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Introduction
A meal can be home cooked, by the consumer or others, but it can also
be produced outside the homre. For instance, hotels, restaurants and
cafes, institutional kitchens or takeaway and retail outlets according to
Ahlgren(2004).
This report begin with the structure of ready meal industry in the UK,
focuses on the players in this industry market. In order to know general
information and understand clearly about prepared foods industry, this
report displays the analysis by using PESTEL for macro environment and
follows by Porter’s five forces model which analyse micro environment,
including the prospect development.
Considering and understanding some major firms who are the leading
players in the ready meal market is greatly necessary. According to ready
meal industry profile (Datamonitor 2009), Northern Foods plc is the leader
of ready meal market share in the UK, follow by Premier Foods plc and
Kerry Group plc.
such as Marks & Spencer, Sainsbury’s, Tesco, and Asda. There was a raise
of turnover from £975.2m in 2009 to £977m one year later but a profit
before taxation decreased to £7.4m, compared with £12.1m in 2009 (see
appendix ll). Additionally, the powerful production of the products such as
salads and sandwiches cause an increase in revenues segment. The next
manufacturer is Premier Foods who supplies the products which are
manufacturers-branded and own-label products. The company’s revenues
in 2009 dropped to £1.52bn from £1.6bn in a previous year. In contrast, a
pre-tax profit in 2009 saw a further sharp rise to £100m, which was 5
times higher than the figure in 2008. The reason for this is in early 2009,
the company extended the range of side dishes of Indian ready meals in
microwavable packages(see appendix lll). The other company is Kerry
Foods who owned by an Irish firm and selling retailer-branded and private-
label ready meals to markets in the UK and Ireland made a turnover of
£477m and £524m in 2008 and 2009, but the pre-tax profit fall to £14m in
2009 from £16m a year before (see appendix llll).
Macro Environment Analysis
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PESTEL
Government and other polities’ events always effect on the firms and
industries directly (Sloman and Sutcliffe 2004 p6). All businesses will be
conducted by the authority via using regulations, a role of legislation,
standards, and a mass of laws. For example, Keynote (2010) reports that
the Food Safety Act 1990 is one of the major legislation overspreading the
food industry in the UK in two main areas-Food standards and Food
hygiene and Food Labelling Regulation 1996 which are governed for
labelling the specific food products, applying in the UK.
Moreover, there are several trade associations who play the role in
food industry such as Chilled Foods Association who advertise and look
after the interest of the frozen food industry and British Frozen Food
Federation who develops common standard of quality in chilled prepare
food products. However, one of the key organisation that control the
quality and safety of food in UK is “Food Standards Agency”.
Economic Factor
GDP Quarterly Growth (%)
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Unemployment
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A study by
Keynote (2009a) indicates due to the booming of the UK economy since
1992, there was a low level of unemployment rate during 2004 to 2007,
but the number of people out of work went up significantly to 7.9% or
approximately 2.5 million in September 2009 because of the recession
that the UK met in summer of 2008.
Social Factor
Technological Factors
Refer to Kew & Stredwick (2008), there are various new technologies
have an impact on humankind such as information technology,
communication technology, transportation technology and the Internet.
These technologies are changed and developed constantly to be an
invention and innovation. Nowadays, it is an absolutely acceptable fact
that the Internet has a great affect on everybody even though on the
retailers. This leads to many large retailers offering e-shopping to the
customers. So that the number of e-customer has risen quickly. As the
report of Keynote(2010) shows there was a dramatic increase by 20% in
online sales of Tesco in 2009. In the UK, the internet access home rate has
grown every years, the number of Internet access increase from 69% in
2006 to 90% three years later. However, there are some parts of rural area
where are far away from a telephone line and cannot access to the
Internet.(Keynote 2010)
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Environmental Factors
situation. In this stage, Michael Porter’s Five Forces Model is suitable for
analysing the near environment. As stated by Datamonitor (2010)
This threat depends on the level of the barriers of each industry which
the new company entrance to. In this stage, establishing new ready meal
factory and promotion to the market require high capital investment
expenditures. A result for this it would be too risk for small business to
succeed in the global market level. What is more, persuading the retailer
to place new ready meal brand on the shelf in their stores is quite hard
because there is a limit space for the products from numerous brands and
the shops would not like to lose the sales of existing brand product which
familiar to customers. For this reason, the accessing to the market by this
distribution channel is a barrier for the new entrants. Overall, the threat
for the new firms to entry is evaluated as strong.
Threat of Substitutes
Conclusion
A few year ago, the UK has faced to the recession. The result for this is
the British had to spend less money and the number of unemployed
people had increased. In the fact that the price of ready meals products is
cheaper than the meals at the restaurant, people buy these kinds of
product more. Moreover, the perception of convenience foods have been
changed more in a positive way, as the quality of the product was
improved and better design packaging. Additionally, there is a wide variety
of products such as Thai food, Indian food, Chinese food, Italian food or
Japanese food, so the consumers have a large number of alternatives for
their meals by buying from the supermarket or hypermarket.
The high demand of ready meals from 1990s caused high level of
competition, many producers invested their money to construct and
enlarge the factories. However, the products are undifferentiated therefore
it is quite hard to retain the customers especially price sensitive
customers.
To sum up, economic cycle is not an important factor that can have an
impact on food expenditure as other sectors such as furniture, clothing,
electric tools and extravagant goods the reason for this is food
expenditure is a vital shopping for every households.
Mission Vision Values(Goals)
M&S outlines its core business as clothing and Food. Its financial objectives is
to deliver shareholder value in terms of increase returns, but also in terms of
increase sales and market share in retailing. It beliefs and values are outlined
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as “Our customers continue to see Marks & Spencer as the place to shop for
special food, produced to exacting standards”. M&S also sees its workforce as
an important part of its plan and also considers modernising its stores as a
key corporate objective.
Vision: The standard against which all others are measured
Mission: Making aspirational quality accessible to all
Values: Quality, value, service, innovation and trust
Globalisation strategy
Marks and Spencer Plc is an international retailer with 718 locations across 34
countries. The group sells clothing, footwear, gifts, home furnishings and foods under
the St. Michael trademark in its chain of 294 stores in the United Kingdom. It is listed
in the FTSE 100 index and employs over 75,000 staff. Approximately half of the
group's overseas stores are franchised to local partners.
References
Sloman, J. & Sutcliffe, M. (2004) Economics for Business. 3rd ed, Harlow:
Pearson Education Limited
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Appendix
I. The value of ready meals market in the UK between 2005 and 2009
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Source: Datamonitor
Source: Fame
Source: Fame
Source: Fame