Global Business Management - Literature review Example

Introduction

The modern business environment requires competition as order of the day, where on the international and global arenas it is shaped by numerous factors that impact on the business of an organisation. Any company’s marketing system should operate within the framework of these forces that comprise the environment of the system, and where the main environmental forces are easily controllable and manipulated variables. The main objective of this report is to illustrate how numerous macro, micro and internal environments influence the operation and marketing of Hamleys, a UK based and a world’s best-known retailer of toys and the oldest toy shop in the world. Most companies feel that in the modern turbulent business environment the best scanning style is possible through PEST analysis as it allows the organisation to act, take advantage of the opportunities and respond to the environmental threats. This report presents the analysis of PEST factors as well as forces that shape the operations of Hamleys integrating them into SWOT analysis of the company. There is also a need to highlight the importance of marketing of the brand as it is now the vital ingredient for business success. Right marketing strategy, which includes market segmentation and brand positioning helps to achieve marketing objectives, which are aimed to achieve a competitive advantage over other organisations. This report will also present how important is marketing for Hamleys brand and justifies for implication of programmes and techniques in relation to the marketing strategy of the company.

Background of the brand

Being a classic British brand Hamleys runs a variety of traditional and modern toys weaving its marketing magic into all (Kochan, 1996). Opening its premises on the six floors, the shop has become the biggest toyshop in the world and the main British attraction with 35,000 different toys and games. For many years, the company has also used all opportunities for overseas expansion. Thus, since France’s Groupe Ludendo acquired it, it has also opened largest store in Moscow and expects to increase sales overtaking UK stores. Later it was sold to China’s C.banner International for the brand to be strong and because it would increase the company’s competitive advantage (Hughes & Felsted, 2015).

Importance of marketing

Whether a company participates in the international business, it faces the ever-increasing competition from the international firms, thus, the concept of marketing for an organisation is essential. It is because it enables the company to view the world as one market with the opportunity to identify and target cross-cultural differences in it and understand that each foreign market requires own adapted marketing strategies (Ghauri & Cateora, 2011). At the same time, the role of marketing activities depends on the strategy of the company and its characteristics. Here, the way company focuses on the achievement of customer goals, along with the goals of the organisation predetermines marketing as essential part of the company. It includes creating goods and services, provision of suitable place for supply and appropriate pricing that would meet customers’ needs (Rad, et al, 2014).

The importance of marketing research is not only in contributing to the company’s success, but in its role in considering business decisions related to understanding of customers, what they want and what they are willing to do. For market research, the main components are the evaluation of the customer, the extent to which the firm understands where the target markets are, the location of customers as well as possibilities for promotion of the product. For Hamleys, marketing helps to find and keep customers and create of competitive advantage through international operations. Though Hamleys wants to be a destination as well as a shop through opening new points across the globe, it is also aimed to bring “magical experience” (Toy story, 2011). This is how Hamleys’ marketing efforts pay their way. Holland (2013), states that one of these efforts is the franchise model that has been a success since the company took its international direction. Thus, it allowed Hamleys to double its franchise stores in 2012 and open more than 200 of overseas points in the next 5 years. It is now present in India, Cyprus, Denmark, Saudi Arabia, Russia and Sweden. Another important aspect of importance of marketing to Hamleys is in maintaining good reputation of the company through shops, which are locate far form Regent Street, where the forst one was built. According to Holland (2013), now people start realising that Hamleys is not a single store, but a set of such stores with the new strategy that Hamleys is going through. Such marketing efforts allowed the company to experience increase of its domestic sales in more than £10m. These numbers have also provided Hamleys with the blueprint for the overseas stores.

