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Critical strategic decisions

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1. 1 Frank Jessop founded the Jessop Group in 1935, his son Alan joined in 1960 and the Group operated as a family firm until July 1996 in the photographic retail sector, through effective planning which ensured Jessop’s survival and future direction. 1.

2 In 1968, a major threat to the business was brought about by the construction of a flyover outside the store which virtually destroyed passing trade. Alan Jessop saw that the abolition of retail price maintenance provided the means to turn the threat into an opportunity.

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The irm undertook an aggressive advertising campaign in specialist photographic magazines such as ‘Amateur Photographer’ and offered to sell high quality Japanese cameras cheaper than other photographic retailers- a prime example of a deliberate strategy with unknown consequences. However, the strategic choice proved to be successful in this case.

Many enthusiasts travelled long distances to save money, purchasing on a cash and carry basis. Such successful variations in strategy are retained and become embedded within the firm so effective routines become those that ‘work’ in practise.

1. In 1978, Jessops had to tackle the problem of a lack of space with the inevitability of relocation to a 20,000 sq ft premises and it was listed in the ‘Guinness Book of Records’ as the Worlds largest photographic store.

The focus became customer driven as they could now handle a wide range of equipment in the demonstration area with impartial advice from enthusiastic, non-commissioned sales staff. A part-exchange service was introduced, together with film processing and camera repairs. Instructional courses in a purpose built lecture theatre and studio called the ‘Jessops School of Photography’ was now vailable. Furthermore, it negotiated supplies of photographic films, consumables, equipment and accessories to be sold under its own brand thereby creating brand identity and brand awareness today.

The business was computerised in 1979, though pre-used stocks were not computerised until 1986. 1. 4 From 1981, a substantial expansion plan was carried out on a regional and national basis. In 1988, it diversified into the wholesale sector following a distribution agreement with the ‘Spectrum’ buying group and Jessops launched its wholesale division, ‘Photoline Distribution’.

1. Jessops was sold in a management buy out in 1996, with Tim Brookes, appointed as the company’s new Chairman and Derek Hine later became Managing Director, both from outside the group.The new MBO team pursued a development strategy characterised first by the modernisation and consistent branding of the existing stores, more focused marketing of the Jessops brand, remotivation of the Jessops personnel and then by an aggressive store opening programme. The directors also refocused the Group by divesting smaller unprofitable operations in France and Spain and its manufacturing operations.

It was in 1999 when Jessops launched its comprehensive website, with on-line purchasing facilities for over 20,000 products. In 2002, ABN AMRO Capital completed the secondary buyout of Jessops from Bridgepoint Capital for i??116m. Distinctive assets, resources and competences 2. 1 Jessops ability to achieve a strong competitive position depends on how well its strategic resources support the offer features that are critical to success within the competitive arena.

The strategic resources are the source of the critical offer features, which must be present for an offer to be credible and win sales.All competitive arenas will have associated with them some factors that are significant for conducting business there, known as significant operating factors. 2. 2 There are four types of strategic resource: structural assets, reputation, internal architecture and external relationships.

Tangible assets include Jessops’ warehouse-style retail shops that allow for high levels of storage and large demonstration areas. Thus, the business benefits from economies of scale in purchasing, where they are able to press for substantial discounts on large purchases (source of structural asset).Furthermore, the human resources employed by the Jessops group is another tangible asset necessary to maintain its competitive advantage. The company has a management team with many years experience in their areas of responsibility allowing for economies of experience to be attained.

Sales staff provide impartial advice from their substantial product knowledge. 2. 3 Reputation is a way of signalling an offer’s value in the market place. Jessops has a good reputation as a specialist photographic firm and customer recognition is vital to its position in its competitive arena.

Also, sunk costs occurred over time imply minimal advertising and promotional sales are required. However, Jessops still continues to celebrate traditional photographic methods by supporting a number of competitions, exhibitions and events over recent years, both raising the profile of Jessops and photography. 2. 4 Jessops has distinctive competencies in its part-exchange service it offers, with the resale of used equipment, thereby increasing its client base and generating profits.

