Assignment of week 14

1.  In your own words and using referenced quotes describe the difference between ‘business unit level’ strategy and ‘corporate level’ strategy?

    Business Unit Level Strategy:

    The way business seeks to compete successfully in the market is called business unit level strategy. It is the decision a company takes on its way to maintain, create and use its competitive advantage. A strategic business unit is a semi-autonomous unit for an organization. This unit is responsible for its own price setting, budgeting and new product decision. The corporate headquarter consider Strategic Business Unit as an internal profit Center.

Bases of Competition         Price         Differentiation         Hybrid         Focus		Achieving Competitive Advantage         Sustainability         Hyper competition         Collaboration         Game Theory
	SBU Strategies
	Detailed Choices         Directions         Methods

                                                         Figure: Business Level Strategies

  Corporate level strategy:

Corporate level strategy is all strategic decision that affects the firm as a whole. It is concerned with overall purpose and scope of an organization. Adding value to its business unit is the main objective of corporate level strategy. The Corporate level strategies affect the matters such as deciding the size and composition of business portfolio of the overall firm.

Differences between Business Unit Level Strategy and Corporate Level Strategy:

   Business-Level Strategy

   Business level strategy is low-level strategy that applies to a single division or business unit. Business-level strategic issues include pricing and marketing strategies. Business-level strategies are normally decided by mid-level managers who are responsible for the business unit or division.

    Corporate-Level Strategy

       Corporate strategy refers to all strategic decisions that affect the firm as a whole. Often, corporate-level strategies will have an affect on several business units. Corporate strategic issues include the financial structure of the firm, mergers and acquisitions, and the allocation of resources to individual business units. Corporate strategic decisions are normally made by the board of directors.

2.      Discuss the corporate parenting style of Virgin group.

    The Virgin group is one of the one of the UK’s largest private company. According to 1996 survey, 96% of UK consumers were aware of the brand Virgin.

   Virgin has been described as a “keiretsu” organization. Further, the Virgin Group had controlled by Mr. Richard Branson. His approach to management style was one that decentralized decision making and responsibility of the own development. Branson ruled by delegating power to managers, however when it came to marketing and promotion, he would take more involved role.

    The name Virgin was chosen so that the brand can be remained virgin in every business it enters. Virgin’s expansion into new markets had been through a series of joint venture whereby Virgin provided the brand name and the partner provided the majority capital. It is involved in mobile telephony, travel, financial services, leisure, music, holidays and health and wellness. It partners with others and transfers and combines skills, knowledge and operational expertise from a wide range of industries. Also, Virgin Group Company is able to run their business by their self. Further the company actively helps each other to solve problems.

    Virgin is involved in not only commercial activities but it is involved in finding solutions to world major issues or problem. With the help of Virgin Unite, a nonprofit foundation, it is organizing campaign like health, economic empowerment, conservation and climate change.

    By observing the ownership, the corporate structure and the management style of Virgin Group, we can say that Virgin is following the Synergy manager corporate parenting style. The synergy manager is a corporate parenting style looking to enhance value across business units by managing synergies across business units. We can easily say that Virgin is following synergy manager corporate parenting style because of the following reasons:

Resources and activities are shared:

Virgin group use common distribution system across its business. It uses the same from brand name for each of its products and services. In many of the countries its offices are shared by its smaller business units depending upon the geographical diversity.

Skills are transferable:

Virgin Group also actively transfers their skills to the required industry. For example Virgin Music can transfer its skill to Virgin Cinema and vice-versa to improve its technology. Further, Virgin Group has its own value adding capabilities by which one business unit help each other in sharing technologies, skills and knowledge. The accumulated knowledge and skills learned in one business is utilized in another business unit in the Virgin Group. This has helped Virgin Group to increase its performance. In addition, marketing and R&D are the expertise skills which are used by Virgin Group to improve the performance of the newly launched products.

