ASSIGNMENT-2

1Q) Factors effecting external factors in Superdrug: There's a range of key factors that can affect the value of your business. Finance

Historical, current and projected profits and cash flow. How well you control costs. Need for capital expenditure in the near future.

External factors

State of the economy in general including interest rate levels and the level of How similar businesses are being valued. How many potential purchasers are interested in the business. How many similar businesses in your sector are on the market.

demand in your market in particular.

Intangibles

Goodwill and intellectual property such as patents. Strength of customer relationships - and how profitable they are. Your business' growth potential. Economies of scale a new owner could leverage.

Assets and liabilities

Value of assets such as property, equipment, debtors and stock-in-hand. How full your order book is. Level of debt and other existing liabilities.

People

The management's record of success.

How dependent the business is on your own skills - and the likely extent of Experience and commitment of key staff.

your future involvement.

While some of these factors are outside your control and may affect the timing of your sale, you can take steps to make your business as valuable as possible. You need to start planning well in advance. Consider inserting an exit strategy into your original business plan. 2Q) Position of Superdrug in market: They use the whole communications mix to get our message across externally. This includes: Transport - Superdrug owns a double decker bus that we use for make-overs and to take to events. Press Ads - all our ads are produced in house. This ensures that we're consistent in communicating to the customer what great value we are. Events - this team is responsible for getting Superdrug out and about. We go to festivals, fashion shows, sampling, Ascot races and many other places. Media pack - we create exciting media events and packages for suppliers to buy into. Produced each year, our media pack is like a menu from which suppliers choose what they want to invest in. Verdict found that the health and beauty market in the UK was roughly evenly split between the supermarket grocers and the specialists in 2006. The specialists such as Boots, Superdrug, Lloyds Pharmacy, Body Shop and others accounted for around 40% of the sector. The grocers took around 44%. Of the specialists, Boots were the market leader, with around 25% of their share, followed by Superdrug with over 7%, then Lloyds Pharmacy and Body Shop with between 1 and 2%. Highlights: Over-the-counter medicines

Price competition encouraged by pharmacies in-store Wider availability in grocers

Baby care:

Higher average age for child-rearing means higher incomes and expenditure on baby products. Higher birth rate forecast from 2009. Higher prices on premium 'organic' products.

Skincare:

Growth of anti-ageing products. Consumers trading-up to get better results. Increased marketing spend to gain mass market.

Paper products:

Face wipes are a fast growing market. Higher population effects. Ageing population effects.

Hair care:

Consumers trading up and value end shrinking. Sales up of intensive and colour-added conditioners. Male-specific and minority ethnic-specific products.

Bathroom toiletries:

Falling popularity of traditional product categories such as bar soap and rising demand for convenience in more expensive gels and liquids. Greater innovation to drive growth. Price sensitive end of category.

Perfumes:

Supermarkets keeping prices down for mass market lines. Continued trading-up as premium brands sell more. Shorter product lifecycles and multiple product ownership.

Men's toiletries:

Changing attitudes, wider use of face products. Higher interest in more advanced, premium products. Supermarkets stocking more men's products.

Dental care:

Demand for better dental health. Price deflation but increased volume sales of electric toothbrushes. Willingness to invest in care of teeth and gums.

In the supermarkets' share, the biggest player was Tesco, with nearly 20%, then Asda and Sainsbury, with between 8 and 9% each, followed by Morrisons with just over 5% of the grocers' total share. The research takes the top ten segments of the health and beauty sector and analyses their prospects for growth between 2008 and 2011. 3Q) Strengths and weaknesses of Superdrug. Bladder or urinary inconvenience is the accidental leakage of urine from the bladder. It is a common problem, affecting over 3 million people in the UK. Women are twice as likely to suffer from urinary incontinence as men, and the condition becomes more common as people get older. There are two main types of urinary incontinence stress management and urge incontinence. Less common types include reflex incontinence and overflow incontinence. Stress incontinence occurs when pressure is put on the bladder for example during exercise or sneezing. Urge incontinence occurs when there is an uncontrollable, sudden need to go to the toilet. References: http://www.bized.co.uk/compfact/boots/bootsindex.htm?page=8

http://www.superdrug.com/page/bladderweakness

TASK-2

1Q) Modelling tools of strategic plans: Cost leadership strategy: Porter's generic strategies are ways of gaining competitive advantage in other words, developing the "edge" that gets you the sale and takes it away from your competitors. There are two main ways of achieving this within a Cost Leadership strategy:

Increasing profits by reducing costs, while charging industry-average

prices.

Increasing market share through charging lower prices, while still making a

reasonable profit on each sale because you've reduced costs.

