Strategic Management Essay Example | Topics and Well Written Essays - 1250 words - 2

Strategic Management - Essay Example In 1998, ‘Somerfield’, a supermarket group acquired Kwik Save in a transaction worth ?473 million (Somerfield, n.d.). They had faced huge competition when super store Tesco and Sainsbury launched their own brands. In addition, other two discounters Lidl and Aldi had also entered the retail market. Several stores were closed around the United Kingdom and as a result the company went under administration. They also sold a few stores to Fresh Xpress but it was also under administration and ultimately all the stores were closed. Eventually, the entire of stores of Kwik Save closed in 2007 (Docstoc, 2010). Kwik Save had closed down 79 stores in order to survive in market. Kwik Save also sold its stores to Somerfield in 2006, and since then more problems aroused which resulted in lay off of several outlets, collapsing of sales as well as suppliers refusing to supply goods (Earth Times, 2011). The management of Somerfield realised that the outlook and inner look of Kwik Save st ores would not fit well with the brand of Somerfield. They had warehouse style of inexpressive wooden shelving, space-saving undersized checkouts and thin passageway which needed to be changed by Somerfield. Subsequently, Somerfield decided to maintain and fully renovate the 102 best stores although the remaining 248 stores were fixed up for closure (Somerfield, n.d.). ... The market share of Kwik Save cut down from 1.2 % in April 2006 to 0.2% in 2007 (Docstoc, 2010). 2.0 Causes of Strategic Problems The company was focussing more on acquisition rather than improving the existing operation. Poor thinking as well as decision-making has been the prime cause of their strategic business failure. The store was not achieving their target since it was established (White Lane, n.d.). Firm’s Strategic Positioning Kwik Save was a successful grocery discount supermarket chain around the United Kingdom. They had developed the strategy to sell branded product in a cheap rate to attract maximum numbers of customer. This strategy led to an amalgamation of low fixed cost as well as severe central control. All this were the outcome of network of above 870 conveniently located and unpretentious stores located around the UK. It adopted a â€Å"no nonsense† approach for grocery retailing. The customer money was provided importance thus they were charged low rate for the products. But in 1970s and 1980s, the entrance of super stores hindered their growth and they could not compete with those retail stores. Firm was successful in strategy positioning when no other highly discount based retailers were present but due to the emergence of superstore they were left behind. The superstores were providing importance to leisure, comfort; excitement in the store but Kwik Save with its simple design, could not gain competitive advantage (Reference for Business, 2011). Firm’s Managers Analysis of the Environments of their Industry Andersen Consulting was appointed by the managers of Kwik Save in order to conduct ‘root-and-branch’ strategic review. Kwik Save was one of the â€Å"Britain’s number one discounter† but became