Situational analysis

The process of business environment examining is aimed at understanding the main variables, in particular opportunities and threats that are likely to affect the company. The external environment includes the macro aspects, related to different political, legal, economic, social and technology factors, which comprise PEST analysis framework (Ibrahim & Primiana, 2015). Thus, in terms of political factors that influence the operation of Hamleys in UK, the great role is given to the regulation of buyers and sellers, where certain degree of UK government interference into the business help the companies like Hamleys to have confidence that the contracts they sign will be upheld and that the rights will be clearly defined. From the competition perspective, the regulation in UK aims to impose the minimum regulation required to achieve any policy aim. The economic factors that impact the UK operation of Hamleys refer to the subsidies and taxes that affect competitors of the company. Thus, subsidies can increase financial support for business growth, however, taxes can also create barriers to build and exploit market power (Government in the markets, 2009). Socio-cultural aspects of PEST analysis refer to the age and population growth rate, cultural peculiarities of the country where business operates. While in UK the number of older people is growing, this can create challenge for Hamleys and the industry of toys in general. At the same time, the changes in consumers’ preferences because of the changes in technology is also what impacts business of Hamleys.

Another social factor that influences businesses is the growing popularity of social media, where more young consumer to use mobile phones and computers (Curtis, 2013). Therefore, it is the new preference of younger generation in using digital and technology to shop online. Hamleys should keep pace with these new opportunities for its growth and development. It is also possible to assess and evaluate market attractiveness through application of five forces model, which Porter established to provide the opportunity to examine the complex interactions of competitors in the particular industry (Indiasty et al., 2014). Officially, the UK toy industry is the largest with 5.9& sales growth in the recent years. Such growth is driven by the intense competition among companies (UK toy industry largest in Europe, 2016). These companies cater both the children and their families and create the flagship store on Regent Street essential barrier to remain its competitive top. Thus, the new outlets of Nickejodeon, M&M store and SRI have obtained significant volume of products sources from UK licensees and thus have additional lines to round out the product mix. In the perspective of such force, Nickelodeon is genuine for Hamleys (Retail theatre of war as upstarts bid for Hamleys top toy spot, 2015). The bargaining power of buyers is based on the seasonal preferences of consumers, which has also put other companies, such as Lego Group and Hasbro Corp. to influence the British toy retailers. Thus, the British market has increased by 4.4% in 2014 and reached £3 billion at retail. Such tremendous results are created through demands from children and their families, combined with the consumers’ desire to prioritise playtime (Best performance for four years for the British toy market, 2014).

In terms of threat of new entrants as force that can shape Hamleys’ strategy, the risk of potential competitors is moderate as the toy industry in UK has several barriers such as economies of scale and market growth. At the same time, proprietary knowledge and specific regulations will enable the new companies to capture their niche in the market and thus influence Hamleys in its operation in UK. At the same time, Hamleys itself creates better conditions as it starts its strategic alliance with C.banner. It is because the cooperation between businesses will enable the two companies to have greater power with suppliers and help grow the brands (Sabharwal, 2016). Threat of substitution in UK toy retail market is high as several factors can influence the demand for traditional toys. Thus, ageing population is the biggest problem. The other important aspect is related to the competition of new products and activities such as other hobbies, sports and school activities. Generally, the substitution to traditional toys can be made because of the technological boom where smartphones, tablets and other entertainment products have created conditions for spending money for these new devices and not for toys (Study on the competitiveness of the toy industry, 2013).

To better identify and prioritise business goals, SWOT framework is helpful as it enables to analyse strengths, weaknesses, opportunities and threats of businesses (Ommani, 2011). The main strengths of Hamlesy are associated with it strong brand as one of the world’s biggest toy retailers. In addition, the company is present in different countries, such as U.S., Denmark, Sweden, Dubai, India, Saudi and Russia.

The other strength of the company is that people are aware of the brand as attached to emotions, which is not connected to the store in the street. The company is strong with its franchise model all over the world. The main weaknesses of Hamleys are connected to its orientation on upscale market and upper class, which makes it impossible for all the customers to purchase toys at Hamleys. The main threats are related to the competition and substitution to traditional toys, which in the era of new technology has appeared to be the greatest challenge for the company. At the same time, there are numerous opportunities in the UK market for Hamleys. Thus, it can target middle class or add more product lines in the variety of the existed products.