Remember that Cost Leadership is about minimizing the cost to the organization of delivering products and services. The cost or price paid by the customer is a separate issue. The Cost Leadership strategy is exactly that it involves being the leader in terms of cost in your industry or market. Simply being amongst the lowest-cost producers is not good enough, as you leave yourself wide open to attack by other producers who may undercut your prices and therefore block your attempts to increase market share. You therefore need to be confident that you can achieve and maintain the number one position before choosing the Cost Leadership route. Companies that are successful in achieving Cost Leadership usually have:

Access to the capital needed to invest in technology that will bring costs

down.

Very efficient logistics. A low cost base and a way of sustainably cutting costs below those of

other competitors. The greatest risk in pursuing a Cost Leadership strategy is that these sources of cost reduction are not unique to you, and that other competitors copy your cost reduction strategies. This is why it's important to continuously find ways of reducing every cost. The Differentiation Strategy: Differentiation involves making your products or services different from and more attractive those of your competitors. How you do this depends on the exact nature of your industry and of the products and services themselves, but will typically involve features, functionality, durability, support and also brand image that your customers value. To make a success of a Differentiation strategy, organizations need:

Good research, development and innovation. The ability to deliver high-quality products or services. Effective sales and marketing, so that the market understands the benefits

offered by the differentiated offerings. Large organizations pursuing a differentiation strategy need to stay agile with their new product development processes. Otherwise, they risk attack on several fronts by competitors pursuing Focus Differentiation strategies in different market segments. The Focus Strategy Companies that use Focus strategies concentrate on particular niche markets and, by understanding the dynamics of that market and the unique needs of customers within it, develop uniquely low cost or well-specified products for the market. Because they serve customers in their market uniquely well, they tend to build strong brand loyalty amongst their customers. This makes their particular market segment less attractive to competitors. As with broad market strategies, it is still essential to decide whether you will pursue Cost Leadership or Differentiation once you have selected a Focus strategy as your main approach: Focus is not normally enough on its own.

But whether you use Cost Focus or Differentiation Focus, the key to making a success of a generic Focus strategy is to ensure that you are adding something extra as a result of serving only that market niche. It's simply not enough to focus on only one market segment because your organization is too small to serve a broader market. The "something extra" that you add can contribute to reducing costs or to increasing differentiation. Generic strategies apply to not-for-profit organizations too. A not-for-profit can use a Cost Leadership strategy to minimize the cost of getting donations and achieving more for their income, while one with pursing a Differentiation strategy will be committed to the very best outcomes, even if the volume of work they do as a result is lower. Local charities are great examples of organizations using Focus strategies to get donations and contribute to their communities. 3Q) Comparative understanding of Superdrug: Superdrug has been told to ensure its price comparisons are "accurate, fair and upto-date" in future following complaints by rival retailer Boots. In two adverts, the health and beauty retailer compared its prices to rival Boots with the headlines "Can you trust Boots on price?" and "Think Boots is expensive? ... so do we?. The company then stated: "We compared the prices of 1,048 everyday health and beauty products ... 960 cheaper at Superdrug 84 the same price 4 cheaper at Boots. Boots challenged whether the claims were based on the most up to date data and brought the matter to the Advertising Standards Authority. Boots believed Superdrug had used the wrong price for 54 of the 960 products for which they had stated Superdrug was cheaper and also claimed that a further 152 of the 960 products Superdrug claimed were cheaper in their stores could not be described as 'everyday health and beauty products' as claimed in the advert; those products included premium cosmetic, electrical beauty and fragrance, all of which they argued were not an everyday purchase, as well as film and battery products, snack food and magazines, all of which they argued were neither health nor beauty products.

In its ruling, the ASA said that the comparative evidence sent by Superdrug did not include documentary evidence of the prices or copies of receipts and upheld Boots' complaint. The watchdog also said that the claim "everyday health and beauty products" was misleading. 4Q) Future organizational strategy: Despite the experience of many organizations it is possible to turn strategies and plans into individual actions, necessary to produce a great business performance. But it's not easy. Many companies repeatedly fail to truly motivate their people to work with enthusiasm, all together, towards the corporate aims. Most companies and organizations know their businesses, and the strategies required for success. However many corporations - especially large ones - struggle to translate the theory into action plans that will enable the strategy to be successfully implemented and sustained. Here are some leading edge methods for effective strategic corporate implementation.

References: http://www.mindtools.com/pages/article/newSTR_82.htm http://www.theappointment.co.uk/news/article-superdrug-rapped-over-pricecomparison-ads http://www.businessballs.com/businessstrategyimplementation.htm