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Laura Ashley: A strategic analysis

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        Introduction:Laura Ashley Plc. is a small family company with very specialised products spread in the Europe, UK and US.

    Started by the Ashleys in 1953 the company kept on embracing new products and companies and integrated vertically. The key for the significance and the competitive edge of the company was the design philosophy of Laura Ashley. Although the company faced a shock after the death of Laura Ashley but the company followed the line of Laura’s designs. By 1985 the company established its own supply chain and kept on supplying the products at shops.

    The Company also implemented the Information system for effective communication with in the company Sales practice:The Company established the shops with the same design and undertaken research and development activities in order to analyse the consumer preferences regarding the brand. As a result of the surveys conducted the company found the brand name as the major asset of the company, which could prove to be the main source of competitive advantage of the company.   Internal factor Evaluation (IFE) of Laura Ashley Company“A summary step in conducting an internal strategic- management audit is to construct an internal factor Evaluation (IFE) Matrix. This strategy formulation tool summarises and evaluates the major strengths and weaknesses in the functional areas of a business, and it also provide a basis for identifying and evaluating relationships among those areas.

    Intuitive judgements are required in developing and IFE Matrix, so the appearance of a scientific approach should not be interpreted to mean this is an all-powerful technique. A thorough understanding of the factors included is more important than the actual numbers.” (David, 161-162)Internal AuditIn order to effectively compete in the industry it is important for the company to analyse the its internal strengths and weaknesses. So that strengths should be used to take advantage of the opportunities for the company in the market and the weaknesses should be removed in order to make the strategy of the company flawless.

    Following are the major departments, which should be addressed in order to undertake an internal audit of a company.Major departments of Laura Ashley (Strengths and Weaknesses):In order to identify Laura Ashley’s internal strengths and weaknesses, the following key internal functional areas will have to be analysed: 1) Management; 2) Marketing; 3) Finance/Accounting; 4) Operations & R/D; and 5) Computer Information System and Technology.PEST ANALYSIS [A]  PoliticalEconomicSocialTechnical *Stability of Internal & External political environment. *Change in the outsourcing trends.

      * Economic environment (Job market / UK’s market economic stability) affecting the business performance / future. * Allocation of Monitoring system budget. * Interest / Inflation rates fluctuation affecting the profit margins. * Long term future of the business in its present state, (referencing economic changes).

         *Opposition by the people in case of increasing burden in shape of increased prices. * Feedback information of the company’s performance from the customer’s perspective. *Change in the taste of people.   *Increase in competition due to technological advancement.

     * The benefits that new technology could bring to improve the production and distribution methods.                   SWOT ANALYSIS [B]    StrengthsWeaknessesOpportunitiesThreats*Increase in the retail outlets all over the world   *Improvement in the efficient production through the installation of highly advanced production and distribution techniques * Saving the business loss due to the time taking travel to the employment places from the residence. *Helping in improvement of Supply chain of production sector by providing efficient transport through vehicles..

      *The increased cost due to the technology implementation at wider level.  *Conservative thinking of the board members.  * Increase in the overall cost of production of Goods due to increased transportation cost. *Division of the company into small groups.

     *Asia as a growing market opportunity with some of the countries with highest population in the world.  *Clear understanding of the customer’s perception through a double looped information system.         *Change in the outsourcing trend can effect the efficient call centre service.  * Failure to update the system according to the changing technology.

          “The Threats-Opportunities-Weaknesses-Strengths (TOWS) Matrix is an important matching tool that helps managers develop four types of strategies: So Strategies, WO strategies, ST Strategies, and WT Strategies.SO strategies use a firm’s internal strengths to take advantage of external opportunities.WO Strategies aim at improving internal weaknesses by taking advantage of external opportunities.ST Strategies use a firm’s strengths to avoid or reduce the impact of external threats.

    WT Strategies are defensive tactics directed at reducing internal weaknesses and avoiding environmental threats.” (David, 180-181)SWOT Matrix:External Opportunities (O)1. Double-digit growth rate in market in Central and North Europe.2.

    New packaging system at depots increasing production time by 7%.3.  Market competitor is decreasing production by 5% annually.External Threats (T)1.

    High threat of substitutes.2. Marks and Spencer brand has gained most of the market share recently.3.

    Lack of funds for the distributors.4. Least price offerings of products at Marks and Spencer.5.

    Through the high competition there has been increasing the list of substitute products.Internal Strengths (S)1. Laura Ashley has remained a major investor in “the further establishing production facilities, distribution networks, sales equipment, and technology.2.

    The company has an employee base of 50,000 all over the world.3.Continuous improvement in the company by research and communication of company with consumers.4.

    The company does a fairly good job of disclosing its true drivers of performance and areas of concern in the MD&A and footnotes.5. Laura Ashley has a number of intangible assets, consisting of trademarks, goodwill, and franchise rights.6.

    Laura Ashley is one of the many organisations that use Enterprise Resource planning software. This software allows all members of the organisation to access the information at anytime where ever they are in the world.”Internal Weaknesses (W)1. Old perceptions of the management.

    2. Relation ship with subsidiaries creates legal and territorial problems.3. Lack of funds for regional supplier to continue expansion4.

    Old image still exists.5.Inconsistent marketing message.SO Strategies1.

    Increase in investment in the creation of own supply chain. (S1, W2, W3)2. Add more employees to spend up the production process. (S2, O3)3.