    References:

• Johnson, Whittington and Scholes (2011) Exploring Strategy, 9th Edition, Pearson Education, Chapter 1 

• Johnson, Whittington and Scholes (2011) Exploring Strategy, 9th Edition, Pearson Education, Chapter 7 

• De Wit, B and Meyer, R (editors) (2010). 4th Edition Strategy: Process, Content, Context, Thomson International Business Press: London. Chapter 6 

Case study of week 14

1.  What type of corporate parent is Virgin (portfolio manager, synergy manager or parental developer)?

Virgin Group is a portfolio manager corporate parent. The Virgin group is one of the one of the UK’s largest private company. According to 1996 survey, 96% of UK consumers were aware of the brand Virgin.

Virgin has been described as a “keiretsu” organization. Further, the Virgin Group had controlled by Mr. Richard Branson. His approach to management style was one that decentralized decision making and responsibility of the own development. Branson ruled by delegating power to managers, however when it came to marketing and promotion, he would take more involved role.

The name Virgin was chosen so that the brand can be remained virgin in every business it enters. Virgin’s expansion into new markets had been through a series of joint venture whereby Virgin provided the brand name and the partner provided the majority capital. It is involved in mobile telephony, travel, financial services, leisure, music, holidays and health and wellness. It partners with others and transfers and combines skills, knowledge and operational expertise from a wide range of industries. Also, Virgin Group Company is able to run their business by their self. Further the company actively helps each other to solve problems.

Virgin is involved in not only commercial activities but it is involved in finding solutions to world major issues or problem. With the help of Virgin Unite, a nonprofit foundation, it is organizing campaign like health, economic empowerment, conservation and climate change.

2.   How does the Virgin Group, as a corporate parent, add value to its businesses?

Virgin as a portfolio manager corporate parent it is adding value by sharing resources and activities, technologies, etc.

Resources and activities are shared:

Virgin group use common distribution system across its business. It uses the same from brand name for each of its products and services. In many of the countries its offices are shared by its smaller business units depending upon the geographical diversity.

Skills are transferable:

Virgin Group also actively transfers their skills to the required industry. For example Virgin Music can transfer its skill to Virgin Cinema and vice versa to improve its technology. Further, Virgin Group has its own value adding capabilities by which one business unit help each other in sharing technologies, skills and knowledge. The accumulated knowledge and skills learned in one business is utilized in another business unit in the Virgin Group. This has helped Virgin Group to increase its performance. In addition, marketing and R&D are the expertise skills which are used by Virgin Group to improve the performance of the newly launched products.

Other value-adding skills of Virgin Group

Envisioning (developing strategic mission, clear external image)

Intervening (Challenging/ Developing Strategy)

Coaching and Training (Developing strategic capabilities, achieving synergies)

Central Services (Scale advantages, Transferring managerial skills)

Expertise (Knowledge sharing, leverage, brokering)

3.  What’s the logic of portfolio? Why do you think they are in mobile telephony, travel, financial services, leisure, music, holidays and health & wellness?

The main aim of portfolio is to balance the business. It will help your business to adjust your profit and loss. There are different risks in different types of business, some have higher risk and some have lower risk. To solve this portfolio exist. It will help the investor to invest in different business rather than a single business where the risk is higher. There are several portfolio models available which will help corporate parent to manage their portfolio business. They are Boston Consultancy Group (BCG) matrix, the directional policy matrix, parenting matrix, etc.

Virgin is involved in different sectors such as mobile telephony, travel, financial services, leisure, music, holidays and health and wellness. As some of the businesses are more risky it has invested in another business to adjust the loss from another business. Virgin Atlantic was the big success in 2003, but as it is a cyclical nature of business it might reach to worst condition by which not only the Virgin Atlantic will be affected but as a whole Virgin Group will be affected .So in order to minimize that risk Virgin Group might have been involved in more than 250 businesses. Further, by increasing the business unit, it can make more profit as well as minimize the loss for risky business. With the beginning of 21^st century, Virgin expanded its business to telecommunication, financial services. Hence, Virgin is increasing its portfolio investment in order to minimize the risk.

