Waitrose Case Study - International Strategy

INTERNATIONAL STRATEGY ASSIGNMENT

Case Study - Waitrose

INTRODUCTION

Waitrose was setup at Acton in 1904; it was founded by Wallace Waite, Arthur Rose & David Taylor. In the year 1906 Taylor left the firm, the first shop named “Waitrose” was formed. The company was later acquired by John Lewis Partnership in the year 1937. At that time it had 10 small service food shops and had a turnover of 150000 GBP. After the acquisition, Waitrose now are specialist Supermarkets, having more than 175 supermarkets all over UK mainly in the south-eastern region. It now boasts a work-force of over 37000 employees and many new stores. They offer fresh produce, poultry, bread & meat. Waitrose is a company known for providing high and good quality products and it targets the higher class with its good and high quality products. Even though it’s a comparatively smaller company than its competitors (Tesco & J.Sainsbury, Iceland), it was successful in its business and was a profit making firm, this was all because they use to perform things strategically.

KEY EXTERNAL FACTORS IN THE WAITROSE ENVIRONMENT

There are many external factors which can be identified, which affect the working culture and environment of the company & in this case Waitrose. One can categorize these factors by use of PESTEL ANALYSIS. Here we look at the various external factors under various heads in the analysis such as Political, Legal, Socio-cultural, and Environmental.

The POLITICAL factors provide some important key drivers of change for Waitrose. The company Waitrose faced two political environments, one in the United Kingdom and the other in South Africa. The government was stable in the UK and in South Africa but there was still different in many ways, which in turn create drivers of change. South Africa was chosen by the company to outsource its citrus fruits. In order to maintain the quality of products Waitrose created a Foundation in South Africa for the welfare of the farmers. The trade policies, foreign trade regulations were favourable for the growth of Waitrose as the company believed in quality and honest pricing; they also hold a Royal Warrant with Queen. The political factors are very important for Waitrose because maximum of its seasonal products are imported, thus they have to abide by the laws of the home country as well as the exporting country.

The LEGAL aspects that affect the working environment of Waitrose are factors such as competition law, employment law, health & safety. Waitrose is one company which keeps quality of products as one of the most important aspects in the working of the company. The

Employment laws in the UK are highly regulated, such that the company has to abide by the disability, racial, sex discrimination, pension laws etc. These laws in turn affect the working of Waitrose, and it has to device policies in accordance to these laws. Health and safety is an important external factor for Waitrose. An example of their policy was to help the farmers in South Africa; the company gave them educational facilities, disease knowhow for their benefit. This gave a positive effect on Waitrose, the people there trusted them and this increased their goodwill in the country. The competitive law is also a stringent one which affects the working environment of Waitrose.

SOCIO-CULTURAL factors affect the working of Waitrose in many ways. The UK market was demanding for better quality and healthy food. This did affect Waitrose and they did reciprocate to the need of the people. They were the first to launch organic food in the UK. Education was a not a factor for Waitrose in UK but it was definitely one in South Africa. The farmers were very poor and thus were not very well educated. Population demographics look into many factors such as income (as in the minimum wage rate in the UK), age, sex, mobility, location. These factors do influence the policies and functionality of Waitrose externally. Income distribution is also seen as an important factor because the products have to be within the reach of the targeted customer.

Environmental factors are affecting the external working of Waitrose. The factors under this are environmental protection laws, waste disposal and energy consumption. It is because of the change in climate due to pollution and other environmental issues that the governments have introduced very stringent environmental laws. Waitrose is affected by these environmental changes because they are mainly into fruit & vegetable and it products, which are in turn affected by these changes. Thus they have to keep a close eye on these issues. Waste disposal is also has its impact on the environment, there are many scientific reasons supporting this argument. For this Waitrose has reduced miles driven year on year, it tries to source electricity from renewable sources. This helps to reduce the energy consumption.

Thus these are the external factors which are identified in the working of Waitrose and the Environment around it.

KEY INTERNAL FACTORS

For identifying the internal factors of Waitrose we use the PORTER’S FIVE FORCES. Here we look at the following concepts RISK ENTRY BY POTENTIAL COMPETITORS, RIVALRY AMONG ESTABLISHED COMPANIES AND SUBSTITUTE PRODUCTS. By using these concepts we identify the internal drivers for change in Waitrose.

SUBSTITUTE PRODUCTS

Waitrose does have substitutes to their products but they have an edge over their competitors in this context. This is because firstly their quality and brand equity have a good hold over their customers, secondly they do not target the entire market. Cull says: "Because this is our business, we want the very best for the customers to ensure future success. It was a key decision to feature partners in the campaign, which uses them as a point of difference, distinguishing us from our rivals (www.guardian.co.uk ). The targeted customers of their products are richer class. The most important reason that they have loyal customers is because of the quality they provide. The customers of Waitrose believe in the company, such that even if they get the same goods cheaper in other stores (Tesco, Azda) they will still stick to Waitrose. In the product line the fruits and vegetables they put on the market are priced at a premium. “For anyone who enjoys food and can afford to pay a bit extra, it is easy to understand why