External Analysis Final PDF

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EXTERNAL ANALYSIS: HUDSON’S BAY (Appendix A) SWOT Analysis – Opportunities and Threats (Appendix B) Opportunities By being part of the retail industry, Hudson’s Bay has developed several opportunities as well as threats. One of the many products they offer that are usually on a constant demand is clothing. Clothing changes from time to time depending on the trend of fashion and season that society is in at the moment. This gives Hudson’s Bay the opportunity to renew their appearance every season and depending on the emerging costumer needs for the newest trends. Hudson’s Bay looks to revitalize their products by giving their clients the ability to turn away from the “outdated” look and to introduce them to new changes. That being said, Hudson’s Bay ‘s targeted demographic is wider than any other competitor. They offer products for women & men and children of all ages, homeowners, and families. Their diverse range of products consists of apparel, accessories, beauty products and home merchandise. This gives Hudson’s Bay the opportunity to offer greater products to their clients depending on their likes and tastes. Also HBC supports Olympic Canadian athletes, which provides publicity and advertisement of national pride. They provided Team Canada’s uniforms for the Torino, Beijing, Vancouver and London Olympic Games. In addition, they have donated $35 million to support Canadian athletes through the Canadian Olympic Foundation and other national sport organizations and initiatives. This publicity leads to brand recognition, which is a great asset and an advantage over any other retail store competitor across North America. Financially speaking, the sale of Zellers brought HBC a large amount of money into the company, allowing them to use these funds in different areas of the company. This permitted the improvement of quality, the expansion of business and the possibility to partner with several retail banners. (Saks Fifth Avenue and Lord & Taylor in the United States, and Home Outfitters across Canada.) Threats Some threats that HBC faces are the existing and growing major competitors. Usually, large companies like Wal-Mart, Sears, Winners, Target, Designer Depot, Nordstrom, Macy’s, Holt Renfrew, Harry Rosen, Roots have a big number of existing loyal customers for the products they offer and the price variety. This puts HBC in a situation where they have to re-consider their price range. During the recession in 2008, HBC was in a position where not too many people had the sufficient finances to buy their products. As there was less income for consumers and an increasing unemployment rate, this meant low expenses and strict budgeting. Customers considered what they needed versus what they wanted, leading to

necessary spending for necessary products. This caused HBC to take into account the risks their products were facing. The economic status of the country is not constant; having many dependent factors as employment opportunities and health raised a concern. This is why HBC offering high-end clothes are included being at risk due to the high expense they follow when purchased.

Industry/Micro Environment Porter’s Five Forces Model (Appendix C) Threat of Potential New entrants: (Moderate-Low) Similar businesses offering similar products are available in the retail industry. They may not be the same quality, but prices vary differently without a doubt. HBC has the advantage of the brand recognition. This makes it difficult for new entrants to obtain a high and successful business recognition as HBC and overcome the already existing product loyalty. In addition, capital requirements to enter the industry are high, for example, in order for a company to enter the same industry as HBC, they are going to require a high capital due to the costs of management and operations in order to keep up at the same pace, or if willing, exceed HBC’s economic performance. The location availability that HBC offers to their clients plays a large role in the selling of their products. HBC are usually part of big shopping centers and provide direct access to their stores either from outside or inside the mall. HBC have 90 locations across Canada, one outlet and online stores, which limits the availability or successfulness of new entrants. Competitive rivalry: (High) In an ever growing world, companies are keen to seek the latest advantages in order to lead the industry they are situated in. HBC is a great example of this, as they have implemented many strategies in order to keep up with a growing economy and world market, as well as a growing demographic continuously looking for the latest trend in fashion. However, HBC has evolved into a company that addresses their customer’s wants whereas other companies address what their customer’s needs. This does not prove to be an effective strategy as HBC is facing a growing problem of economic inequality and only providing highend and expensive products. Companies such as Sears address the needs of their customers by providing affordable and reliable quality of products. Companies such as Lancôme have many loyal customers that go to Hudson’s Bay only for their products, if HBC loses this joint venture with Lancôme, not only would they lose a trading partner, but also a large amount of customers who are loyal to Lancôme.

Bargaining Power of Suppliers & Buyers: (Low) The power that suppliers and buyers possess is low. The suppliers and buyers have a bargaining power due to many competitors offering the same thing. For example, HBC and Walmart have similar products, some a bit more expensive than others. However, products are very similar, so the buyers do not have an optional store to buy from considering they all offer similar products. When a buyer decides to purchase something from one store and wants variety, they will be unable to do so because the other retailer will offer the same thing. Suppliers do not have power in this case. The supplier has low power by providing their products to a majority of retailers. For example, Tommy Hilfiger is a key trading partner with HBC, therefore, when it comes to price negotiations for its products, it had a great deal of leverage due to the customers that are loyal and willing to buy from HBC, just for the sole purpose of having a Tommy Hilfiger product. The buyers and suppliers are also looking for a greater variety of products to choose from in order to satisfy their needs. The buyers look for products that suit their interests and want to decide from a variety of other products in order to make sure they are making the correct decision. The suppliers seek variety for the sole purpose of reaching out to a larger and more diverse demographic of individuals for their products. Demographics also play a critical role due to customers wanting products that suit their needs; for example, a teenager looking for fashionable clothing, parents looking to keep up with modern trends, and elderly people looking for the most comfortable clothing. Threat of Substitutes Products: (Low) The threat of substitute products is low because the consumers do not have variety to choose from due to many places offering similar clothing. Most of the clothing being sold will be directed to a targeted group of buyers. These buyers will be looking for something specific and “unique,” however it will be difficult for them to find variety since much of the clothing being sold on the market are the same. Company A will offer the same products as company B. The buyers will not have a great variety to choose from and will eventually buy what’s simply available to them.