4.What are the main risks facing Virgin Group as a result of their strategy? How might they be reduced?

Every company faces risk as a result of their strategy. The most important asset of Virgin Group is its brand. The strategy of boosting up the brand might be dangerous. For example a customer enjoying a nice holiday’s package on a Virgin Holidays may be happy to use Virgin Mobile, but a customer who has a bad experience in any one of the product and services might avoid all the products and services of Virgin Group.

A real time example of Virgin can be shown by which it will be clearer. In the UK, the excellent service of Virgin Airlines and the terrible reputation of Virgin Railways remained unsolved by 2004, by which the loyal customer of Virgin Group were in dilemma whether to consider Virgin group a good or bad company.

Another issue relating to Virgin group is Branson himself. He was closely linked with Virgin Brand, there is also risk of weaken the value of Virgin brand if some of his high profiled marketing ventures failed. The main issue is what will happen to Brand Virgin after Richard Branson.

In order to face with the above risks Virgin Group needs to develop new strategy by which the risk might be minimized. The leadership and control over Virgin group should be more decentralized so that the impact of Branson can be lowered. Also Virgin needs to be less diversified. in addition, every effort should be made to bring in line the accounting year end date for all businesses in the Virgin Group to be on the same date.

References:

Johnson, Whittington and Scholes (2011) Exploring Strategy, 9th Edition, Pearson Education, Chapter 1

Johnson, Whittington and Scholes (2011) Exploring Strategy, 9th Edition, Pearson Education, Chapter 7

De Wit, B and Meyer, R (editors) (2010). 4th Edition Strategy: Process, Content, Context, Thomson International Business Press: London. Chapter 6

GROUP VIDEO PRESENTATION

Topic of the presentation :
Analysing strategy of nepal telecom

Team Members:
Saurav Shahi
Bipin Lamichanne
Prashant Timilsina
Bicky Gauchan
Narayan Sapkota

Week 10

In your own words and using referenced quotes describe what is meant in strategy by “Organizational Purpose” and describe what is meant by “Corporate Social Responsibility”?

Organizational purpose gives the organization its reason for existense . It acts as an guiding force upon which every other decision is rooted.  Organizational purpose may be defined as the initial phase for strategy of an organization .  It sets the tone for your organization to show the reason why it is established . Organizational purpose must consider internal considerations and stakeholders needs and other considerations which include code of ethics . It should consider following aspects which are listed below :

·         Business ethics

·         Stakeholders aspects

·         Corporate Governace

·         Cultural context

Organizational purpose of an organization includes the following types of terms concerned with strategic planning :

·         Quality , cost and product of the organization.

·         Human resource of an organization.

·         Competitive position

·         Ethical code of conduct

·         Structural position

·         Target customers

    

      Corporate Social Resposibility

     “Corporate Social Responsibility (CSR) is the responsibility of an organization for the impacts of its decisions and activities on society, the environment and its own prosperity, known as the “triple bottom line” of people, planet, and profit. Not only do responsible, sustainable and transparent approaches help build brand and reputation, they help strengthen the community and therefore the marketplace. A solid business plan, embedded into the business culture, reflecting organizational values and objectives through strategic CSR application, will help to build a sustainable and profitable future for all.”

      Should organizations focus more on profit and shareholder satisfaction or responsibility and stakeholder satisfaction? Discuss your own thoughts but try to support your ideas with theory or examples.

      For most business organizations the prime objective is to grow bigger and bigger , which can be attained  by maximizing profit and ultimately satisying their shareholders . Almost every business organization is focused on generating profits through maximising their sales and consumption .The primary motive of the business established is to make high amount of profits , to grow in size , to increase their resources and satisfying shareholders and stakeholders .

      In my opinion business organizations should maintain a balance in satisfying their shareholders and stakeholders respectively . The prime objective should be to earn profit as well as providing enough services for stakeholders respectively . Because its practically impossible for any business organization to sustain in the long run if its primary motive is to become responsible towards the environment and satisying their stakeholders . Whereas in theory it is possible if business organization maintain a positive balance in satisying both their shareholders and stakeholders respectively. Some of the huge business organizations of Nepal has implied with this method .