    Keep quality standards above the competition for more revenue. (S4, S5, O3)WO Strategies1. Continuous introduction of new products in different directions with the changing demands of consumers. (W1, O2)2.

    Introduction of technology in advertisement. (W5, O1, O2)ST Strategies1. Advertise more about our top selling products instead of just high end products. (S4, S5, T1, T4, T5)2.

    Advertise the televisions that we are able to get mass quantities year round. (S4, S5, T1, T4, T5)3. Keep the product price competitive by keeping updates about the price policy of competitors. (S3, S4, T2)WT Strategies1.

    Obtain a more reliable information management system for the company all over the world. (W2, T3)Having contacts with the subsidiaries offering low supply chain cost and efficient services. (W5, T3)          CRITICAL SUCCESS FACTORS [D] The following are the Critical Factors for the successful implementation of the Policy                                                                                                    :Law EnforcementCompliance measureConnectivityReliabilityAvailability of reasonable alternateSupport from ManagementAppropriatenessUser Friendly systemCustomer support serviceOngoing development and maintenance of system   The Grand Strategy Matrix: Rapid Market Growth Quadrant II                                                         Quadrant I1. Market growth                                1.

    Market growth2. Market dispersion                          2. Market dispersion3. Product development                    3.

    Product development4. Technology advances                   4. Technology advances5. Horizontal incorporation              5.

    Horizontal incorporation6. Liquidation                                     6. Advance arrangement7. Backward integration Weak                                                                                                                                                            StrongCompetitive                                                                                                                                          CompetitivePosition                                                                                                                                       PositionQuadrant III                                                                       Quadrant IV1.

    Economising                                                   1. Related diversification2. Related diversification                                 2. Unrelated diversification3.

    Unrelated diversification                              3. Combined Ventures4. Liquidation Slow Market Growth According to the performance analysis of Laura Ashley Company the Company stands in quadrant III. It should try to maintain the position in the departmental stores market by capturing the highest profit margin.

    The company has adopted all the promotion tactics in order to capture a wide range of consumers. As the market is extending the company is also extending its product line by introducing new products. The Company has to expand large budget and promotion activities in order to keep the new entrants away from the entering the market. Although the Company has adopted a positive and up to date strategy which has helped the Company to stay in the market but still a lot more is required to be done.

    The wide range of the products and a looking ahead strategy as compare to the competitors has given the company a competitive edge. Strategic choices require trade-offs. Some alternatives involve high risks, others low risks. Some choices demand action now other choices can wit.

    Rational and systematic analysis is just one step in the strategic planning process, for a choice also involves personal preferences, personal ambitions, and personal values.Development of short-range organisational Objectives and Action Plans:Short-term objectives and action plans did not successfully support the organisational strategy, which could be a part of the performance appraisal process. The short-term objective of the organisation was to increase the customer satisfaction, which could lead to increased market share in future. Objectives were not also well supported by action plans.

    The achievement of the above stated goal involved effective completion of the different tasks by different departments. All the managers of related department should have aligned their activities according to the objectives of the company. It is obvious that the long-term strategic organisational plans need to be supported by short-term objectives and action plans.Development of Contingency Plans:Organisational plans are developed in an environment of uncertainty, and the future cannot be predicted with great accuracy.

    Therefore, contingency plans based on alternative assumptions should be prepared.  (Koontz & Weihrich, 1994)Production and operations management:Managing operations is a crucial aspect of each and every kind of business. The main concern of the initial thinkers is to such as Frederick Taylor, Henry Gantt, and Frank Gilbreth was to improve productivity. They all put great emphasis on human factor as an indispensable input.

    The notion of production management has been transformed from the manufacturing activities and has expanded to activities as purchasing, warehousing, transportation, and other operations from the procurement of raw materials through various activities until a product in available to the buyer. The notion includes the process of delivering the services to the customers with the products. With the changing time the aspects covered are increasing, the process now also includes R&D, value creation, marketing management, sales activities, accounting and finance.The operation management model constitutes of inputs and outputs.

    The list of inputs include,1. Customer needs:Although the company responded to the needs of the customers but the information regarding the tastes and demands of the customers was not sufficient. Despite the efforts by the company to understand the needs of the customer the company could not align the production with the customer needs.2.

    Information:The process of internationalisation requires a thorough information regarding the country in which the Company is going to expand its business. Laura Ashley suffered serious headaches while operating in US.3. Technology management:The case study does not signal towards the effective use of the Information technology implemented in the Company.

    4. Fixed assets of the business:The company kept on expanding the fixed assets of the group, which also effected the liquidity of the company.5. Human capital:Downsizing and job cuts were found as the important source of reducing costs.

    The company reduced some 1100 job positions in the Welsh operation, which saved 2 to 3 million pounds for the Company.6. Variable assets related to transformation process.Information and the physical factors play an important role for managers in order to produce outputs.

    The company could not effectively use the variable assets of the group effectively.The Company transformed its business from clothing to home furnishings. Planning, operating and controlling are the important constituents of transformation process. The improvement in the system is also an important aim of the model.

    Outputs consist of products and services and may even be information, such as that provided by a consulting organisation. (Koontz and Weihrich, 1994; p 633, 634)                   References·         Fred R. David, Strategic Management Concepts and Cases, Eleventh  Edition, pp.165-166.

    ·         Koontz, H., and Weihrich, H., (1994). Management: A Global Perspective, Tenth Edition, McGraw-Hill, International Editions, pp.

    633-653·         Laura Ashley, (2006). Available from     

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