Management Summary

E-Commerce

Management Summary

The report aims at analysing Alliance Boots, one of the leading pharmaceutical and healthcare organisations in the United Kingdom (UK), in order to provide an overall picture of organisations’ strategic status in the industry. The analysis has been done through SWOT and PEST framework which provides aninclusiveidearegarding the organisation. Astrategic evaluation of Boots has also been conducted in the report for recognising the organisational background, financial performance and products/services offered to the customers. The report also attempts todraw the effect of Information Technology/ Information System (IT/IS) on the organisational culture as well as productivity.

From the findings, it can be stated that the financial performance of Boots is quite strong and IT/IS has significantly impacted on the productivity of the organisation.The major findings gathered from the report are follows:

• Boots provides a broad range of pharmaceutical, healthcare and beauty products to the customers along with a variety of services
• Boots concentrates on providing superior services and products at best prices to their customers
• Boots witnessed high level of competition from several superstore chains
• IT/IS has helped Boots to improve the underlying quality of the services and business performances to effectively compete with the superstore chains

Table of Contents

Management Summary

Introduction

Strategic Evaluation

SWOT Analysis

PEST Analysis

Impact of Information System (IS)/Information Technology (IT)

Impact of the New IT/IS System on the Culture and Productivity of Boots

eMarketing Strategy

Value Proposition and Differential Advantage of eMarketing

Legal and Ethical Issues

Conclusion

References

Introduction

Alliance Boots is aninternational organisation based in the United Kingdom(UK)which deals in pharmacy as well as beauty products along with offering a wide variety of services.It was established in the year 2006 as a result of a merger between ‘Reckitt Benkiser Boots Group’ and ‘Alliance UniChem Plc’. In the year 2007, Alliance Boots was acquired by ‘AB Acquisitions Limited’.Boots is recognised as anassociate of Alliance Boots group. The business of the organisation is mostly based onpharmacy,health and beauty products(Alliance Boots, n.d).

Alliance Boots was learnt to keep up a robust cash flow which helped the organisation to fund investment activities. Since 2006, Alliance Boots demonstrated a strong financial performance in terms of revenue growth which reflects its clear vision and identifies the remarkable performances of the efficient business teams with strong operational knowledge (Alliance Boots, 2012).

Bootsentails ranges of beauty and healthcare brands such as Botanics, Soltan and No7 among others.It also offersan assortment of products comprising skincare, healthcare, sun-care, anti-ageing products, cosmetics and organic products.The organisation also provides extensive ranges of medicines, vitamins, patient-care and first aid products. Boots Opticians are believed to be specialised optical services which provide an array of glasses as well as lensesApart from the mentioned form of products, Boots also provides its customers with several ‘value added services’ and offer assistance to the posologistsin order to enhance their own business (Alliance Boots, 2012).

Strategic Evaluation

Due to the altering pattern of the customers in terms of purchasing beauty as well as health products from the superstores, Alliance Boots have been learnt to be encountering huge challenges to compete with specialised superstores.Individuals gain access to every kind of product required by them from the superstores owing to which Alliance Boots was found to be losing their market share. Thus, Boots is known to beundertaking prudentmeasures in order to enhance their competenciesand compete effectively.

SWOT Analysis

A SWOT analysis can help to evaluate the strategies of Boots.

Strengths

The major strength of Boots is supposed to be its wide assortment of products in comparison to the other competitors. The cost of the products of Boots is quite low than the other existing competitors. Furthermore, the stores of Boots arealsopositionedat suitable places which assist people to locate them easily. Boots also provides numerous services such as home delivery, consultancy and night-timeapothecary among others which make people visit the stores of Boots frequently. The store design and atmosphere of Boots is also found to be attractive which helps in luring customers to a large extent (Girdhar, 2009).

The huge collection of healthcare products is considered to be the major strength of Boots.The organisation differentiates itself by becoming a healthcare products and service provider. Boots invests a huge amount of money towards enhancingits business by developing services, new products and new pharmacy stores (Girdhar, 2009).

Wholeselling is identified to be the other strength of Boots which positions the organisationas one of the leading distributors of pharmaceutical products in the Western European region. Boots engages an effectual form of performance with respect to regularity of delivery, product availability, delivery accurateness, and dependability. Through its services, Boots constantly delivers high proficiency and efficiency in business.Furthermore, the products of Boots are also learnt to be quite renowned for its superior status of being dependable and reliable (Girdhar, 2009).

The other strength of Boots can be considered to be its ability of responding quickly. The organisation was found to have reacted effectively and prudentlytowards the challenges posed by other competitorsby involving itself into offeringpharmacy and medical services. Thus, Boots effectively entered and successfully positioned itself in the health and beauty segment.Today, Boots is not only recognised as a pharmacy and medical brand but it is also considered as a lifestyle brand as well. By identifying the market trend, Boots reacted efficiently and adopted the appropriate branding strategies(Girdhar, 2009).