General/Macro Environment

PESTLE analysis (Appendix D) Political: The Canadian government wants Canadians to use Canadian dollars on Canadian retailers. This is important because it will help Canadian growth overall by decreasing unemployment, increasing demand and supply for Canadian-made products and overall growth. The Canadian government wants to promote Canadian shoppers to buy domestically, this will bring new opportunities to Canadian employees an also will let the Canadian brand be known. Economic: It is important for any company to consider the economic factors associated with operating within a country, which includes competition, growth and employment. It’s also important that there should be more than one competitor because it this would help boost economic growth and competition. To explain, if there are more retailers and there is an increasing demand for one certain product, then there will be a competition for resources relating to materials and workers. While Canadians shop domestically, this will lead to increasing growth in retail stores, eventually leading to job growth. In order to have a strong economy, people need to be employed and have a source of income. Luckily, the retail industry in Canada is one of the largest, which means many people are employed and have a source of income, leading to a low unemployment number. According to statistics Canada, the retail industry accounts for nearly two million jobs. These retail jobs range from working in a clothing store to a hardware store. HBC has many joint ventures and partners domestically and are responsible for the employment for a significant number of individuals in the retail industry as they expand across the retail industry. Social: In today’s society, it is crucial for employees and customers to have leisure time. This leisure time can be anything from free time, to time with family and friends. Most importantly, free time means that there is a greater possibility to spend. Retail stores across Canada, including HBC, offer flexible hours and fair pay to compensate their workers and provide them with the time they need. In addition, it is important for retail stores to be flexible with their hours as well. In a world where people are working weekdays and only having weekends to themselves, the retail industry has learned to adapt by opening their stores on weekends and for longer periods of time. This is also an advantage for employees who are looking for more hours. The retail industry is committed to providing Canadians a work life balance. It also pays attention to lifestyle and trends in customer behaviors, for example, what people wear, how it affects their social life and the trends it eventually leads to. It’s important for the retail industry in Canada to pay attention to these key points as they are vital for growth and success.

Technological: Technology is already a huge part of society. Many things are done online and through technology, something that many companies have learned to adapt to and take advantage of. The biggest market at the moment is online shopping. Online shopping offers customers the ability to purchase products online from the comfort of their own home at their own leisure time. Going to a retail store can use up resources such as fuel and time. By being able to purchase products online, customers can have a variety of tools at their disposal, such as search tools, price differentiation and brand recognition. This is something that most customers find difficulty with when attending a retailer due to the time consumed looking for information. HBC and many other Canadian retailers have offered the option of purchasing products online. HBC offers free shipping for products purchased through its online store. This is also a great advantage for customers who aren’t willing to pay extra for shipping based on the size of the product. Technology overall has influenced Canadians to be better buyers. Legal/Ethical: An important aspect to the success of HBC are their legal and ethical components that help their customers and partners. Ethical sourcing is important due to the business relationship being build with suppliers based on the highest ethical principles of trust, teamwork, honesty and respecting rights and dignity of workers, customers and other parties involved with the sale of the product. When signing up for HBC’s MasterCard, they require the SIN* as an option to help distinguish individuals with sensitive information and may help accelerate the credit review process when purchasing a product. HBC realizes that in order to maintain and build a successful relationship with all parties involved in the sale of its products, it must maintain a strong legal and ethical background to ensure that trust and security are a top priority. Over the course of HBCs operational period, it has completed these expectations, which have evidently led to the success of the company and its reputation. Environmental: As global warming becomes more of a concern and global climate patterns are changing, the retail industry in Canada is preparing for the worst. While some days may be the hottest and other days may be the coldest, companies such as HBC realize that there is a high demand for online services and communication services. While companies find a new solution to provide better service for their customers, HBC maintains a personal goal towards a sustainable environment by establishing a waste division. They are willing to do their part by having less of a carbon footprint, for example, using fuel efficient vehicles for transportation services and a reliable waste division that efficiently harvests waste material and disposes of it in an ethical manner (HBC Social Responsibility).

REFERENCES: http://www3.hbc.com http://www3.hbc.com/hbc/hbc-foundation/ http://www3.hbc.com/financial-services/ https://prezi.com/b03wkccq-nry/the-hudsons-bay-company/ http://businesscasestudies.co.uk/business-theory/external-environment/pestanalysis.html#axzz3JeRorlrI

APPENDIX (A) Strategic Concept

Political Economic Social The Industry

The Organization

Technological Legal

tal Environmen

(B) SWOT Analysis

Opportunities

Strengths

Threats

Weaknesses

(C) Porter’s Five Forces Model

(D) PESTLE Analysis

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P olitical E conomic S ocial T echnological L egal/Ethical E nvironmental...