EFFECT OF RETAILING STRATEGY ON ORGANIZATIONAL PERFORMANCE
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EFFECT OF RETAILING STRATEGY ON ORGANIZATIONAL PERFORMANCE
Chapter one
INTRODUCTION
1.1 Background of the Study
Retailing is the set of activities that involve marketing products or services to ultimate consumers for personal or home use. Businesses adopted retailing tactics to boost market share and profit, thereby improving firm performance.
Vertical selling is highly popular among larger businesses looking to expand their event further. Vertical strategy occurs when a business expands into new areas related to its business processes.
There are several tactics for each form of retailing that aim to improve revenues for the organisation. Market expansion occurs when a company attempts to grow into areas that will enhance its market share, although not necessarily in different sectors or even with the same products.
Retailing strategy is a vertical strategy in which corporations penetrate industries in the supply chain before others. In other words, a vertical retailing strategy is a method of ensuring distribution channels for products and services by establishing relationships with or controlling distribution.
The strong market rivalry, as well as changing customer tastes, have made the job of merchants complex and challenging. Many shopping businesses were open, but others were closed.
Many researchers have focused their efforts on finding a solution to this dilemma. During interactions with the organised NLR, a need for understanding retail problems and organisational performance was observed.
In this study, an attempt is made to identify retail difficulties and their impact on organisational performance. The rest of the paper concentrates on these topics. The first portion focuses on a literature review of retail problems. The second section focuses on the organization’s performance.
The third element focuses on research technique, which includes designing and carrying out research for the project. In the final portion, the report discusses its limitations and leaves room for future research.
The factor analysis technique was used to classify factors for retail issues, while the structural equation modelling technique was used to evaluate hypotheses.
Businesses save money by selling things they develop, which frees the provider from the threat or influence of a large customer. Firms typically add new products to their portfolio when they gain new expertise and combine it with their existing knowledge base, especially in highly dynamic industries.
The new information frequently builds on previous knowledge, allowing for improvements in existing items such as excellent quality and the ability to meet the expectations of consumers.
As a result, the process of knowledge development and retailing frequently increases the performance of linked items in the portfolio. The combination of various knowledge stocks enhances the firm’s ability to offer a wider range of connected items. As a result, the company is able to better meet the needs of its customers than competitors’ product offers.
On the other hand, the manufacturing industry remains one of the most important engines for economic growth, and its performance as a catalyst for transforming slow-growing and low-value activities into more productive activities with higher margins and growth prospects is even greater today,
given rapid technological change and the need to achieve liberalisation and bridge the income gap with the industrialised world. (Mike, 2010).
However, vertical retailing indicates that a business unit’s fortunes are at least partially dependent on the capacity of its in-house supplier or client (who may also be its distribution channel) to complete effectively.
Technological developments, changes in product design involving components, strategy failures, or administrative issues can all lead to the in-house supplier supplying expensive, inferior, or inappropriate products and services. Essentially, there are two sorts of vertical retail strategies.
Backward retailing is a method in which a company develops its own sources of raw materials. It occurs when a company expands into operations that are concerned with the inputs to its existing business. (Oyedijo Ade 2004).
Retailing strategy, on the other hand, occurs when a company disposes of its own output by acquiring or expanding control of distributors or retailers.
An increasing number of manufacturers are following a retailing approach by developing websites, distribution outlets, and so on to offer their products directly to consumers.
Thus, retailing strategy is concerned with the company’s outputs, i.e., the firm expands its retailing in the value chain by establishing and offering its own distribution outlets, transportation system, repairs, and servicing.
It is argued that growing vertical retailing has led to decreased pricing for both unmerged input suppliers and vertically integrated firms (McAfee1999). According to the literature, vertical retailing or coordination will increase efficiency by lowering transaction costs associated with market exchange. (Source: William Son, 1974).
