Situation-Analysis

/in /by

Situation AnalysisSTR/GM 581University of PhoenixSituation AnalysisIntroduction

METRO GROUP is an international retailing company with Head quarter in Germany. The company has over 280,000 employees in 180 nations around the world with over 2,200 outlets in 32 countries in Europe, Africa and Asia. The company wants to expand its operation in Canada; the purpose of this research is to use Porters Five Forces to explain the structure of the industry in Germany and the new country for it expansion Canada. A good generic strategy will give the company fundamental ideas about how an organization can strives above average in the in international market. Michael Porter developed a scheme that most planners believe will aid a firm seeking long-term strategy that they should base it on one of three generic strategies for that particular firm to gain competitive advantage (Pearce and Robinson, 2011).

Porters Five Forces

The objective of developing a model of environmental threats is to assist organizations like Metro Group in analyzing threats so that they can be more effective in developing strategies to neutralize them especially in international markets. The strongest competitive force or forces determine the profitability of an industry and so are of greatest importance in strategy formulation.

The threat of entry is the first of the five forces; even though there some threats, Metro Group should invest in Canada because of the superior performance that some incumbent firms in that industry are achieving. Report shows that the Canadian retail sector sales is expected to grow over the next five years (Euromonitor).

The threat of rivalry, rivalry in retail stores in Canada tends to be high because most of the businesses are unable to differentiate their products. Metro Group can become dominant in Canada through acquisitions or joint ventures.

The threat of substitutes; substitutes goods will place a ceiling on the prices firms in an industry can charge and on the profits firms in an industry can earn. Metro Group must evaluate both substitute and complimentary goods. Understanding the negative effect of substitute goods and how it reducing the company’s profits is vital, and will help reduces cost in the long run.

The fourth threat is the threat suppliers; they can threaten the performance of firms by raising the prices of their supplies or by reducing the quality of those supplies.

The threat of buyers is one of the most important threats; it reduces the revenue a firm could generate. Using a cost reduction and differentiations strategies will help Metro Group reduces this threat.

Conclusion

Metro Group will have to recognize what strategic environmental model will be useful in reducing the above mentioned threats. Implementing the Porter five forces model will help the organization in the foreign as well as in the domestic markets. Conducting a SWOT analysis, will help Metro Group identify the strengths, weaknesses, threats, and opportunities that are available in the foreign market. Information gathered from the SWOT analysis will help the company develop strategies that will give Metro Group competitive edge over competitors in the retail market. The Organization must implement a strategic control plan that will help track their strategies as it is being implemented, this will help the company detect various problems or changes in its underlying premises, and make necessary adjustments (Pearce and Robinson, 2011).

References:

http://www.metrogroup.de/internet/site/metrogroup/node/10781/Len/index.html

Pearce, J. A., II, & Robinson, R. B., Jr. (2009). Strategic management: Formulation, implementation, and control (11th ed.). New York, New York: McGraw-Hill.

Yip, G. S. (2003). Total global strategy II (2nd ed.). New Jersey: Prentice Hall.

Mintzberg, H., Lampel, J., Quinn, J. B., & Ghoshal, S. (2003). The strategy process: Concepts, contexts, cases (4th ed.). New Jersey: Pearson-Prentice Hall.

https://www.bea.gov/scb/account_articles/international/1097srv/maintext.htm

http://www.statcan.gc.ca/daily-quotidien/080522/dq080522c-eng.htm