Pierre Robert Group Issue Analysis Storyboard
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The document analyzes three strategic options for PRG to achieve a top 3 market position in Denmark within 3 years: 1) Enter Denmark on its own, 2) Acquire a Danish company, or 3) Form a joint venture. It concludes that entering on its own faces high barriers and PRG should not pursue this option. Either acquiring an existing company like Jbs or forming a joint venture with Jbs or HB Textil are viable alternatives that could help PRG reach its goals by gaining access to new customers, channels, and skills. The recommendation is that PRG should pursue acquiring an existing Danish company to reduce costs, achieve economies of scale, and remove a competitor from the market.
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Pierre Robert Group Issue Analysis Storyboard
- 1. The purpose of this presentation is to: • Define the issues. • Conclude on strategic options and their barriers to success. • Recommendation.
- 2. Todays presentation adresses 3 questions: Which are the strategic issues? Which strategic option should be prioritized? What is the recommendation?
- 3. PRG should strive for a position among the top 3 players in the market! • Importent to frame the problem in order to identify the strategic issues. • Cornerstones in Company vision - Building strong brand positions - Presence in all Scandinavian countries - Inspiring every day • Problem definition: What can be done in a 3-year period in order to achieve a position among the top 3 players in the market, and a EBITA margin of minimum 15%?
- 4. Players applying the generic strategy Low cost & Wide Scope are the winners! Low priced fashion retail, KSFs • Fast product turnaround • Flexibility in production • Speed to market • Only PL. • High volume/low cost • Own stores/franchise • Scale • Low priced fashion Performance • High profitability level • Strong sales growth • Increased market shares • New store openings • High stock turnover
- 5. Players applying the generic strategy Low cost & Wide Scope are the winners! Low priced grocery retail, KSFs • High volumes • Low cost • Low price points • Buying power • Own stores • Operational efficiency Performance • Significant growth in market shares. • Strong sales growth.
- 6. PRG apply the generic strategy Wide Scope/Differentiation Low/Medium priced suppliers, KSFs • The service concept • Distribution level & sales channel. • Innovation • Strong brand • Heavy investments in media. Performance • High Profitability • Strong CAGR • High Distribution level • Successfull innovations • High share of voice
- 7. Suppliers in Denmark are struggeling Low priced suppliers, performance • Negative CAGR. • Declining profitability. High priced suppliers, performance • High Profitability level • Negative CAGR • High brand awareness • Declining market shares
- 8. Matching O & T with S & W defines possible issues • Copy/Paste sales concept. SO • Consider Acquisitions. • Multi sales channel strategy, but different offerings in each channel. • Adjust sales concept & ST add new value adding activities. • Establish Danish subsidiary • Offer different price levels that meets custome demands. Overcome weaknessess and WT threats by: • Consider Acquisitions. • Consider Joint Ventures. • Do not enter Denamark. • Consider Acquisitions. WO • Offer the service concept to the grocery trade in DK. • Consider wholesale of product concept that adds value. • Apply Multiple sales channel strategy, but not the grocery.
- 9. Prioritizing the issues by matching them with the problem definition • Copy/Paste sales concept. SO • Consider Acquisitions. • Consider Acquisitions. WO • Adjust sales concept and ST add new value adding activities. Overcome weaknessess and WT threats by: • Consider Acquisitions. • Consider Joint Ventures.
- 10. Conclusion Which are the strategic issues? Conclusion: 3 Strategic options 1. Enter DK on its own. 2. Enter DK by acquisition. 3. Enter DK by a JV. Which strategic option should be prioritized? What is the recommendation?
- 11. Hypotheses 1 To reach the target on its own, the company needs initiatives that at least enable a turnover of approx. $30 million in year 3. • KSFs of PRG + external opportunities (market growth and size) - Grocery channel best alternative. • Full market entry required, i.e. preferred supplier to all the major chains. 63% av the total accessible market is needed in order to reach the target. • To become preferred partner, PRG need to add more/different values than competitors.
- 12. Conclusion - Hypotheses 1 PRG would probably not be able to enter DK on its own. The barriers to success are high. • PRG neither have the knowledge of the market, nor any relations with key customers. • This entry strategy is dependent on agreements with all major customers, i.e. no/few agreements – no entry. • If only some product concepts would be listed in each chain, i.e. entering with a broad scope/nische strategy, would significantly reduce the possibilities to build a strong brand.
- 13. Hypotheses 2 PRG can reach the targeted position in Denmark by an acquisition. • The targeted position, top 3, can be reached by aquiring either Jbs, Hb Textil, Triumph or SOS Distribution (Bjorn Borg). Main barriers to success. • The willingness to sell is crucial. • Important the achieve synergies in order to reach the target. • The evaluation of the company might differ between the parties. • The culture in Jbs might not fit with the culture of PRG. • The core competencies, and resources that are available to make the acquisition work, could cause problems.
- 14. Conclusion Hypotheses 2 PRG would be able to achieve the target by an acquisition of Jbs, or Hb Textil. • Jbs offers the best strategic fit, and are close to the required level of profitability.
- 15. Hypotheses 3 PRG can reach the targeted position in Denmark by entering a joint venture. • A joint venture with Jbs, HB Textil or Triumph could solve the problem. Triumph win Add. product categories. Increased sales by entering grocery channel. Lower cost PRG win Access wide distribution & to new channels. Increased Know-How. Low risk HB Textil win Suppl. price segments. Higher sales & lower cost More attractive supplier. Increased profitability. PRG win Relations key customers. Access to grocery channel Assortment suppl. The low priced of Hb Textil. Lower cost/Less risk. Jbs win New prod. categories + prod. for ladies/childr. Opport. to expand to other countries PRG win Relations key customers Supplementing assort. Opportunities in No, Swe Access to channels. Lower cost, less risk.
- 16. Conclusion Hypotheses 3 PRG would be able reach the targeted position in Denmark by entering a joint venture with either Jbs, or HB Textil. • Despite the Barriers to success - process of partnering with other business can be complex. - It might reduce focus from core business in Swe, No. - Different objectives and cultures in each company might cause problems.
- 17. Conclusion Hypotheses 3 PRG would be able reach the targeted position in Denmark by entering a joint venture with either Jbs, or HB Textil. HB Textil win Suppl. price segments. Higher sales & lower cost More attractive supplier. Increased profitability. PRG win Relations key customers. Access to grocery channel Assortment suppl. The low priced of Hb Textil. Lower cost/Less risk. Jbs win New prod. categories + prod. for ladies/childr. Opport. to expand to other countries PRG win Relations key customers Supplementing assort. Opportunities in No, Swe Access to channels. Lower cost, less risk.
- 18. Conclusion - Which strategic option should be prioritized? Conclusion: 3 Strategic options 1. Enter DK on its own. 2. Enter DK by acquisition. 3. Enter DK by a JV. Conclusion: PRG should not enter on its own. Aquisition & Joint Venture are both viable alternatives. What is the recommendation?
- 19. PRG should strive for an aquisition. • Several key advantages - Reduce its cost base - Economies of scale - Access to valuable skills • Could vastly improve competitive position, and reduce any learning curve, that otherwise would take years. • Would remove one key competitor from market. • Allow for entering in new sale channels in Swe and No.