PESTEL and SWOT Analysis of Homebase

PESTEL and SWOT Analysis of placebase plazabase is the UKs aid bigst base improvement retail merchant and is recognised for choice, style and client dish out across the wider domicil enhancement mart. It has to a greater extent than 300 large, out-of-town stores passim the UK and country of Ireland, and is planning to add to its store chain with around 15 lateborn stores a course of instruction. It sells over 30,000 products across DIY and decorating, home and garden ranges, and has a growing internet offering. interior(a)base serves over 70 million customers per year through and through its stores and offers customers the convenience of home deli very(prenominal) for bulky, high-value items. Its Ideas magazine is the number one home interest magazine in the UK, with a circulation of almost half a million. In 2006 al-Qaedabase won Britains best Superstore Manager of the Year at Britains Best Retailer Awards and in 2005 it was awarded DIY Retailer of the Year in the National denture Awards. radicalbase was the first UK DIY retailer to achieve Forest Stewardship Council Chain of Custody certification. more(prenominal)(prenominal) information on Homebase can be found on spotlight analysisWith gross sales of nearly 6bn in the bypast financial year, Home Retail Group is the pencil lead home and general merc potise retailer in the UK.Although community is already the number one in legion(predicate) of its product categories, there is still potential to increase its market sh ar. Our feature position accounts for just 10% of a market valued at 60bn. As many of these markets be fragmented and its market sh be has reinforced quickly, there ar further opportunities for growth. Homebase proves theres No Place Like Home for charities In August 2006 Homebase launched its first devil year partnership with Marie curie crab louse Care (www.mariecurie.org.uk) and the Irish Cancer Society in the Re overt of Ireland (www.cancer.ie), under the meas ure of Theres no place like home The charities were chosen in a club-wide mental faculty ballot where 39% of Homebase staff voted to acquit them The aim of the two year partnership was to raise 500,000 to pay for 25,000 hours of home nursing. Homebase staff and customers wear exceeded all expectations in the first year of the partnership, shattering the original hind end and raising an astonishing 785,000 already Over the past 12 months, the electioneering has seen everything from head s devotes and dress down years to staff abseiling down buildings for the charities. The notes raised in the first year go away help to support a fantastic 39,250 hours of nursing.External Analysis-Macro Environment policy- fashioningEmployment array in UK is increased to 74.7% since the last year and it is think to increase as healthy at the end of the current year which could be beneficial for the company because the purchasing power of the customers has increased and at the alike( p) sequence it will increase the live of the company by increase the pay rate of their own employees.Terrorism is likewise touch on the customer little bit but it increases the online sale.If the company go in the developing countries for manufacturing, it may reduce the appeal because the low pay rate in the developing countries at the same time it may excise the study of the company.EconomicalConsumer price inflation rose up to 2.2% in January 2008 influenced by the oil and food prices which can influence the price schema of the organization as puff up as the promotion and distribution and also can effect the purchasing power of the consumer.Oil prices are increase rapidly in these days and the prices has been reached to its record which increases the bell and in take place the high prices.The value of dollar against Euro is decreasing which can affect the sugar margin.SocialThe rate of population in UK is increasing dramatically which is a big cause of unemployment.In creasing number of visitors especially on capital of the United Kingdom Olympics 2012 can be a opportunity to sponsor time or individual and increase globally the companys cypher and recognition.TechnologicalDue to the increasing internet sensory faculty among the customer the online sale is increasing day by day. It saves the time and cost as thoroughly.52% of business suffered a cattish premeditated e-security breach during 2005 which can affect the customer data, as well as the customer trust to by online. It can affect the reputation of the place.After the introduction of the overbold security system PayPal the online payment from extension card has be surface more secure which increase the customer self-assertion on the brand which increase the reputation of the brand.LegalThe World hatful Organization members countries have the right to impose the safeguard measures and it has a reasoned membering to imports. When the company goes to importing it should be aware and follow the changes in the regulations.EnvironmentalBy following the government waste strategy the company should increase the amount of recycle which strengthen the reputation of the company.The public of UK is surround conscious and may be a burning issue of the worldly concern in near future day so the company should improve its recycling policies.External Analysis-Micro EnvironmentThe micro environment also cognise as task environment are the internal forces that have a signal affect in the companys strategies. These factors include buyers, suppliers, all type of competitors, parvenue entrants and substitutes employees and selling intermediaries (media).Industry analysisThe following analysis is based on Michael Porters 5 Forces Model (1996) and it helps understand the competitive environment for HomeBaseThreats of New EntrantsFactors train of little terrorimplicationProduct differentiation juicyHome products are very common products so the marketing of the company sel ls.Capital requirement mass forteA lot of capital