PESTLE Analysis Of Ocado Group Plc

Political Stability and Policy Changes

Mission statement and long-term goals of Ocado Group Plc:

Ocado Group Plc consists of the mission statement that aims to change the way through which the people can shop their groceries each week. In order to make a strong strategic position, it can be stated that following the mission statement the organization can create their customers to live easier.

On the other hand, in terms of long term goals, Ocado tends to create the best shopping of the groceries for the railing customers across the UK. However, in regard to the core of its joint venture with the firm M&S, Ocado is being powered by the unique technology along with aiming to lead the delivery service in an easier manner.

Analysing the current macro environment for Ocado_PESTLE:

The below table represents the macro environment for Ocado Group Plc.

Table 1: PESTLE Analysis of Ocado

Factors	Description
Political	? High political stability ? Frequent changes in the policies ? Corruption and bureaucracy
Economic	? High rate of inflation ? Poor conditions of the labor market ? Poor economic structure
Social	? Equality and power distance ? Online shopping ? Spending behavior and patterns
Technological	? Social media marketing ? R&D and its impact on value chain
Environmental	? High depletion of resources ? Renewable technologies ? Waste management and recycling
Legal	? Intellectual property law ? Consumer protection laws

(Source: Self-Creation)

Interpretation of the information:

Based on the above analysis, it can be stated that due to the political stability, Ocado is seen to be associated with a friendly environment along with having predictable growth in the trending market. Also the growing instabilities in the politics affect the industry growth of Ocado. Frequent changes in the policies is another factor due to which the business performance of Ocado gets harmed (Mason 2019). It is expected that the political scenario of the country as well as the priority of the government can affect the growth of Ocado as well. Corruption and bureaucracy adversely influence the environment of business. As Ocado operates in various countries, therefore its business growth becomes unpredictable due to the poor enforcement as well as the high level of corruption.  

Conversely due to the high growth in GDP, Ocado becomes able to pursue the long term growth strategies. As such a high rate of inflation enhances the ability of customers towards spending more products. Herein operation in such circumstances consisted of the chance to low the production cost for Ocado. The Condition of the labour market is another factor that determines the poor wages as well as the skilled workforce (Sanchez Rodrigues et al. 2018.). As the hierarchical department of Ocado fails to attract talented staff, therefore it fails to leverage the skills for improving the business performance. In addition to above, the business practice of Ocado is seen to be influenced by the prevailing structure of the economy. Herein regulatory as well as the economic environment in the oligopolistic structure becomes different from monopolistic that lead to the intense competition.

Ocado needs to adjust the business management practices at the time of entering the markets having low or high power distance. This provides serious implications on the global business context of Ocado. The advent of e-commerce as well as social media have encouraged the behavior of online shopping among its customers (Triantafyllou et al. 2021). Here Ocado needs understanding the behaviour of online shopping through considering the general differences along with developing communication as well as marketing strategies. Spending patterns as well as the behaviour is being influenced by the purchasing power of money. Here Ocado needs to invest it’s time to understand the motivations of the consumer along with defining the social trends related to consumer behaviour.

Inflation and Labour Market Conditions

The development of marketing communication technology has led to adapting innovative techniques of marketing. Here for enhancing the approach of collaboration with customers, Ocado utilizes social media as a common medium (Moss 2021). However, Ocado tends to leverage the opportunities by improving the social media marketing for improving its performance of business. On the other hand, Ocado needs to invest over its competition on both micro and macro level regarding the influence of the new technology on the value chain of its business. Here the hierarchical department of Ocado needs to invest in the disruptive technology in order to increase its profits as well as the profits through the disruptive technologies.

High depletion in the resources of Ocado is expected to draw the adverse response from the environmental protection groups, media, general public and its customers. Here Ocado needs to study the particular regulation of the environment incorporating the resources like electricity and water (Clarke 2018). Ocado can benefit from renewable technologies by ensuring long term sustainability. It is noteworthy that by investing on this fact Ocado is expected to increase the satisfaction of its stakeholders along with expanding the large base of customers and brand image. Due to current advancement of technology, Ocado can compel its waste management practice as well as innovation in recycling.

In addition to offsets, for Ocado the intellectual property rights can result in losing the competitive advantage due to which its strategic position can be weakened. Also, the protection of data has appeared as a significant issue due to the security as well as the privacy concerns for the customers. Here Ocado needs studying on the data protection regulations in order to protect the data of the customers (Neate 2019). Also, following these laws Ocado needs to ensure high quality standards to protect its customers from the fraudulent claims of marketing.

Assessing the internal capability of Ocado by using McKinsey’s 7 S framework:

In order to assess the internal capability of Ocado, McKinsey’s 7 s framework has been analysed below:

Hard Elements:

Strategy: The strategy of Ocado Group Plc is clearly defined in its strategic direction as well as the overall strategy of the business. The definition of business strategy has been made Ocado as transparent along with aligning the establishment of its organizational goals. Competitive areas as well as the changing demand of its customers are the other areas that evolve the market consumption and the market patterns of the consumers (Wesonga 2018). The strategy of Ocado offers both adaptability as well as the flexibility by which it culturally as well as domestically adopts the products through localisation.