In its efforts to respond the changing business environment, it is appropriate for the company such as Hamleys to set the segment groupings of its consumers. It would differ in ways that allow the size to be easily measured. In addition, the segment of customers should be large enough to justify the targeting efforts and the target customers should be reachable through communication and did not diminish in size over time (Lynn, 2011). In terms of positioning of the brand, the way the company wants its customer to perceive and feel about the brand versus competitors predetermines its strategies toward customers’ attraction. For that purpose, Hamleys uses all the opportunities, including new technology to position its brand. Thus, according to Smith and Chaffey (2008), Hamleys has chosen the web to acquire new customers from overseas market despite the London base. Instead of increasing sales to the existing customers, the company has used an opportunity to target consumers that would look for specialist collectibles difficult to obtain elsewhere.

Marketing programmes

The marketing mix, consisting of product, price, promotion and distribution represents the way where the company’s brand marketing strategies can be translated in the marketing programs for further action (Burnett, 2008). At Hamleys, products are the primary marketing mix as they satisfy customers and provide the main link between the company and people. Using its 255 years of experience in bringing the most wonderful toys to children, Hamleys has created the reputation of well-known and trusted brand all over the world. The toys of the company are chosen and distributed in accordance to the changes in the business environment and each product is aimed to be profitable. Thus, Hamleys offers toys for children of preschool age, soft toys and arts and crafts, dolls, toys from the series “Build it”, actions toys and games for outdoors and indoors (Hamleys, 2016). The other element of marketing mix, distribution is essential for the company as it influences the customers and is the determinant of their perception of the firm. In these terms, Hamleys is committed towards the ensuring of its toys to be sold responsibly and in accordance to safety rules. Here, it is the company’s obligation to ensure that its toys achieve international toy standards and that the suppliers did everything possible to ensure these standards to be kept until the product has reached its point. Hamleys suppliers should demonstrate their compliance to the regulations of the company to satisfy the needs of customers (Our suppliers, 2016). Communication or promotion as another marketing mix elements refers to the benefits of the firm that should be communicated to the distributors and to the final customers.

Here, the organisation should provide marketing information to the final customers through promotion, advertising, sales promotion and packaging. At Hamleys, there exist the whole Offers webpage, where for online shoppers the company provides all the exclusive offers, gift vouchers and other benefits. The other element of marketing mix, the price is also aimed to promote the product if it is bundling. Here, such companies as Hamleys can establish price-adjustment strategy to allow customers to use discount pricing.

Consumer behaviour analysis

Measuring attitudes and beliefs of the consumers helps the companies to predict behaviour of these consumers toward their ability and desire to purchase products and use particular services. Consumer behavioral analysis in this term has developed a systematic set of concepts taken from the long tradition of experimental and applied research (Foxall, et al., 2006). There is also interrelation between consumer behaviour and brand image, which is associated with the general perception and impression of the brand and its products (Zhang, 2015). For Hamleys, the consumer behavior much depends on the brand image of the company known for already two hundred years and which through its products is capable of satisfying the changing preferences of the consumers. It is the customer satisfaction that refers to the general evaluation of the shopping experience at Hamleys with the performance-specific expectation as key indicator of customer satisfaction. It is the great role of Hamleys’ brand image in affecting customer loyalty recognised as the extension of customer satisfaction. Here, the favourable stores image is helpful in fostering customer loyalty.

Conclusion and recommendations

One of the main attributes of the successful business is to be able to rapidly adapt to changes on the environment. Here, the company, such as Hamleys is expected to use emotional branding as influential manner for brand management. Such branding is effective in causing customer reaction, sentiments and moods necessary for the business within toy industry. Related to the emotional branding, there is a need for the company to increase its visibility in the new markets as well as sustaining its performance in the domestic arena. Being the shop for particular customers segment, there is a need to expand wider and capture not only upper classes of consumers. It is because in the time of economic crisis, Hamleys could find new target audience if it could offer products for mass.