Managing Business
(Nov 2021 Term)
Shoppee Staying Competitive in the Online Shopping Industry
Coursework Assignment 2
Name of student: Justin
Executive Summary
This report is aimed at advising Shoppee on how to stay competitive in the industry as it seeks
to further expand its market to Taiwan. This follows the increasing demand for online shopping
services after the emergence of the pandemic. The report starts with an environmental analysis
of Taiwan in assessing the suitability of the country as an expansion alternative for Shoppee.
This is followed by a VRIO analysis of the company’s resources which leads to a
recommendation on how the company should better and manipulate its resources to enhance
its chances of success in the new market. The second part of the report gives an overview of
managerial decision making process. The process is then applied in helping the company arrive
at Taiwan as the best option for its planned international expansion. In conclusion, the report
makes recommendations that the company should indeed expand into Taiwan market.
However, the company should ensure adherence to the VRIO recommendations as a way of
optimising resource allocation hence increasing its chances of success in the market.
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Table of contents
Executive Summary................................................................................................................................. 2
Introduction ............................................................................................................................................ 4
2.0 The external environment that will affect Shoppee and its operations in Taiwan ...................... 5
2.1
2.2
PESTEL Analysis ....................................................................................................................... 5
VRIO analysis ............................................................................................................................... 7
3. How Shoppee can better manipulate and stretch ........................................................................ 10
4.0 The Decision-Making Process ......................................................................................................... 12
4.1
Problem Faced .......................................................................................................................... 13
4.2
How it can be solved ................................................................................................................. 13
5. Recommendations and Conclusion................................................................................................... 14
6. References ........................................................................................................................................ 15
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Introduction
Following the novel COVID-19 pandemic, there have been numerous disruptions on the way
business is conducted particularly because of the containment measures undertaken with
some economies being closed. However despite the negative impact on the business
generally, this has been a blessing in disguise for e-commerce as most businesses and
individuals saw it as the only means of conducting business in the resultant environment.
Through e-commerce, international business has been able to continue where people order
goods from foreign markets and this are shipped to foreign destinations. However, shipping
and staff resource have been issues of concern owing to the possibility of spreading the
pandemic although the measures undertaken by companies have been largely successful.
The pandemic has implied that organizations have to undertake a whole new perspective in
managing their staff in an era full of uncertainties where staff are regularly working at home
without any supervision when economies have been closed down. There are different
management styles that organizations can employ in this regard. For Shoppee, the appropriate
management styles would be democratic management style and transformational leadership
styles which are capable of keeping the employees motivated in such an environment. The
management styles are appropriate for the company at different levels of management
decision making including at the tactic level, operational level and strategic managerial
decision making level. Within the new era, a lot of capital is required to finance marketing of
companies’ goods to customers given the increased competition in the e-commerce industry.
This is because Shoppee has to compete with such e-commerce giants as Amazon, Alibaba
among others. Therefore, there is need for the company to remain competitive in the online
shopping industry if it is to survive the current era. This report is aimed at advising Shoppee
on how to stay competitive in the industry as it seeks to further expand its market to Taiwan.
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2.0 The external environment that will affect Shoppee and
its operations in Taiwan
2.1 PESTEL Analysis
Political factors
i)
The country has a relatively stable political governance system and Shoppee can make
strategies on that basis (Garda.com, 2022).
ii)
Taiwan has some level of possibility of entering into an armed conflict which may affect
the company’s operations.
iii)
Post 9/11 attacks, acts of terrorism have increased and hence Shoppee should consider
taking insurance and hedging instruments to mitigate against the risk (Phan, 2021).
Shoppee will have to adhere with the various regulatory requirements in operating in
Taiwan especially those to do with consumer data protection.
Economic factors
i)
Taiwan has experienced significant increases in household disposable incomes and
Shoppee can thus leverage on the trend to expand the market into the country.
ii)
The levels of inflation in Taiwan are relatively low at 1.5% hence indicating low
currency depreciation risks.
iii)
Taiwan workforce productivity has experienced sustained growth over the years
and hence Shoppee is able to hire skilled workforce at competitive salaries.
iv)
Taiwan government employs fiscal and monetary policies that are friendly to
investment with positive levels of economic growth indicating growth in demand
which can enable Shoppee to expand the product range and target new customers
in the market.
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v)
Taiwan has relatively high level of government spending which can boost
Shoppee’s sales in the short-run.