require to introduce a new product to compete the existing productsBrand identityLowHome base has a laborious brand name in solid US and UKDistributional subscriber lineLowFranchisee will be get the brand identity in the first stepEconomies of scalemediumNew entrant have to entrant in a large scale to compete in the marketThreats of substitute productsFactorLevel of threatImplicationFew substitute productsLowIn abode products there are very few products which can be replaced bargain power of customerFactorsLevel of threatimplicationProduct fictional characterHighSome of the competitors claim to provide similar quality products to the customerType of customerhighAs the management of the store is responsible for a good sale so there is a sound customer bargainingBrand identityLowMarketing strategy is strong thats why the brand is recognized all over the US and UKBargaining power of supplierFactorsLevel of threatsimplicationCo st of supplierHighThis company is in developed countries thats why the labour cost quite highSupplier concentrationLowThe company guard community tradersCompetitive rivalryFactorsLevel of threatsImplicationBrand identityhighThe brand value of each company as well as the target market makes the differentiation to the customerIndustry bigHighDue to the recent growth in the mansion items the arguing is very highCost of structureHighCompetitors follow the same scheme of economies of scale with relatively low cost and high meshworkDiversity of competitorsHighNow a days there are some companies who are introducing the efficient productsConclusion after analysing the Porters 5 forces in this company it is noticed that the retail market is attractive for Homebase. though Homebase is a leader in the market the company has to develop more technological and attractive products to compete the other companies as well as company has to improve its growth strategies to keep the customers an d to fulfil their needs.Market segmentationConsumer marketThe Homebase has become the leader in its market because it covers almost every household item like from gardening to decorating. Now a days collectable to development in technology the customer is becoming more and more aware of the quality so they demand for high quality products because they have choice.ProductsHomebase concentrate on household products and the is still trying to cover everything regarding home. bon ton deals with the following types of products.Kitchen itemsBathroom productsFurniture and homewaresLightingFlooring and tilingDecoratingHome electricalHeating and coolingToolsBuilding and hardwareGardening outdoor(prenominal) livingMain competitorsfollowing are some principal competitors for the Homebase,Home Depot, Inc.Eagle ironware and Garden Inc.Hechinger Stores Co.Builders Square Inc.Payless Cashways Inc.Orchard Supply Hardware Corp.Lumbermens Building Centers.Though Homebase has quite strong competito rs but still it is leading the market and providing the quality products as well as quality inspection and repair to its customer and also it is successful to keep its customers till now. The company has to basso continuo the performance to maintain the standard.BrandSince last few years Homebase has worked cogitate on customer favour by providing products in low rate with a shopping experience that combines excellent service with a house-to-house range of household items.Homebase proves theres No Place Like Home for charities In August 2006 Homebase launched its first two year partnership with Marie Curie Cancer and the Irish Cancer Society in the Republic of Ireland, under the banner of Theres no place like home The charities were chosen in a company-wide staff ballot where 39% of Homebase staff voted to support them The aim of the two year partnership was to raise 500,000 to pay for 25,000 hours of home nursing. Homebase staff and customers have exceeded all expectations in the first year of the partnership, smashing the original target and raising an astonishing 785,000 already Over the past 12 months, the campaign has seen everything from head shaves and dress down days to staff abseiling down buildings for the charities. The money raised in the first year will help to provide a fantastic 39,250 hours of nursing. After doing this Homebase has become a strong brand in all over the UK and Irish republic.Internal analysisResources physiologic resourcesNumber of stores 310Countries in proceeding(p) UK IRISH REPUBLIC2. Human resourcesMore than 8400 employees including stores and offices are working in Homebase3. monetary resourcesPro forma of 52 weeks to3 butt 20074 march 2006 gross sales1,594.2m1559.0benchmark Operating profit53.4m51.4mbench mark direct margine3.4%3.3%Like-for-like change in sales1.4%3.1%New space part to sales change3.63.1% check sales change2.2%0.0%Benchmark operating profit change4%n/aNumber of stores at period end310297Of whi ch impart a mezzanine floor one hundred sixty-five144Competences and capabilitiesUsing the 5Ms is possible to analyse the competences and capabilities of the company.MarketThe Homebase is the leader in the retail market and it is providing quality products in cheaper rates and due to this Homebase is organism recognized all over the uk as well as Irish republic.MaterialsThe company is investing a lot of capital to introduce new stores so that the customers can buy quality products from their locality. The key element to the new store design is part of the business strategy to make-up marketing fixture.MenMore than 8400 employees including stores and offices are working on Homebase.MoneyFinancial resourcesPro forma of 52 weeks to3 march 20074 march 2006Sales1,594.2m1559.0benchmark Operating profit53.4m51.4mBenchmark operating margine3.4%3.3%Like-for-like change in sales1.4%3.1%New space contribution to sales change3.63.1%Total sales change2.2%0.0%Benchmark operating profit change4% n/aNumber of stores at period end310297Of which contain a mezzanine floor165144MachinesNumber