     An example of business organization maintaining good balance between satisying shareholders and stakeholders is NCELL , which is one of the leading telecom industries of Nepal . NCELL believes satisying their stakeholders and being responsible towards societ will do good business for them . They provide their products and services at a very affordable price from time to time .They come out with attractive schemes tempting customers to use their product or service . NCELL is also responsible towards society as they are actively involved in various social activities like donation , charity and society welfare programs as well as they launch city cleaning programs at times  which shows that they are very responsible towards their society.  Some of the schemes provided by NCELL which satisy their stakeholders are as follows :

1)      BUY 1 GET 1 SIM FREE

On April 2012 NCELL introduced its scheme which was focused towards satisying their customers and shareholders . If you buy a sim card you would get an extra sim card free of cost with a balance Rs 50 on it . This scheme was a big hit and it generated a  lot of profit for NCELL as well as satisyied their stakeholders .

2)      CALL AT NIGHT AT 0.50 Paisa

Ncell launched its call at night scheme in October 2011 which provided customers  to make a  call just at 0.50 paisa per minute from 10 pmt till 6 am in the morning .It is also an outstanding example of business organization satisying their stakeholders and making profits for themselves as well.

3)      SURF 3G AT CHEAPEST PRICE

Ncell launched its surf 3g internet in cheapest price , which was approximately 0.1 paisa bytes per second , which was the cheapest mobile internet service in Nepal . This scheme brought  lot of revenue for Ncell and this satisfied lot of their stakeholders as well .

At the beginning we studied the internal and external analysis. There was vivid discussion about the analytical tools used to study the internal as well as the external environment of an organization. Then after , the discussion we viewed the interview of chairman and CEO of PepsiCo Indra Nooyi . Next we were given a taks about case study and analyis of PepsiCo  . We enjoyed the case study and argued about the vision , mission and goals of PepsiCo among our friends . Moreover we also disussed about the corporate social responsibility of PepsiCo,

I answered the following questions:

       What are PepsiCo’s strategic objectives? Why does the firm exist?

   

      Pepsico is more focused on youth consumers , therefore they are more focused on attracting the young consumers. Its objective is to make a revenue of $30 billion by the year of 2020 . The seem to adopt an emergent kind of strategy , moreover try what they feel is the best for the company. As Pepsico is losing its market grasp in USA  , henceforth now they are upto target the Asian market .The population of the Asian market is huge , henceforth this will be a big market for the beverage products .In addition Pepsico is also increase its product line , which means there is going to be a variety of different products in the market hence will increase their portfolio business.

      The main organizational purpose of Pepsico is to best serve the interest of its conusmers . Its aime is to provide consumers quality products at affordable price .Through their advertising they focus on giving education and incentives and strategic acquisition . Moreover the brand is looking towards their product reformation . For instance , PepsiCo is looking at making its food and beverages healthy . It is considering to achieve expansion in an internatinal basis and achieve synergies . In addition it is also looking forward to maintain efficient distrubution system . PepsiCo is focused on empowering employees , sustainable growth and acting with trust and responsibility.

    What are the possible strengths and benefits of the strategy?

     Here are the possible strengths and benefits of the strategy of PepsiCo.

Ø  Empowerement of its employess

Ø  High market share

Ø  Employment opportunities for locals

Ø  Adequate funds

Ø  Top MNC , its business in more than 200 countries

Ø  Resposible towards society

Ø  High healthy and nutritious products

Ø  Product line extension will lead to rise in relative market share .

       What are the possible weaknesses and disadvantages of the strategy?

Ø  Risk factor is high

Ø  Huge competion with Coca-Cola

Ø  Low customer preferences

Ø  Low attractive branding and packaging

Ø  Low market share in comparison with Coca-Cola

Ø  Product failure in product line might be too risky

       Do you think the organization has the right balance between profitability and responsibility?

