized. managing and organizing activities. The unforeseen has been accommodated. The importance of interdependence has been recognized. Ideas generate and decisions taken Convergent and lateral thinking have been applied D3. Demonstrate convergent, Capacity for innovation and lateral and creative thinking creative thought has been used. Receptiveness to new ideas has demonstrated. Unfamiliar contexts have been applied.