Development Strategy Essay Example | Topics and Well Written Essays - 1500 words

Development Strategy - Essay Example and growth of specialized stores the competitive landscape became much more diversified. 'Boots operates in an extremely competitive environment where the pace of decision-making and speed of implementation is integral to success," said Boots' chief executive Richard Baker.' (WWD, Jan 23, 2004, p.13). In response to the changes of the environmental factors Boots Group has undertaken a number of measures. Among them are launch of the customer loyalty programmes, sale of non-core business branches, plans for merger etc. One of the examples is the loyalty programme that has been commenced early in the year. 'Customers earn four points for every 1 [pounds sterling] spent. They can buy goods with points, each point advantage card earned being worth a penny. Customers can also collect points on the Boots website, boots.com, but can't spend them on the site.' (Grocer, Feb 19, 2005 p45) The possibility to unite the efforts and capabilities with one more strong market player is for Boots Group another way of addressing the struggle for profits in a competitive environment. In October 2005 the company announced that 'it has been in talks for about six months regarding a merger with rival Alliance UniChem. The transaction was approved by both companies' respective executive boards and shareholders and is expected to be finalized in April, 2006.' (Hoovers 2005) The America's Intelligence Wire, Oct 3, 2005 noted that 'the merger comes after Boots. . .refused to reiterate profit guidance for the year amid slowing U.K. consumer spending and competition with Britain's top retailer, Tesco PLC'. Taken into account that the shareholders and potential investors are two more integral parts of the company's business environment, the rumours about possible merger that have been circulating for six months had significant influence on the stock performance. The ambiguity of the future outcome has partially caused the decline in the stock price earlier in the year followed by the increase after the announcement of merger has been made. (Reuters Quote 2005). The goal of the merger is to create 'an international, pharmacy-led company with a combined turnover of L13.0 billion ($23.11 billion), to operate under the name Alliance Boots. However, their proposal might yet be scuppered as several private-equity firms are reported to be looking at making a bid for Boots following the news that it is up for sale. Among these are KKR, Permira and Apax'. (Pharma Marketletter, Oct 10, 2005 p0) Another environmental aspect that becomes more and more important with the course of Boots expansion into the US market is the economic, social and political factors and the specifics of this market. The groups plan to gain strength in the US retail market in the upcoming few years: The firm is boosting its beauty product presence in U.S. retail partners CVS and Target, and by this fall, Boots beauty items will be offered in 130 stores, up from 32, which will give it entry into the key markets of Washington, D.C., San Francisco, Dallas, Minneapolis and suburban New York and Boston. This effort will also help the retailer gather data on how to successfully expand here nationwide in 2006 within these retailers. (Moore 2005, p.1) Organizational Audit The internal environment of the Boots Company is built upon a strong notion of