      Every business organization is established with primary objective of growing bigger and earning large market share and profit . The same trend implies ot PepsiCo .Since its market share declined to 3% per annum in USA , it has targeted the Asian market . The market share will be relatively high in the Asian market

The chairman and CEO of PepsiCo , Indra Nooyi , is a business leader charisma personality and vision . Her main objective is to triple the revenue of the company by the end of 2020 , moreover she desires to make PepsiCo the number one brand in the beverage industry . She is responsible towards her stakeholders , customers and employess . Due to her vivid personality she looks really focused towards achieving the goal and objectives of the company .

References:

      ·  E.H. Bowman and C.E. Helfat, ‘Does corporate strategy matter?’, Strategic management Journal, vol. 22, no.1 (2001), pp.1-14.

      ·   R.P. Rumelt, ‘How much does industry matter?’ Strategic management Journal’, vol. 12, no. 2 (1991), pp. 167-185

      ·   www.msdn.microsoft.com/en/us/library/aa479076.aspx

[MSDN, Accessed on 10^th January, 2013]

Week9

In your own words and using referenced quotes describe what is meant in strategy by the ‘Resource-Based View’?

Strategy is basically a plan or series of maneuvers for obtaining goal. In regard to resource-based view, it is primely concerned with the capability. Any company or organization looking forward for advancement, growth in profit rates and competing with other organization requires good strategic knowledge. Strategy is made in accordance to the potentiality of the company in which the competing company may lack. This potentiality can be regarded as the resource for the required organization. These resources can be fruitful to the company as the organization’s competencies.  Hence, resource- based view of strategy is the competitive advantage of an organization which is explained and justified by the distinctiveness and uniqueness of its capabilities.

With its capability or resource, a company would be efficient enough to multiply its profit rate compared to other organizations. They can perform their work with lower investment yet with best quality products.

2. How might you undertake ‘Internal Strategic Analysis’? What models would you apply and why? Where would you go to find the information you need? 

    There are enormous analytical tool present to carry out Internal Strategic Analysis in an organization such as:

•         Resource and competence analysis

•         VRIN

•         Financial analysis

•         Value chain analysis

•         McKinsey Seven S analysis.

Out of all the above analysis, I would prefer McKinsey Seven S Analysis because of its uniqueness.It is mostly concerned in evaluating the performance of an organizational activity. Changes found in one element can affect all other elements. Thus, they are interrelated with each other.

     There are especially seven elements altogether which needs to be considered under the McKensey Seven S Analysis. They are Strategy, Structure, System, Style, Shared Values, Skills and Staff. These seven S are the main elements of measuring the quality of performance of an organization.

3.   Talk about your group video work. How is it going so far? Do you have a plan? What are you most worried about at the moment? What is going well?!

I, Saurav Shahi with my fellow collegues Narayan Sapkota, Prasant Timilsina, Bicky Gauchan and Bipin Lamichanne formed a group of five members for the group assignment. We decided to work on a project regarding telecommunication industry in Nepal. The two leading organizations which we have chosen are Nepal Telecommunication and NCELL. One is a government owned organization and another is a private owned organization respectively.

As known, there are various analytical tools that can be used for both internal and external analytical tools. We decided on using three or more tools concerning both internal and external analytical tools.

The analytical tools are:

1.PESTLE analysis

2. McKensey 7s model

3. SWOT analysis

We have kept an option for Porter’s Five Forces model if necessary. Since it is a group work, so we have equally divided the task to each member and we are processing on it.

It has quite been proved difficult in collecting information regarding the telecom industry in Nepal and mostly in case of Mckensey model. This model have been challenging since they are the internal information of these organizations. They are hesitating in providing us the information but we are trying our level best to convince them.