of stores 310Countries operating UK IRISH REPUBLICS.W.O.T AnalysisStrengthsLeverage purchasing scaleHigh loyaltyStrong brand nameIncrease treat in large product marketsExpand homebase store networkExtend and endeavour multi-channel leadershipWeaknessesMore capital require for new storesHigh provide costHigh operation costOpportunitiesFurther to go on importingOpportunity to explore other overseas sourcing locationsAdditional benefits to come from supply chainOther cost reduction processesThreatsStrong contestation in retail marketCustomers are becoming more and more aware of quality due to improvement in technology and desire high quality products on cheap pricesIncrease in the sales of competitorsThough there is competition in the market the Homebase has a strong brand name and the company is improving their performance as well as it is investing in the product quality and opening new stores. There are still lot of opportunities for the company.Market planOn the basis of the previous audit marketing and the company strengths the objectives and the targets of the company are as followsObjectives and targetsReduce plastic bag manipulation by 25% by the end of 2008 give away ISO 14001 status for 5 Distribution CentresAttain recycling rates of 50% across the GroupEnergy attain energy accreditation for the Group from the Carbon TrustReduce energy consumption by 2% KwH/sq ftPurchase at least(prenominal) 30% green powerProductsReview current policy guidelines for product infusionAttain accreditation for sustainable paper sourcingMaintain existing recycled paper fill of catalogue at 13%CommunityRaise at least 1.6m for charity partnershipsAchieve gold status for pay flourish giving ( at least 10% of workforce)Establish arrangements for community investmentEstablish a volunteering policy for the GroupWorkplace and HR reform employee engagement scores.Improve take u p of share save schemesReduce average absence per employeeReduce RIDDORS by 10%CustomersIncrease levels of customer satisfaction (reduce no of orders whichgenerate one complaint)Group growth strategiesGrowth through leverage purchasing scaleGrowth through increasing market share in targeted large product marketGrowth through extending and exploiting multi- channel leadershipGrowth through expanding the store network (10 homebase stores in a year)Marketing mixTo implement the above strategies the following points can be appliedProduct / brandingHomebase is working efficiently in these days by following their strategies and because of this it is leading the market in all over the UK and Irish republic.Well I believe that regarding to the objectives of increase the brand image is recommended that the company is to associate the environmentally friendly image such as reducing the use of plastic bags. And further more the company should go on importing as well as explore the other overs eas resources locations so that the brand can win the global recognition. Though the company has started its own recycling program in which some products are heartly recyclable and some are partly, but in future environment will be a burning issue so organization should do some more for this which protect as well as beneficial for the brand in future.PriceThe differentiation strategy allows the company to implement a value-based pricing approach.PlaceDevelop a multi-channel distribution has been successfully implemented in the company. On the other hand company should increase its online sale.Promotion targetPeople concerning about environmental issuesHouse wivesCommunicationTo promote the product benefitsTo make the product knownTo increase online buyersThe massageIt is suggested to use the objectives that concern with the knowledge or awareness in the mind of the customer.Media selectionAdvertisement on the magazines which are commonly being sent to the houses monthly or weeklyA ttracting customers by making sales on special occasionsOnline publicizingUsing the logo in other web sites to link with the companys web site series of the press releases to be sent to magazines and access onlineTV campaign to roll out nationality on terrestrial TVPostersPeopleTo monitoring run online as well as make available news tools to the customer shopping onlineTo incorporate orders online, to store products and othersTo help increase the sells and to ensure the customer service qualityProcessProducts purchase online delivery with in a weekCredit card to be charged at time on the shipment of the order and confirmed by e-mail use the latest security methods such as PayPalReturn policy should be with in the existing 30 days after the purchase physiological evidenceReceipts and inventory billsSoftware to develop the e-commerceBudget equipment failureTo achieve the above marketing planning objectives it is set an overall cost of 8.5 million. And this overall cost is divided i nto the following categoriesProduct16% of the gibe cost is for the market research and for the development of the product, RD. The estimate cost in 1360015.7Place8% of the cost is to be spend on the straight refurbishment and maintenance of the stores, distribution and transportation, and the estimate cost is 680,000.Promotion60% of the total cost is to be used for the promotion of the product which includes the media advertisement such as advertisement in TV programs, magazines, posters in public transport, etc. The estimated cost is 5100,000.People10% of the cost is to be played out on HR, training, recruitment and IT outsourcing. The estimate cost is 850,000.Process4% of the total cost will be spent on the development of the operation processes and for this the estimate cost is 394400.63Physical evidence2% of total cost is to be spent on the reservation for the physical evidence and process to maintain the e-commerce. And the estimated cost for this is 170000Total costThe total cost for the total process of the above marketing planning to achieve the mentioned objectives is estimated as 8500000.