Dixons_v3 14/10/98 8:51 am Page 1 Organisational Change BUILDING A CHAIN WHICH MEETS THE REQUIREMENTS The Dixons Group Strategic alternatives Mastercare was part of Currys when it was acquired by Dixons. A key benefit OF DIFFERENT GROUPS OF CUSTOMERS When Sir Stanley Kalms, the current In order to pursue its corporate aim, from acquiring Currys was that chairman of Dixons, joined the business Dixons was faced with two simple Mastercare would help Dixons to If you looked at some of the largest and most successful organisations twenty in 1948, it had a turnover of £105 per alternatives. It could go alone and develop a lead in the area of ‘service’. years ago and then compared them with those of today, you would probably be week. The Dixons Group today is one of expand internally, which would mean PC World was not a major competitor surprised. Closer examination of these organisations would show numerous the largest publicly quoted retail groups relying upon expansion within the when it was taken over. At the examples of success, failure or transition over this relatively short time period. in the UK, with a turnover approaching company or it could opt for external time it only had four stores serving Some of the largest business organisations today might not even have been £3 billion. expansion which would mean acquiring largely niche markets. However, other parts or businesses which would Dixons recognised that PC World around 20 years ago! There are many reasons why organisations excel, die or The Dixons Group comprises: add to the overall effectiveness of had uncovered a formula which simply survive from year to year. Management theory shows that organisations Dixons as a business. Dixons opted for could provide a successful platform go through periods of evolution followed by periods of revolution. Many ● Dixons, the UK’s leading high a strategy including elements of both. for further development in the field changes occur because of pressures from the business environment to which Its internal strategy involved further of computer sales. Each of these street retailer of consumer electronics, of the ‘group’ as a whole in areas such represented by its massive turnover in organisations have to react. Other changes occur because employees and selling the latest video, audio, development of Dixons stores and the organisations, except for Mastercare, creation and development of The Link. as purchasing, product development, the computer marketplace which today personal computer, photographic and broadly represented horizontal level managers want to move an organisation forward in pursuit of far-reaching Dixons’ external acquisitive strategy management, channels of distribution is £572 million, an increase of 23 per communication technology. integrations which involved the aims and are prepared to make key decisions which enable it to do so. led to Currys, Mastercare and PC addition of similar products and and customer care and service. cent over the last year. PC World has World becoming part of the Group, services to complement the existing become a talking point in the industry as ● Currys, the UK’s leading electrical where they could also be further Dixons’ portfolio, whilst at the same Currys/Mastercare well as in towns and cities where each retailer, providing a comprehensive developed. time helping to increase market share. new store is located. selection of domestic appliances, video, Currys and Mastercare were a REVOLUTION audio and communications products particularly good choice for the Dixons Meeting the demands and personal computers. portfolio in 1984 because they enabled DIXONS GROUP the Group to stay close to its expertise of different groups in electrical and electronic retailing. of customers EVOLUTION ● TIME PC World, the UK’s largest specialist Dixons and Currys were then managed computer superstore retailer, featuring ACQUISITION INTERNAL DEVELOPMENT together to gain economies of scale and In an industry which is fast-changing, PERIOD OF CHANGE comprehensive ranges of personal competitive benefits from buying in organisations need to know their computers, printers, software, peripher- volume and reduced overhead costs. customers and their changing needs CURRYS DIXONS STORES This case study focuses upon how the Dixons Group developed a business als and accessories. The Group then developed the ‘out of and requirements. The biggest threat MASTERCARE INTERNAL DEVELOPMENT THE LINK town’ concept for Currys Superstores strategy which enabled it to achieve its corporate aim ‘to be number one in the for any organisation is to fail to PC WORLD and began to close Currys in the adjust to changes in the market-place. electrical and electronic market-place’. In a changing world it is important for ● The Link, a high street retailer High Street. With this change in In an increasingly complex retail an organisation to have a clear idea of its strategic direction. By developing a specialising in communications services market positioning it was decided in environment it also became