Social Factors
i)
The population of Taiwan is mostly Chinese who speak in three dialects including
Taiwanese, Hakka and Mandarin with the population supporting Confucian values
although the culture has also been influenced by Europeans, Japan and China.
ii)
Most educated people speak English though the national language is Chinese
Mandarin and hence Shoppee ought to consider this in expanding to Taiwan.
iii)
Taiwan is highly urbanized with more than 60% of the population living in cities.
iv)
The society is generally peaceful with well developed cities that have good working
conditions implying that investments with respect to social structure will be safe.
Technological factors
i)
Taiwan rides high with respect to technological advancement. This has resulted in
relatively low cost of production.
ii)
There is a high level of acceptance of mobile payments and Fintech services which
should favour Shoppee in its attempts to expand to Taiwan. The country’s ecommerce industry is relatively well developed.
iii)
The country has invested heavily in research and development and Shoppee could
leverage on this to hire the best people for its operations.
iv)
Shoppe should be aware of laws relating to property rights and protection of
technology oriented assets in Taiwan.
Environmental factors
i)
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The country has strong environmental laws and environmental agencies.
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Climate change will have an impact on Shoppe’s business model and supply
ii)
chain as sudden climate change may lead to bottlenecks in shipping of
products.
iii)
The country has a relatively high per capita national carbon emission and
Shoppee should consider this in making decisions on plant location, product
development and pricing strategy (Story, 2020).
iv)
The country has strong waste management policies and hence the need for
Shoppee to adhere to them.
Legal factors
i)
Taiwan has a relatively good legal system that is transparent. Disputes
are resolved promptly with the country adhering to common law.
ii)
Intellectual property rights are protected as stated above.
iii)
Shoppe ought to also ensure adherence to all business laws as failure to
adhere has serious legal consequences in Taiwan.
2.2
VRIO analysis
VRIO analysis is an analytical technique employed for evaluating the company’s
resources and hence competitive advantage. Below is an analysis of Shoppee’s resources
using VRIO framework.
Resources
Value
Rare
Imitation
Organization Competitive
advantage
Accessing raw
materials for
Yes
Yes since
competitors
Yes
Yes
Provision of
sustainable
have to
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successful
come to
competitive
execution
terms with
advantage
Shoppee’s
dominant
market
position.
Opportunities
Yes. New
No. Since
for brand
niches are
extensions
Yes
This calls
Provides
competitors
for high
temporary
emerging in
are also
marketing
competitive
the market
targeting
budget
advantage
Company
Provides
has stable
temporary
financial
competitive
position
advantage
Opportunity
Could
channel
exists to
provide
management
exploit the
sustainable
excellent
competitive
sales force
advantage
Yes
Provides
the niches
Financial
Yes
No
Yes
resources
Sales force and
Yes
No
Positioning
Yes. Shoppee
among
has strong
sustainable
retailers and
relationship
competitive
wholesalers
with retailers
advantage
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Yes
Yes
Difficult
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and
wholesalers
Marketing
Yes. Firms
No
Pricing
Yes
Temporary
expertise within compete
strategies
competitive
Shoppe
based on
often
advantage
differentiation
matched by
in the
competitors
industry
Track record of
Yes
Yes
No.
Yes
Provides
project
Competitors
strong
execution
have not
competitive
been able to
advantage
imitate the
expertise
Distribution
Yes
No
Yes
Yes
Medium to
and logistics
long-term
costs
competitive
competitiveness
advantage
Pricing
Yes
Yes
Yes
Yes
strategies
Temporary
competitive
advantage
Intellectual
property rights,
Yes
Yes
Low risk of
imitation
No
Provides
strong
copyrights and
competitive
trademarks
advantage
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3. How Shoppee can better manipulate and stretch
Based on the VRIO analysis above, the following is how the company can better
manipulate and stretch its resources in its attempt to enter the Taiwan market.
Value: Ability of the firm’s resources and capabilities to enable Shoppee to respond to
environmental threats or opportunities. In this regard, the main environmental threats for the
company lie in the competition for sales with e-commerce suppliers. The suppliers must still
manage logistics, suppliers and warehousing. In having name brand recognition and brick and
motor stores with product placement capabilities, the company has the ability to interact with
suppliers accordingly. It should also use this to push its own proprietary blends thus
competing along the value chain even with its own suppliers (Maria et al., 2022).