Other most commonly argued benefits of vertical retailing include the reduction of risk, improves supply chain coordination, captures upstream and downstream profit margins, the ability of integrated firms to innovate and differentiate,
it enhances steady near-capacity production operations through the creation of one’s own dependable channels for pushing product to end-users, increased efficiency in the exchange of information and organisational structures, and
As a result, the primary goal of this research is to empirically investigate the effect of vertical retailing on the performance of integrated organisations, specifically the influence of retailing strategy on Cadbury Nigeria Plc.
1.2 Statement of Problem
Manufacturing industrial sectors are not immune to problems and difficulties that affect all industries. This research effort is carried out with the purpose of providing solutions to difficulties faced by industrial industries.
1. The problem stems from inadequate vertical retail planning.
2. Failure to establish control over distributors.
3. An unlimited supply of skilled and competent distributors.
4. Weak type of machinery that is put in place to implement retailing strategy.
5. A lack of finance and human resources required to run the business.
6. High costs for market transactions and administrative tasks within an organisation.
7. Lack of stable production and desire to enhance competitiveness
This cost advantage over competitors is achieved by the adoption of a retailing strategy and the increase in selling prices to end users, allowing the organisation to raise the predictability of demand for its outputs.
1.3 Objectives of the Study
§ Assess the impact of retail strategy on organisational performance.
§ Determine how retail strategy impacts organisational goals.
§ Examine how much the organization’s retail outlets have increased market share.
§ Assess the impact of an organization’s service department on productivity.
§ Determine how lower selling prices to end consumers impact manufacturing industry profits.
1.4 RESEARCH QUESTIONS.
§ Do the organization’s retail outlets gain market share?
§ How much has an organization’s servicing department increased productivity?
§ Does implementing a retail strategy help organisations achieve their goals?
Does implementing a retail strategy improve organisational profitability?
Is there a correlation between organisational sales control and profitability?
1.5 Research Hypothesis
Ho: There is no significant association between an organization’s retail locations and market share.
Hi: There is a considerable correlation between an organization’s retail outlet and market share.
Ho: There is no association between an organization’s servicing department and its productivity.
Hi: There is a correlation between an organization’s servicing department’s performance and production.
Ho: There is no link between retail strategy and achievement of organisational goals.
Hi: There is a link between retail strategy and achievement of organisational goals.
1.6 Significance of the Study
Retailing strategy, as a whole, helps a company maintain a competitive advantage over its rivals. In many industries, independent sales agents, wholesalers, and retailers dealt with competing brands of the same product, having no allegiance to any one company’s brand, they prefer to push whatever sells and earns them the most profits.
A manufacturer may be frustrated in his attempt to increase sales and market share or maintain steady, near-capacity production if he must distribute his products through distributors and/or retailers who are only half-heartedly committed to promoting and marketing his brand as opposed to those of competitors.
In such instances, it is preferable for a manufacturer to incorporate retailing into wholesale or retailing through a company-owned distributorship or chain of retail outlets.
Another major aspect of retailing is franchising, in which the franchisor allows its franchisees the right to use the franchisor’s name, reputation, and business abilities in a certain place or area.
This reduces the financial burden of rapid expansion, allowing the company to grow quickly and gain the benefits of large-scale advertising, as well as economies of scale,
management, and distribution. Franchising allows businesses to grow quickly since costs and opportunities are shared by a large number of people.
1.7 Scope and Limitations of the Study
The scope of this research shall be limited to Cadbury Nigeria Plc. The research focuses on retail strategy as a method for obtaining lower selling prices to end consumers. However, the study had the following limitations:
v Time.
v Finance
v Information availability.
1.8 Definition of Terms
v STRATEGY: This refers to the concepts and plans that a company uses to compete successfully with rivals.
v MANUFACTURING: The conversion of raw materials into final goods.
v PERFORMANCE: It refers to the final result of an activity.
v RETAILING: This is the process of integrating two or more things so that they work together.
v PROFITABILITY: This is the amount of money earned in a business after deducting expenses.
v PRODUCTIVITY: The rate and amount of items produced by a worker or company in relation to the amount of time and money required to produce them.
v COMPETITOR: A person or organisation that competes with others, particularly in business.
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