In addition, Jessops is renowned in the photographic industry for offering a wide range of high quality ourses, led by expert tutors. This is another effective way of increasing demand for its extensive product range, coupled with accessories. The after-sales service and support has been described by many customers as being ‘second to none’, thus Jessops’ distinctive competency has enabled it to achieve superior customer service, which in turn allows it to put emphasis on customer service rather than low price.2.

5 Other distinctive competencies include MBO by ABN AMRO Capital, who manage funds for Jessops and provide the necessary finance to increase its portfolio of businesses, nabling it to grow both nationally and internationally, thereby increasing its market share further. Also, Jessops own branded equipment available reinforces its position as the market leader and innovator. Future opportunities 3. 1 Jessops should consolidate its market position as the number one photographic and imaging retailer by continuing to deliver its current high standard of service and extensive product range.

These features need to be emphasised in a sound advertising campaign, incorporating ABN AMRO’s financial backing to target key audiences via television. This in urn should increase its market share in comparison to its rivals.3. 2 One of the highest growth areas in the retail industry are digital imaging products and services, particularly digital cameras.

Consequently, Jessops need to invest in in-store and internet digital and processing technology such as digital image laboratories. 3. 3 Although Jessops ‘price promise’ scheme is an effective way of preventing customers from turning to rivals, it has limitations. The scheme only covers the local area, which must be increased to cater for enthusiasts who are willing to travel long distances to purchase quipment at the best prices.

3. 4 Jessops need to invest further into research and development to raise its own brand goods’ specifications to match that of the major players.This would lower the interdependent nature of relationships between Jessops and its suppliers by carrying out backward integration. This in turn will also provide greater profits, being the manufacturer and the seller.

3. 5 Jessops should remain focused on building on the strong position they have established by further expansion plans. Currently, it is still opening new stores in the U. K.

but it must onsider opportunities in Europe and the rest of the world. However, this needs to be carefully administered over a realistic time frame in the present political climate with the war on Iraq and the possibility of strike on North Korea.Internal factors (weaknesses) 4. 1 I have visited Jessops on numerous occasions and closely observed working practises.

Jessops’ main problem is the waiting time at equipment sales counters and you may have to queue up for long periods before being served. This may be because the person in front of you may have queries rather than actually purchasing an item.Jessops could shorten waiting times by setting up extra counters i. e.

an information desk for customer enquiries and another one dealing directly with repairs. 4. 2 Jessops ‘Price Promise’ is great for products such as cameras, lenses and tripods but it is useless for darkroom tongs, timers, etc as no one sells the Jessops branded ones. 4.

2 Staff does not receive commission which could mean that the staff are less motivated or less willing to sell more products, directly affecting volume of sales. External factors (threats)5. 1 Rivalry among established firms – Jessops are competing within a consolidated industry here the sector is dominated by a small number of large companies such as Dixons, Boots and Argos. Although Jessops specialise in photographic equipment, they do not have alternative products that their rivals offer such as televisions or consoles.

Jessops may lose out on potential markets due to this. For example, a customer going on holiday soon is more likely to buy a camera from Boots if they have already purchased sunglasses from there. 5. 2 Power of buyers – Buyers can be a competitive threat when they force down prices or demand higher quality and better service.

Jessops will have to keep the quality of their products and their service at a high standard to encourage repeat buying, as buyers can switch sellers more easily than sellers can switch buyers. 5. 3 Risk of entry by potential competitors – Supermarkets are likely to emerge as a competitive force as customers are likely to be impressed by 1- hour film processing, as films could be handed in before shopping and collected afterwards. 5.

4 Threat of substitutes – 3G mobile phones can be seen as a major threat to Jessops’ business. Since its recent introduction, the potential of next generation phones seems oundless.The easy to operate 3G phones with in-built cameras and in-built camcorders, being just some of their features, could take away a large share off Jessops’ earnings. 5.

5 Power of suppliers – Sony, Cannon and Nikon are leading suppliers that serve both Jessops and its rivals such as Dixons. This can be a threat, especially as the suppliers can exert more influence over Jessops compared to Dixons. This is because Dixons sell 3G phones as a substitute for camcorders and cameras. Thus suppliers can raise prices for products and Jessops would have no alternative but to comply.

Cite this Critical strategic decisions

Critical strategic decisions. (2018, Jan 09). Retrieved from https://graduateway.com/critical-strategic-decisions/

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