Boots strength also lies in recognising the purchasing manners or attitudes of the customers. The ‘advantage card system’, implemented by Boots has helped the organisation to recognise the purchasing behaviours of customers and accordingly develop the management structure (Alliance Boots, 2012).

Weaknesses

One of the most significant weaknesses of Boots is its insufficient resources which hinders itfrom becoming a service leader. Besides, Boots also lacks expertise in real-time production and consumption of personalhealthcare and lifestyle productsas. The competition posedby several rivals is making Boots susceptible to market risks asthe organisation falls short of recognisable campaign administration schemes (Girdhar, 2009).

Opportunities

Boots can make use of its strengths to effectively exploit the available business opportunities. It can further develop its famous brands by making increased investments. It can also enhance its proficiency in the field of beauty by hiring specialists. The other significant opportunity for Boots would be to make its way in the beauty and health spa business(Girdhar, 2009).

Boots can also implement new technologies in its business operations. It will facilitate the organisation to provide innovative services to the customers and as a result progress the brand image further. As the market has become global, Boots would require enhancing the business by prospering into new markets. It will also help to augment the customer base. By entering into mergers with other organisations,Boots can improve its business positionin contrast to its competitors (Girdhar, 2009).

Threats

Boots needs to deal with several business environmental threats. Several superstore chains such as Tesco and Wal-Mart are entering into the personal, healthcare and pharmaceutical market with strong determinations. These competitors have numerous product lines which are desired by the customers. These superstores are intruding in the market of Boots which is turning out to be quite a threatas they can provide an array of products in a single store which is sufficient to entice the customers. These competitors are compelling Boots to minimise the costs of products which isconsequently affecting the profitability. Besides, other external environmental aspects such as governmental regulations onpharmaceutical, healthcare and other products, flagging economy and inflation rates can also pose a severe threat on the business of Boots (Girdhar, 2009).

PEST Analysis

Political Factors

Political aspects such as regulation of government can impact on the business of Boots. In the recent times, the deregulation in the UK economy has enhanced the factor of competition for Boots, as several superstores are attempting to open pharmacy stores in their outlets.This will enable the superstores to provide healthcare services such as Boots and whichwill consequentlylead to a severe price competition (Girdhar, 2009).

However, the government of UKas well as other nations are also concentrating on maintaining a healthy lifestyle and is thus initiating several health promotionalprograms. It provides a significant opportunity for organisations such as Boots to involve themselves in the government directed programs and to spread their brand name amid the people at large. Thus, government health promotion strategies can indirectly assist Boots to increase the sales of its products. Furthermore, the government in UK is also focusing on controlling the healthcare expenses and requesting organisations to provide greater ‘value for money’. It made Bootsbalance their expenditures with the level of revenue to provide the customers with better value for money (Girdhar, 2009).

Economic Factors

The economic factors also play a significant part in operating the business successfully.Boots has managed the business effectively irrespective of therecent economic turmoil. In reality, the business of Boots gets less affected by the economic conditions, because people cannot ignore their health and hence, they will require purchasing healthcare products despite of the unfavourable economic conditions as these products fall under the category of necessity goods. However, the beauty and optical segment of Boots can get unfavourablyaffected by the economic turmoilas these are considered to be inferior goods.It was during the times of economic crisis that the sales of fashionable glasses and stylish contact lenses reduced significantly, but the sales of low-cost cosmetics products increased considerably. However, it has been found that people belonging to the high income group still desire and opt forexpensive fashionable glasses and lenses (Girdhar, 2009).

Social Factors

The social environment comprises lifestyle, income and education level, cultural background as well as the societies to which they belong. These social aspects can impact on the health awareness of the people. The higher the health awareness, the more will people spend on healthcare services and products. In the present days, customers are found to be quite educatedwith respect to healthcare products and therapies which imply the existence of a prospective market for Boots to deliver relevant quality services and products (HollandBatiz-Lazo, 2005).

The government of UK is also helping to enhance the awareness of people regarding a healthy lifestyle through several programs such as ‘National Health Service’. These efforts will help to greatly enhance the health awareness of people and facilitate Boots to take the advantage by extensively promoting their productsamong the people. Furthermore, the income level is also known to impact on the sales of Boots’ products. The growing trend and number of working women is increasing the purchasing capacity of women greatly which relates to the actuality that women would be able to spend more on beauty products. In UK, the average income of people is measured to be quite high thus; it would prove advantageous to boost the sales of the products of Boots (Girdhar, 2009).

Technological Factors

Improved technology involves the competency to enhance the efficiency of services and improve the major aspects of business such as monitoring and treatment. Technology is considered to be anessential part of the operational activities of Boots. Technology helped to enhance the performance of Boots by effective decisions and management. For instance, in order to enhance the logistics system, Boots has implemented ‘Demand Forecasting’ and ‘Replenishment System’ in its business procedure. Technological solution helps to recognise the purchasing trend effectively, resulting inlow level of inventory.Technology also supports Boots to enhance the safety inventory level and minimise excessive inventory shortage situations. Besides, implementation of technological solution also helped Boots to develop the services and renewal procedures.Boots shares a long partnership with International Business Machines (IBM) in order to improve their business performance. The information technology solution provided by IBM also assisted Boots to manage huge amount of information and generate accurate reports concerning stock level, service performance and suppliers’ activities. The implementation of enhanced technologies proved successful in offering a lucid vision regarding the aspects of business, resulting in earninghigher profits (Manhattan Associates, 2010).