 We discussed about the group video presentation every day and have now prepared some ideas in enhancing the project in correct direction. Each member of our group is working hard for their presentation. The works done by the member are discussed and suggestions are shared for improvement. It has been decided that every team member will complete their assigned task by Saturday and then we will give final touch to the presentation. So, we will be practicing the presentation from Sunday for a week and record the video next Saturday. We have also decided in submitting the draft of the presentation by 13^th January.

We are working hard for the assignment. We have improved the quality of communication skills and dealing while working in group which would be very helpful in future.    

References: 

• Montgomery, C.A. and Porter, M.E., Strategy: Seeking and Securing Competitive Advantage, Harvard Business School Publishing, Boston, 1995.            
• Weisbord, Marvin R., Inventing the Future: Search Strategies for Whole Systems Improvement, Productive Workplaces, Jossey-Bass, 1987.
• http://www.mindtools.com

         [Mind Tools, Accessed on 1st January, 2013]

• http://www.jstor.org/discover

          [JSTOR: The Academy of Management Review, Accessed on 1st January, 2013]

WEEK 8

1. Make a list of competitors for Islington College

2. Develop a Porter’s 5 Forces Model for Islington College

3. To which strategic group might Islington College belong?

Can you map the group?

1.

      Islington College is the first college of Nepal to offer an international degree in Information Technology and Business Administration.  It offers degree from London Metropolitan University which is one of the famous universities in London .There is a stiff competition in the market for Islington College, there are colleges which offers contemporary courses and provide international degree. Some of the competitor colleges are:

Institutions that offer International Degrees:

ü  Softwarica College

ü   Lincoln College

ü  International School of Management and Technology

ü  Silver Mountain College

ü   Kings College

ü  London College of Business and Computing

ü  Nova International College

ü  The British College

Colleges offering Nepal education board degrees:

• ACE College of management
• White House College
•  Apex College
• Kathmandu college of management
• College of Software Engineering
•  Global College of Management
•  Himalaya College
•  Kantipur City College

FIVE FORCES MODEL OF ISLINGTON COLLEGE 

       Competitive Rivalry:

      Competitive rivalry has an impact on any sort of business. It may help business in positive direction or can turn it down.  The growth of competitive rivalry between colleges has risen up. Likewise the competition for Islington College is in augmentation. In past there were few colleges linked with foreign universities and Islington College is one of them which provides international degree to the students.. But lately it is seen that the number of colleges offering such degrees are increasing which brings the colleges into competition. Not just the colleges offering International Degree, but also the colleges affiliated to Nepalese University are becoming a threat to Islington. With various facilities and ideas such as reduction in educational fee, scholarships program and other incentive programmes leads competitive rivalry to Islington College to a greater level.

     Buying Power

     The buying power of students is very low and the income of the people is average. Students have high switching cost hence there will be no threat from buyers to the Islington College.  Also students cannot threaten Islington College by entering as a competitor. Hence, the buyer’s bargaining power seems to be lower and it will be benefit for Islington College.

o     Power of Suppliers 

      London Metropolitan University is the supplier for Islington College. The power remains high towards the supplier as Islington College is dependent to the supplier. It will be very difficult for Islington College to switch to any other university as the switching cost will be high and the time consumption can create negative impact on the college profile. The act of switching to another university needs a lot of research, lengthy procedure, licensing, other cost etc. Hence, the bargaining power of supplier remains higher.

      Threat of Substitutes

      The concept of acquiring international degrees by studying in native country has just been accepted by the people. So there aren’t many threats of substitutes to Islington College. Various educational programs such as online degrees and distance learning facilities which have recently been developed could be regarded as substitute product of Islington College’s international cost but has no threat as those facilities are not well followed by the society.

     Threat of Entry:

      The threat of entrants is absolute. The investment to establish such a college is high. Even the licensing cost is very high. For the establishment of college, they have to follow all the government regulations and policies which are quite strict. Any new company which has consideration in entering the field of education needs to analyze the Economies of Scale. Newly established company may hardly maintain the brand loyalty.