Structure: Ocado contains a flatter hierarchy for its organization through which it gets supported in a progressive and learning manner. Such falter hierarchy allows Ocado to enhance the quick process of decision making along with increasing its commitment for the organization. Apart from that, interdepartmental coordination of Ocado monitors and initiates the coordination between its all the departments in order to ensure a smooth process for the organization. Ocado also has the hybrid structure for decentralization (Hanbury 2019). Therefore it widely supports the roles and the responsibilities of its employees by establishing mutual understanding and coordination among the supervisors. In addition to above, it is worth to mention that Ocado contances intricate as well as developed systems for managing the communication among huarache departments as well as the employees. Such flow of information ensures the goals and tasks are organized.

Social Media Marketing and Consumer Behavior

Systems: Ocado has well-established systems in place to ensure that fundamental company operations run well and that no issues or problems develop. The technologies used by Ocado are largely departmental in nature, and include items such as:

– Management of human resources

– Promotion

– Funding

– Business operations

– Management of supply chains

– Promotions

– Strategic management

– Management of Public Relations

Ocado has developed its own strategies and processes to guarantee ensure all of the company’s divisions and technologies are on the same page and working together to meet the company’s ultimate goals and objectives (Beynon-Davies 2018). This is achieved by ensuring that all processes, as part of the overall company overall strategy, define and achieve specific targets and results specific to respective areas of competence

Soft Elements:

Shared Values: Ocado’s core values are established and communicated in order to create an innovative and growing passion framework that helps employees to perform efficiently while also raising their enthusiasm and devotion to the firm. The following are some of Ocado’s core beliefs, however they are by no means exhaustive:

– Ingenuity

– Integrity

– Discretion

– Responsibility

– Belief

– High-quality

– Cultural heritage

All of Ocado’s operations and procedures are conducted in line with high moral and ethical standards that have been evaluated and standardised against international benchmarks. Ocado’s company culture also supports innovation and creativity by empowering employees to fine-tune their professions and identities by allowing individuals and organisations to thrive autonomously. Finally, Ocado’s corporate culture is defined by leadership and teamwork that emphasises availability and openness in order to increase employee motivation and job contentment.

Style: The leadership style of Ocado is participative. Using a participative leadership style, Ocado is capable of including and teaching its employees in decision-making procedures and administrative decisions (Danel 2016). Ocado encourages verbal auditing and collaboration across people, technology, teams, and units. Given Ocado’s global operations, its workplace obligations and responsibilities regularly necessitate inter-departmental input and ideas, this cooperation and collaboration has emerged as important.

Staff: Throughout its worldwide operations, Ocado employs a sufficient number of people. Workers for various job kinds and professions are employed both domestically and globally, depending on the amount of demand and the level of expertise required. As a consequence, it is apparent that Ocado has employees that are capable of performing their work tasks and obligations (Gargas 2016). All employees get on-the-job orientation to familiarise themselves with the business and its goals. Both external and internal help is available for skill growth. Ocado employs a large number of individuals. The number of employees varies by country and location, depending on the demands and specifications of the primary company. Ocado’s global staff is approachable, friendly, and appealing, while also collaborating with members to reach business goals. The team members and workers at Ocado are the most important part of the company’s success.

Skills: Ocado’s crew is remarkable, having exceptional qualities and skills. Ocado prioritises the development of its employees’ skills and competencies (ucka 2016). It holds frequent internal and externally administered training sessions for its employees in order to provide opportunities for advancement and expansion. Ocado values and collaborates with its employees, putting a heavy focus on personal and professional growth. At Ocado, knowledge and skills are matched to specific job profiles and requirements, offering the company a competitive advantage.

Table 2: through VRIO analysis of Ocado 

Valuable	· Ocado is highly engaged in the actions of social responsibility · Engaged in the activities of CSR allows the concerned brand for building a non-substitute competency
Rare	· Global presence of the Ocado Group Plc operates in the multiple regions and countries · Problem solving skills fosters the issues of organisational culture amongst the management and employees · Innovation leads to the high competitiveness for the concerned brand
Imitable	· As Ocado group offers a high quality products for the consumers, there it appears as a source for appealing to the brand · Marketing communication is the another area that induce the high consumption in a strategic way · The concerned organisation offers a unique experience for the customers
Organisation	· Financial strength of the brand is high in regard to the strength of the brand · Technical integration as well as advancement is considered as a significant resource to develop competitive advantage · Ocado Group Plc enhances the substantial investments in R&D

(Source: Self-Creation)

Table 3: SWOT Analysis of Ocado

Strengths	Weakness
· Strong technology and enterprise application performance; expansion of Ocado’s own brand image; broad choice of food products and competitive price  · Partnerships with well-known retailers such as Carrefour, Waitrose, and Morrisons	· The debt as well as the credit facilities are crucial to the operations. · In the context of the UK, expansion over the single market might encompass small size groceries.
Opportunities	Threats
· The prospects can be duplicated by replicating Ocado’s business model across Europe’s attractive markets. Investing in digital technology may improve competitive advantages as well as capabilities. Robotics licences improve the automated warehouse platform.	· Brexit might cause Ocado’s business to suffer, as well as customers’ purchasing · There is fierce competition from online shopping giants like Amazon Fresh.