clear that goal identifying where it wanted to be, Dixons was defining a future state of and products. Acquisition There were many benefits from 1994 to separate out the management not all customer requirements and affairs it wanted to achieve which helped everyone within the company to focus these acquisitions. The ‘group’ concept of Dixons and Currys for Marketing purchasing habits were the same! As a method of development, acquisition and Sales (not Buying or central on the process of change. enabled Dixons to develop its business makes sense, particularly in markets across a horizontal plane which support) so that each Chain would have As a retail organisation, Dixons ● Mastercare, the UK’s leading after which are relatively mature. Acquisition provided growth and at the same time the freedom to develop its own needed to understand their potential The process of strategic management means setting a pathway for an sales service organisation for consumer enabled Dixons to take over a large enabled it to stay close to its expertise market and customer focus. customers and any likely developments organisation to change and then putting in place plans and policies which enable electronics and business products, company which already existed in the in electronic and electrical retailing. in their buying patterns. By developing it to achieve its corporate aim. Strategic decisions are means to achieve ends. supporting customers of Dixons, Currys, electrical market-place (Currys) and Acquisition provided Dixons with the PC World a clear direction which responded to also to acquire a developing organisation These decisions encompass the definition of the business, products and markets PC World and The Link. opportunity to take over a major these changes using this acquisitive with a bright future (PC World). At the time of the acquisition, PC competitor and rapidly increase its strategy, Dixons could further develop to be served, functions to be performed and the major policies needed for the World had just four stores. With a market share. The fusion of resources its market not just through the nature of organisation to execute these decisions. Within this case study we look at the rapidly increasing market for personal across the business allowed a larger the products and services it provided nature of key decisions made by Dixons within the process of change as it built computers and related products, the DIXONS GROUP Dixons to gain from economies of but also through the improved distribu- (HORIZONTAL RETAIL ORGANISATION) acquisition of PC World was viewed as a chain designed to meet the requirements of different groups of customers. scale and improve its commercial effi- tion opportunities it created. ciency. a way of increasing Dixons product authority. The sales of PCs were likely A strategic decision was taken to focus DIXONS CURRYS PC WORLD THE LINK to move on from businesses to consumers Acquisition also allowed Dixons to and Dixons needed to develop its entry upon individual brand building which (FORWARD VERTICAL DEVELOPMENT) benefit from synergy. The synergy potential into consumer markets still would then position the chains in relation STRATEGY AIMAIM equation 2 + 2 = 5 signifies that a further. The growth of PC World is not to each other. This would involve portfolio of businesses is much more simply reflected by the growth in the emphasising the benefits of each chain (MEANS) (ENDS) MASTERCARE valuable than each business as a stand- number of stores from four to 53 under of stores to meet the needs of the alone entity, because of the influence the ownership of Dixons, but is better customer, by product and competitive Dixons_v3 14/10/98 8:51 am Page 2 attributes. The belief was that this strategy could be used to create a broad THE PROPOSITION range of retail opportunities, each of TASKS & ACTIVITIES which would serve different customer requirements. Service would underpin each of the retail brands’ strategies. The policy led to Currys moving away THE CUSTOMER from the High Street to larger edge of town superstore units in order to satisfy IMPULSIVE RETAILING DESTINATION RETAILING KNOWLEDGEABLE CUSTOMERS COMMUNICATION RETAILING customer needs such as a wider product • Individuals, younger, male, wanting excitement, • Families, all ages wanting choice and value. • Category killer, appealing to all sectors of • Individuals wanting advice. range, emphasis upon bulkier and larger wanting the latest/newest /smartest. • Need security that products are good and prices keen. the market. • Looking for best price and the right service. goods, improved space for browsing and • Looking for a deal. • Know product they want but not the model. • Business customers, households and individuals. • Small businesses. car parking. In contrast, the strategy for • Wanting uniqueness/exclusiveness. • To meet a ‘need’ rather than a ‘want’ and the • Some customers seeking choice and value, Dixons was to remain in the High Street • Instant gratification. purchase will be planned and will not be instant.