Strategic Group Analysis

Strategic Group Mapping

Therefore from all the above explanations of diagrams , we come to the conclusion that Islington College comes under as the college thats providing international degrees ,  and its cost is relatively very high as compared to other contemporary colleges of Nepal . Its is immensely improving in its brand power and infrastructures .

References:

• http://www.islingtoncollege.edu.np/

        [Official website of Islington College, Accessed on 25th December, 2012]

• http://www.thebritishcollege.org.np/

         [Official website of The British College, Accessed on 25th December, 2012]

WEEK 7

                                             PESTLE Analysis Report of Big-Mart

Introduction:

Big Mart is considered one of the most valuable brands in Nepalese super market store industry. The first store was launched on 10th July, 2009 in the largest mall of the country - City Centre,Kamalpokhari, Kathmandu. It currently operates a chain of 3 supermarkets in the capital city , and has ambitious plans to establish a market leader position in the country in the next three years .

                                                              

Pestle Analysis: Pestle analysis report will look at the macro environmental factors (Political, Economic, Social, Technological, Legal and Environmental) and its impact on big mart store .

1.      PESTLE Analysis:

Political Factors

The political factors focuses on government policy and meticulously takes into account items such as government intervention in the economy, taxation policy, interest rate and monetary policy, consumer protection right, competition regulation, political stability etc. As in our country political stability is very poor and government changes within short period, this has adversely affected the economy and retail industry sectors like big mart. There is lack of government inspection and government regulation which has increases the inflation in country. High inflation decreases the purchasing power of people which in turn affects the sales of store.

The political situation of Nepal can affect a lot to any business. Due to the unstable political condition there is a high risk to Big Mart and other retail business. The consequences of the twelve years long internal war has affected the political scenario. The most important thing is that there is no constitution of Nepal. Due to such consequences Big Mart is stepping back to open outlets in different sectors. As their objective was to open their outlets in every locality, the political factors have affected them a lot

 Economic Factors

The economic factors focus on the economic growth, government spending, unemployment rate and policy, taxation, tariffs and subsidiaries, production level etc. The economic growth of our country is very less about 2.98%comparing the neighboring country India about 5.8%. The government spending on the development of infrastructure of country is very poor and this has affected the overall industrial sector. Big mart stores are mainly affected by government taxation policy, unemployment and low production level.

The unemployment rate of country is very high and people consumption capacity is very low. There is lack of skilled labor and due to the lack of skilled labor the industries are closed. The country is importing more finished goods than exporting due to this domestic products are less competitive in market. Due to poor economic condition, stores like big mart have not capitalized the resources like labor, capital and technology in full gear which has reduces the potential market value and competences in the market.

As a retail store, it has to pay high amount of tax to the government. Also, due to the low number of outlets it has losing opportunities, hence resulting lower profit. Also the inflation rate is 18% which has pressured them to increase the wages of their staffs which increase the cost.

.

Socio- Cultural Factors

In Nepal the concept of buying grocery in departmental store is slowly increasing. So, Big Mart business is really affected by the perception and life style of people. Big Mart stores were geared to the higher level people in the beginning. Changes in the social trends can really impact the demand for the products in Big Mart. With the social acceptance, it has become the attraction place for middle class level too. Today Big Mart has become a social place to hang out and for shopping goods. Big Mart has helped to show the social status of people as they will choose products that match their tastes and preferences.

The demographics, living standard, lifestyle, fashion consciousness, occupation have direct   impact on the business of store. Without the help of society it is impossible to run the business because the society not only provides the customer but also provides labor work force, supplier and market.

Technological Factors

Technological factors influence a business of big mart in a major way. It affects the business ability to produce, to sell, expand and to maintain demand. The technological factors include the government spending on technology research, new inventions and development, life cycle and speed of technological obsolescence, global communications, and manufacturing advances, internet etc.

With technological advances system the operating cost and inventory cost of big mart store has been reduced which also help in reducing the cost of product but big machines used in stores like wet umbrella dispenser, store equipment have to be imported from India which is very costly.  The government spending on technology is very low and due to limited MNC`s technology advances is poor.

