Smartco: Strategies for Sustained Growth and Expansion
Disadvantages of Partnerships in South Korea
In a South Korean business venture, every decision that each partner makes will have to be agreed upon by all partners. This can be a disadvantage because it can lead to disagreements that can harm the business. This is why it is always advisable to draft a deed of partnership during the formation period to ensure that everyone is aware of what procedures will be in place in case of disagreement and what will happen if the partnership is dissolved.
Another disadvantage is the fact that each partner is subject to unlimited liability, which means that each partner shares the liability and financial risks of the business. This can be countered by the formation of a limited liability partnership, which benefits from the advantages of limited liability granted to limited companies while still taking advantage of the flexibility of the partnership model.
Maintaining Smartco’s Success and Profitability
The UK business of Smartco is based on a fascination with getting it right for the customers. They strive to offer great value, grow market share, and bring new innovations.
In this report, it can be recommended that if Smartco follows these core competencies, then Smartco may protect its present status or it may sustain its position as one of the top 10 retailers in the UK.
- First of all, since the developing Eastern European and Asian markets have enormous potential for growth, Smartco needs to continue to invest in those markets so that the company can gain more market share for its expansion.
- Second, Smartco can sign partnership agreements with more companies in Eastern Europe and Asia to gain more comprehensive market information and share of the products and develop new ones.
- Last but not least, it is necessary that Smartco deepens its partnership with Esso, since Esso is a long-established and well-respected player in the UK market. By doing this, Smartco can achieve further expansion.
Question 2
Part A
Smartco’s Expansion: Strengths and Weaknesses
Strengths
First of all, Smartco has a strong domestic market position. Since the 1990s, it has expanded rapidly through acquisitions of smaller supermarket chains throughout the UK. Smartco was one of the first supermarket groups to introduce a loyalty card and led the way as one of the first food stores to offer an internet shopping service.
Second, Smartco is geographically diverse and has expanded into areas such as the retailing of books, clothing, electronics, furniture, petrol, telecoms, and DVDs. The 1990s saw Smartco reposition itself from its perceived position as a downmarket retailer to one which appealed to a wider social audience through its Smartco Value to Smartco Quality ranges. This was successful, and the chain grew from 600 stores in the mid-1990s to 2500 stores 15 years later.
Last but not least, as one of their characteristics, Smartco has a strong partnership. Following their main competitors, in 1997, Smartco and Esso formed a business alliance that added petrol stations to many of their larger store sites. It also allowed them to open Smartco Mart stores on the site of many existing Esso petrol stations. 200 Smartco/Esso sites now exist across the UK. This also leads to a stronger market presence.
Weaknesses
First of all, Smartco has chosen not to diversify into banking/financial services and broadband, making the company less competitive in those sectors.
Second, regarding saturation of the market, Smartco’s competitors have also rapidly expanded their supermarket and hypermarket outlets. Some European chains have also become well-established in the UK, with the result that the UK grocery market has become increasingly saturated, making food retail companies fight much harder to attract customers.
Last but not least, there is a lack of strategies and adaptation to deliver growth more economically. Because of the current attachment to past strategies, the company is not achieving the growth and good returns that it used to deliver.