Analysing the challenges in implementation of Price Leadership strategy amidst competitive market environment: Case study of Poundland, UK

This paper concerns with the challenges faced by the global firms to maintain price leadership approach in a competitive business environment. The study has focused on the case study of Poundland, UK. Secondary research has been conducted in order to achieve the objectives of study. Based on the thorough assessment suitable recommendations have been provided to manage price leadership strategy.
1.0 Background of the research
With the advent of globalisation, the level of competition in the market has increased significantly irrespective of the types of industries. Hence, in order to sustain in the highly competitive market environment, the companies have started to formulate effective business strategies. The main purpose of these strategies is to create competitive advantages over the rivals (Barney, 2009). In this circumstance, most of the strategies have focused on modifying 4Ps of the firms such as product, place, price and promotion.
Pricing strategy of the firms depends on several factors such as demand and supply of the market, level of competition of the market, regulatory framework of the market, strategies adapted by the rival firms etc. (Barney and Hesterley, 2006). However, in most of the cases, it has been observed that the managers of the large firms have started to formulate strategies that can nullify the level of competition in the market. Liberalisation and privatisation policies have also provided the opportunities to these companies to operate independently and decide their own pricing policy (Campbell-Hunt, 2009). Hence, large companies have started to decide their own pricing strategy by taking the advantage of their large scale production. In majority of the cases, the market leaders in a particular industry have started to decide their own pricing. The concept of regulating the prices by the market leaders are known as price leadership (Buzzell and Wiersema, 2011). However, price leadership policy adapted by the firms has lowered the level of competition in the particular market. As a result of that this approach has been highly criticised by the rival firms in the market. Moreover, in a highly competitive market, implementation of price leadership strategy has imposed significant challenges for the firms. This research intends to highlight on the major challenges faced by the firms during the implementation process of price leadership strategy in an immensely competitive market environment.
1.1 Organisational background
Poundland is a popular variety store chain in UK and sells most of the items for £1 to its consumers. The company has been established on 1990 and its’ headquarter is located in West Midlands (Poundland, 2015a). The company offers a diversified range of products that include home and kitchenware, healthcare items, gift items and others. Most of the products offered by the company are clearance products. Like most of its competitors, Poundland also operates through a rotating product line (Poundland, 2015a). The company claims to introduce the concept of rotating product line in Europe. Most significantly, Poundland is considered as the largest single price retailer discount retailer of Europe.
According to the 2015 figure, Poundland has reported its revenue as £997.8 million and net profit of £13.9 million (Poundland, 2015a). Croydon store of the company has recorded as the busiest single-priced discount store of the world. It caters the demand of almost 2.75 million of customers per week.

Analysing the challenges in implementation of Price Leadership strategy amidst competitive market environment: Case study of Poundland, UK

Type: Dissertation
Domain: Pricing Strategy
Words: 12000
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