 Legal Factors

Legal factors include rules and regulation of governing bodies and this factor try to understand the impact of rules, regulation and laws on the businesses. It mainly includes the regulatory bodies and processes, employment law, consumer protection, industry specific regulation etc. Sound legal system is basic requirements for running of the business operating but at present our country`s legal system is worse, the political parties are unable to make constitution which has affected the business environment of country. There has not been a regular regulation and inspection of consumer protection and employment law which have created problem between employee and employers.

There are different types of laws that may affect the business of Big Mart. The first one is consumer laws which are designed to protect the rights of customers against the unfair and misleading practices. Another category of law is competition law where they are designed to protect small departmental stores and to make sure that there is no existence of monopoly in the retail industry. Another category of law includes employment law. They are mainly aimed at protecting the rights of employee covering the areas such as minimum salaries and incentives, facilities and minimum working hours. This law is designed to provide a safe working environment to the employees and use of safety products.

Environmental Factors

Environmental factors include ecology and geographical factor areas such as, natural resources endowments, weather, climate conditions, and also include the environmental issues. Big mart should implement the environment friendly policies and their business activities should not degrade the environment.

Changes in the weather may positively or negatively impact the business of Big Mart. For example, in winter season, the demand for soft drinks like Coca Cola is low whereas in summer season the demand for the same products is high. This shows that there is a seasonal impact on the business of Big Mart. The potential impact of environmental factor on big mart store is low.

  Factors to be considered to be competitive in Retail industry     

Supermarkets purchase goods for resale, and goods and services for conducting their operations. Supermarkets have to decide what product assortment to carry, what vendors to buy from and what prices and terms to negotiate with their suppliers (Kotler, 1984). To stand as a competitive supermarket in the retail market, innovative changes are required from time to time. Innovation change can be technological, organizational and managerial, which should be undertake to remain competitive in the market (Reardon et al., 2004a)

In order to remain competitive Super Markets should consider following external issues to    remain competitive over others:                                     

Right amount of Supply and Demand

Retailers of super market need to consider the level of demand supply. Products and services should be delivered after considering demand for that item. If supply become higher that the demand then a these retailers have to store the excess goods in inventory which will be costly to them. So, to remain competitive there needs to have a proper balance in between demand and supply.

 Level of Competition

Competition from other retailers can be a great challenge for a retailer of super market. When other retailers sell products at a lower price than the one who is selling those products at higher price can get effected. So, super market needs to closely monitor the activities and strategies of competitors.

 SWOT Analysis

The basic component to remain competitive in the retail industry is to identify your Strengths, Weakness, Opportunities and Threats. Retailers of supermarkets must know their strengths and weakness and implement its strategies accordingly.

Economic background

Super market needs to look after the economic background or the living standard of the people in that location or country. If purchasing power is lower, then it will be beneficial for super market to sell products and services, which can be afforded by the people of that location or a country. So, to have a competitive position, super market should look after the living standard of people.

 

 Above shown are the pictures of the Big mart store of Lazimpat branch located in capital city of Kathmandu . .

References:

• E.H. Bowman and C.E. Helfat, ‘Does corporate strategy matter?’, Strategic management Journal, vol. 22, no.1 (2001), pp.1-14.
• Doherty, J. and Skahill, B., 2006. An advanced regularization methodology for use in watershed model calibration. Journal of Hydrology. 327 (3-4), 564-577.

• http://www.ekantipur.com/2012/08/01/business/big-mart-to-open-seven-stores-in-kathmandu-by-2012/358057.html 

          [ekantipur, Accessed on 20th December, 2012]

• R.P. Rumelt, ‘How much does industry matter?’ Strategic management Journal’, vol. 12, no. 2 (1991), pp. 167-185.
• http://www.bigmart.com.np/

        [Bigmart- official website of big mart, accessed on 15th Decemebr, 2012] 

• www.msdn.microsoft.com/en/us/library/aa479076.aspx

         [MSDN, Accessed on 15^th December, 2012]