Rarity: Whether the resources are currently controlled by a small number of firms. In this
regard, Shoppee ought to ensure that it remains on top of the industry and attempting to also
copy competitors. Shoppee should however note that it is difficult to consider rarity as
strength in the industry it operates since technology diffuses quickly throughout the industry.
Imitability: whether the resources are imitatable with not cost advantage. It is difficult for the
companies operating in the industry to break into brick and motor retail section. Thus,
Shoppee must use its strength in this respect in replicating the success of a retail storefront
from aspiring new competitors.
Organization: whether the firm’s policies and procedures are organized to support the
exploitation of its value, rare and costly to imitate resources. In this regard, Shoppe ought to
hold regular sampling and sales events in-store. This is good as the company is able to exhibit
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its products, drive sales and increase brand awareness in a way that e-commerce competitors
lacking the resource of physical stores is able to do.
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4.0 The Decision-Making Process
In making decisions, a firm’s management undergo a number of steps. These are
outlined below;
Step 1: Identification and definition of the problem. This is where the management gathers
information, processes it and deliberates on the issue at hand before establishing decision
objectives.
Step 2: The management generates and evaluates alternative courses of action. Based on the
information gathered, data is analyzed with regard to advantage and disadvantages of
alternative solutions.
Step 3: The management then decides on a preferred course of action where the management
can either employ the behavioural model or the classical model.
Step 4: The management then implements the decision by taking action to ensure the chosen
course of action becomes a reality.
Step 5: The last step involves evaluating the results where actual results are compared with
desired results. Where actual results fall short of desired results, the management then returns
to earlier steps in the decision making process.
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4.1
Problem Faced
The problem that Shoppee is facing in this era is that of expansion. The rising demand
for online shopping has presented the company with opportunities to expand into foreign
markets. However, owing to resources constraints, the company can only be able to expand
into one country either in East Asia or South East Asia. The problem that the company now
faces is which country it should expand into given that there are over ten countries it can expand
to.
4.2
How it can be solved
The problem the company faces can be addressed using the steps identified above. The
first step would entail defining the problem and finding the relevant data on the countries it
should expand to. The alternatives should then be analyzed using various models such as
PESTEL analysis as well as the cost and benefits analysis. Each alternative ought to then be
seen in terms of its advantages and disadvantages including its ability to help the company
achieve its targeted return on capital employed (Althuizen et al., 2016). From the alternatives,
the company should then choose the alternative it considers based on the criteria that it sets and
based on the issues identified in the prior step. Once the best alternative (country) is chosen,
the management should then go ahead and expend resources into the expansion project. The
final step would be to evaluate whether the chosen alternative actually delivered based on the
company’s criteria after the duration the company decides. If it proves unsuccessful, the
company should consider going back to the decision making process in order to arrive at a
better alternative.
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5. Recommendations and Conclusion
This report had the aim of advising Shoppee on how to stay competitive in the industry
as it seeks to further expand its market to Taiwan. This follows the increasing demand for
online shopping following the emergence of the pandemic. In arriving at the recommendation,
an environmental analysis of Taiwan was conducted with an aim of gauging the suitability of
the country for the proposed expansion by Shoppee. Based on the environmental analysis, it is
recommended that the company should go ahead with the planned expansion as the market has
potential for success. On the other hand, a VRIO analysis was undertaken with an aim of
advising the company on how it can better manipulate and stretch its resources which will
ensure success in the new market. Based on the analysis, it is recommended that the company
fully undertakes the VRIO recommendations as this will ensure optimum resource application
thus increasing the chances of the company succeeding in Taiwan.
(2000 words)
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6. References
Phan, S (2021). The effect of PESTLE factors on development of E-commerce. International
Journal of Data and Network Science, 5(1), 37-42.
Story, J (2020). Using the PESTLE analysis model. Retrieved from
https://www.smartinsights.com/marketing-planning/marketing-models/pestleanalysis-model/
Maria, K., Despoina, L., & Fotis, K. (2022). The implementation of E-business value chain
on enterprises in the sector of information technology and communications, Retrieved
from
https://www.researchgate.net/publication/320961690_The_Implementation_of_EBusiness_Value_Chain_on_enterprises_in_the_sector_of_Information_Technology_a
nd_Communications.
Garda.com. (2022). Taiwan country report. Retrieved from
https://www.garda.com/crisis24/country-reports/taiwan.
Althuizen, N., Wierenga, B&, Chen, B (2016). Managerial decision making in marketing:
Matching the demand and supply side of creativity. Journal of Marketing Behaviour,
2(2), 129-176.
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