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Specsavers Case Solution
The company that has been selected for this report is Specsavers which was founded in 1984 and is involved in providing eye care services particularly eye-sight testing as well as sells glasses, sunglasses, and even contact lenses. The overall business model is quite unique as it is old and has a loyal customer base together with a portfolio of a diverse range of products. This allows it to compete effectively in the market as it makes use of a cost leadership strategy. Moving on, the external environment of the business is not much favourable mainly because of Brexit which has raised the cost of doing business and shrunk the demand for the business's offering placing it in a challenging position. However, once the recession is over, the demand is expected to rebound and given the emotional element attached with purchasing glasses, the switching costs are completely eliminated which further results in higher margins for the business. Based on the thorough internal and external analysis of the business, it is recommended that Specsavers should make use of digital marketing techniques for higher brand awareness. Not only this, but it should also involve building long-term strategic relations with the suppliers so that it can negotiate favourable price terms. This way Specsavers would be able to effectively penetrate the market given the challenging market conditions and hence lock in a reasonable amount of margin.
Following questions are answered in this case study solution
External Environment (PESTLE and Porter’s Five Forces)
Case Analysis for Specsavers
Specsavers Optical Group is a British multinational company with its main operations based in the UK and other Nordic countries. It was founded in 1984 by Mary and Doug Perkins and since then has rapidly grown its operations. The business is engaged in providing eyesight testing services and selling glasses, sunglasses, contact lenses, and also hearing aids. The mission of the business is to ensure that it provides the best value healthcare and optometry services that exceed customer expectations (Specsavers, 2021). Specsavers has strengthened its position in the market by opening a large number of stores so that it is easily accessible by the majority of its target customers. Also, it ensures quick customer service by having its support staff also trained to carry out tests. Furthermore, the dispensing optician at each store location allows the customers to conveniently select the best set of spectacles that looks just right on their face and is aligned with their prescription. The company is also extensively engaged in innovation by undertaking different digital transformation initiatives as it makes use of in-store tablets to guide customer purchasing experience. Also, it makes use of data analytics so that its employees are better equipped with understanding customer expectations and can assist them in a better way that would generate high value for the business.
2. The Industry
Specsavers operates in the ophthalmic industry. The ophthalmic industry is expected to experience significant growth in the near future of about nearly 5% due to a rising number of eye-related diseases among people (Mordor Intelligence, 2021). Apart from this, the number of ophthalmologists in the country, however, has decreased who are not exactly doctors but are in a position to prescribe glasses and contact lenses. Hence, the level of employment is declining in the sector as can be seen by the fact that there were 19.7 thousand ophthalmic opticians in the UK as of 2020 which decreased from 24,000 in 2013. This can also be attributed to the fact that the number of resources available for the ophthalmology sector has declined, making it challenging for the sector to provide high-quality standard of care to its potential patients (Statista, 2021). This is because there has been a rise in the number of patients, patient expectations, and the lack of government support due to its high deficit, there has been an increase in the extent of workload faced by the eye specialists as adopting new technology to improve the level of care has become challenging.
Following Brexit, Specsavers would have to face the brunt of uncertainty associated with it as it will be a challenge to recruit support staff and professionals, given the labour shortages which would, in turn, influence the talent pool (Reid, 2017). The costs of doing business will increase. This is because the supply chain for most of the businesses will be disrupted which would result in delays and higher freight costs. Also, Specsavers may have to face the potential custom duties and tariffs on borders if they would consider shipping their products across Europe. Also, there is a likelihood of recession which would reduce the purchasing power of people given the rise in the Covid pandemic as well following the Brexit (Partington, 2021). Although Specsavers comes in the significant category, there is a probability that people suffering from less severe complications might delay their check-ups which would result in reduced revenue and profitability for the business.
Brexit is also going to have an impact on the ophthalmology sector in the sense that it would be difficult for the businesses to get ophthalmologists and eye opticians The scarce supply of labour will further put a strain on the existing resources and make it expensive for people to afford the relevant healthcare services required (Acuity DIgital, 2018). The cost of doing business will increase which will reduce the overall profitability of the sector. Hence, Brexit is expected to have negative implications on the industry, but these will be short-lived as the industry is expected to rebound soon after the aftershocks of Brexit will settle down. This is because eye care is an essential service and is considered a need rather than a luxury. Hence, once the recession gets over, the people will be able to get the eye care service which will help in immediately increasing the revenue and the profitability levels of the businesses operating in the sector. This can mainly be done through effective marketing and promotional strategies that would allow the people to avail the eye care services at a lower cost than the one that is charged normally (Bilgin, 2018).
4. Internal Environment
i. SWOT Analysis
Conducting the SWOT analysis of the business, it can be seen that the business is established for a long time. Hence, it has a higher degree of credibility in the eyes of its target customers which would allow it to grow sustainably in the long run. Also, it trains its staff on a frequent basis so that they can deliver exceptional customer service (Spectrum, 2019). However, the business does not cater to the high-end brands which is a weakness as it might be losing the potential revenue which would have otherwise caused it to increase its profitability. As far as the opportunities of the business are concerned, it can tap the e-commerce segment and engage in social media marketing as more and more people have become tech-savvy. Also, a major threat that the business is faced with is that given the rising number of patients having eye problems, the number of competitors in the market is expected to increase which would further decrease the profitability of the business in the long run. This is further demonstrated in Exhibit 1.
ii. Core Competencies
The core competencies of Specsavers revolve around providing exceptional eyesight testing services and recommending spectacles and sunglasses to the people based on their preferences. Apart from this, the business has also diversified to some extent as it engages in selling contact lenses as well. Furthermore, it has a panel of skilled optometrists and opticians that are responsible for delivering exceptional customer care. Hence, the employees share the same vision as that of the company which allows them to be highly productive and perform well.
iii. Resource-Based View Competencies
The VRIO analysis for the business shows that it allows a sustained competitive advantage in the case of most of its resources (Knott, 2015). From Appendix 2, it can be seen that the brand name and the loyal customer base are what have allowed the company to sustain its competitive edge in the market despite the rising level of competition in the market. Moving on, the skilled workforce and the adoption of technology will allow the company to enjoy a temporary competitive advantage. This is because as soon as the new players will enter the market, they will adopt the new technology as well to enhance the patient experience and Specsaver no longer will enjoy the first-mover advantage (Kerin, Varadarajan, & Peterson,1992). Also, retaining staff is a challenge as they might switch jobs if they get a better opportunity. Hence as long as the staff is there with the company, it will be able to benefit from an edge in the market by providing the patients with a satisfactory experience which would, in turn, result in positive word of mouth, generate customer loyalty and result in repeat patients.
iv. Porter’s Value Chain Analysis
The primary activities of the business concern procuring specialist equipment and hiring skilled ophthalmologists and dispensary opticians who would conduct the sight testing and guide the customers when they would be making the buying decision. Hence, this results in higher customer satisfaction.
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