 (Source: Self-Creation)

 Table 4: TOWS Matrix of Ocado

Threats	Opportunities
? Brexit can lead to the economic down turn for the Ocado along with reducing the spending for the customers ? There is intense completion with the online retail giant such as Amazon Fresh ? High price wars among the retail sector of the grocery eroded margins	? The opportunities can be replicated the model of business of Ocado across the lucrative markets of Europe ? The investment in the digital technology can enhance the competitive advantages as well as the capabilities ? Robotics license enhance the warehouse platform that is automated
Weakness	Strengths
? Operations depend to revolve the debt as well as the credit facilities ? Expansion over the single market can relatively consider the small scale grocery in the context of the UK	? Strong performance of technology as well as the proprietary software ? Expansion of Ocado of its own brand image ? Broad range of offered grocery and competitive pricing (Beynon-Davies 2021) ? Partnership with the strong brand like Carrefour, Waitrose and Morrison

(Source: Self-Creation)

Evaluating the competitive positioning for Ocado by Porter’s Five Forces Analysis:

Table 5: Porter’s Five Forces Analysis for Ocado

Forces	Analysis	Impact
Threats of new entrants	In the business where Ocado Group Plc works, scale economies are tough to attain. This makes it easier for businesses who produce vast quantities of goods to have a competitive edge. It also increases the cost for newcomers. As a result, the threat of new entrants is lessened.	Low
Bargaining Power of Suppliers	In the industry in which Ocado Group Plc works, there are far more providers than purchasers. As a result, firms have far less control over price, leaving suppliers in a poor negotiating position (Salaman and Storey 2016). The products of these suppliers are largely standardised, have little distinction, and face limited competition.	Low
Bargaining Power of Buyers	The number of firms that create the commodities greatly outweigh the number of suppliers in Ocado Group Plc’s operation. As a result, purchasers have a limited number of options from which to pick, and hence have limited bargaining power. As a result, purchasers’ negotiating power is weakened inside the sector. Within the sector, there is a lot of product differentiation, so purchasers won’t be able to tell which companies make the same thing. Buyers’ negotiating leverage inside the industry is weakened since shifting is difficult.	Low
Threat of Substitute Products or Services	In the industry where Ocado Group Plc operates, there are few substitutes for the things it produces. The few alternatives on the market are also made by low-profit companies. This implies that in the industry in which Ocado Group Plc works, there is no cap on how much money a business may make. Alternative products’ market threat has lessened as a result of all of these causes.	Low
Rivalry among Existing Firms	Ocado Group Plc has a small number of competitors in its industry. The bulk of them are also rather big. This implies that no business move will go ignored. As a result, the area’s current competitiveness becomes a less formidable worthy adversary.	Low

(Source: Self-Creation)

 Through the following matrix, the strategic position for Ocado has been analysed.

Market penetration	Market development
Ocado uses the market penetration technique to expand their present product offerings in regions where their brands are already well-established and operational.	Through marketing strategies, Ocado might expand its business by supplying current goods in new areas. Ocado will be able to accomplish this through a variety of strategies.
Product development	Diversification
Ocado has the ability to make adjustments and enhancements to existing goods in order to present consumers with new and better alternatives. This will result in increased sales income as well as increased consumption.	Diversification is crucial since it allows Ocado to remain competent, innovative, and lucrative, as well as reach out to distribution networks.

(Source: Self-Creation)

Strategic management plan, for the next 5 years of the Ocado:

Analysis	Formation of strategy	Goals setting	Structure	Duration
? Remote as well as external environment	? Diagnosis	? Guiding policies	? Leadership and organizational structure	? 1.5 years
? Internal assessment	? Strategic decision making	? Corporate ? Functional business	? Re-Programmes, incentives, investments	? 1.5 year
? Industry environment	? Portfolio management	? Scorecard and measurement	? Acquisitions and offered	? 2.5 year

(Source: Self-Creation)

References

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?ucka, J., 2016. Ocado Kickstarter-aplikacja webowa do wspierania pomys?ów programistów.

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Moss, A., 2021. How Ocado Technology Automated Covid Test Scheduling. Impact, 2021(1), pp.7-9.

Neate, R., 2019. M&S agrees£ 750m food delivery deal with Ocado. The Guardian. https://www. theguardian. com/business/2019/feb/27/marks-and-spencer-agrees-750m-food-delivery-deal-with-ocado.(Accessed 7 September 2019).

Salaman, G. and Storey, J., 2016. A Better Way of Doing Business?: Lessons from the John Lewis Partnership. Oxford University Press.

Sanchez Rodrigues, V., Wang, X., Demir, E. and Mohammed, A., 2018. Food waste in the online grocery supply chain: The case of Ocado’s salads.

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