Impact of Information System (IS)/Information Technology (IT)

IT/IS is learnt to serve the interests of an organisation. The interface between IT and organisation is supposed to be quite complex and is influenced by several aspects such as organisational system, business procedures, organisational policies, working culture, the surrounding business situations and board decisions. There exists a need for comprehending the way IT can impact on thebusiness as well as working culture of the organisations. It would be difficult for an organisation to design or develop new systemseffectively without recognising the business and customers’ choices. Boots has been assessed to come a long way in terms of relating the implementation of IT with the business system. The working culture of Boots has considerablytransformed over time and has also developed its own business structure which chiefly deals withhealthcare requirements of people. Boots has realised that in order to enhance the performance there is need for improving the IT infrastructure. IT has significantly facilitated Boots to enhance itsperformance for the reason of attaining customer satisfaction (McGrath, 2003).

Impact of the New IT/IS System on the Culture and Productivity of Boots

One of the biggest transformations of Boots with respect to IT was the adaptationofl new ‘Enterprise Resource Planning’ (ERP) system in the business.Boots implemented ERP for widespread functionalities and effective management of products (ABAS Software, 2012). Boots introduced ‘Advantage Card’ system in order to provide benefits to the customers on purchasing Boots products. The card system was quite successful as the number of active ‘Advantage Card’ members of Boots became 17.8 million in 2012 (Alliance Boots, 2012.). The organisation is also attempting to improve the customer investigation system.Through this card system, Boots gained higher flexibility in managing and storing information regarding customers’ preferences. Boots has been learnt torecently improveits technologies in order to personalise the promotionalofferings and enable the Advantage Card to be used for online purchasing (Alliance Boots, 2012.)

The implementation of IT has been found toalter the organisational culture of Boots intensely. Through IT, Boots has been able to improve the tasks related to back offices and also renovate the internal network structure. ITproved greatly beneficial for Boots to streamline the constant outsourcing agreement with IBM in order to maintain its performance. The major objective of making improvements in IT has been identified to be the reason for concentrating on the development of customer services, reducing the operational expenses and enhancing the distribution abilities.Boots also successfully improved theexperiences of the clients by upgradation of applications and supporting services from ‘Tata Consultancy Service’ (TCS). TCS helped Boots to simplify in-store performances and minimise the operational expenses. IT solutions from TCS helped Boots in increasing the speed of medicinal database appraisal procedure. Furthermore, Boots also adapted ‘SmartScript’ application in order to fulfil the necessity of digital prescription services (Tata Consultancy Services Limited, 2007).

IT system helped Boots to alter the working culture by reducing paper works and manual procedures, resulting in higher productivity.The other area where IS proved to be efficient in terms of the working culture of Boots was in providing easy access to the people for availing quality healthcare services. Through the development of IT, Boots has been able to record the information related to the patients through internet from national database. It allows Boots to accept patients for providing servicesrelated to minor illnesses, hence reducing the pressure ofNational Health Service (NHS). Hence, it can be well deciphered that ITprovided a significant degree of benefit to Boots, as patients now visit the stores for not only purchasing products but also for receiving services. Thus, it is quite apparent that Boots have radically altered its organisational culture by introducing IT in its working processes. IT system helped Boots to effectively compete with the other organisations and enhance its performance (Boots, n. d).

eMarketing Strategy

Internet has been learnt totransform the way pharmaceutical products are presently sold in the market. Whereas, traditional print and television broadcasting mediums are still regarded as the primary methods for promotion, however, internet has facilitated the development of better techniques for promoting products for pharmaceutical organisations such as Boots. The pharmaceutical business necessitates large networking, public relations and effective products. Thus, by introducing products through social media, Boots can significantly catch the attention of the people. Thus, developing websites has become a beneficial eMarketing strategy for Boots. However, only the development of websites for eMarketing is not considered to be sufficient. There are numerous other organisational websites which provides information regarding their respective brands. There is need for differentiation to compel people for selecting a particular brand (Chandraet. al., n.d).The eMarketing strategies which can help Boots to enhance the sales and brand awareness are as follows:

Advertisement

Technological improvement has intensely impacted on internet advertising methods. Therefore, several organisations are shifting the emphasis from old text and graphics advertisements to those which involve up-to-date technologies. As a result, organisations can more efficientlyinvolve and connect theviewers with advertisement campaigns andseek forstructuring the approaches and outlooks of customers towards particular products and services.Furthermore, internet advertising is also considered to be cost effective in comparison to the traditional methods of marketing. Through internet advertisingcampaigns,Boots can track the results of marketing efforts through measuring the number of visits. Thus, by using advertisement as an eMarketing strategy, Boots can take the advantages of pictures as well as other rigid experiences.