BUS 4340 – Strategic Management

Group Assignment
Evaluation of the corporate strategy of
–ODEL
Department : Department of Finance
Group No :

Group Members :
Name CPM MC Signature

A.G.Lakshitha Sampath 15487 80527

L.O.N. Silva 15300 80587

Uvini Gunarathna 15480 80046

W.J.L Suresha Nilmini 15473 80333

W.A.S.L.P. Wellappuliarachchi 15149 80691

H.W.P.N Samarajeewa 14855 80513

W. Chirath Boteju 15466 79891

H.A.B. Thishakya 15423 80647

D.P.D.P. Jayawardhana 15470 80156

V.P. Preethika Shanthi 15543 80578

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CC

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Acknowledgement

This Assignment gave us a tremendous opportunity to apply the academic knowledge that we have gained on
corporate strategy formulation, implementation and evaluation to a real world business organization. We are
much grateful to Mrs K.A.S.K. Kariyapperuma for the guidance and support to make this report a success.
You’ve been a great advisor and instructor throughout this course. And your excellent teaching technique
helped us to strengthen our theoretical knowledge of this subject. Last but not least, we are utterly grateful to
everyone who helped us to make this report a success.

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Table of Contents
1 Introduction to the organization .................................................................................................................. 5
2 Strategic direction of the organization in terms of Vision, Mission, key Goals and objectives ........................ 6
2.1 Vision .................................................................................................................................................... 6
2.2 Mission .................................................................................................................................................. 6
2.3 Key Goals ............................................................................................................................................... 7
2.4 Objectives .............................................................................................................................................. 7
2.5 Core values ............................................................................................................................................ 7
3 Understanding the strategic position ........................................................................................................... 8
3.1 Macro Environment Analysis .................................................................................................................. 8
3.2 Industry and Sector Analysis ..................................................................................................................10
3.3 Competitor Analysis ..............................................................................................................................11
4 Internal environment analysis ....................................................................................................................12
4.1 Resources .............................................................................................................................................12
4.2 Capabilities ...........................................................................................................................................12
4.3 Competencies .......................................................................................................................................12
5 SWOT Analysis ...........................................................................................................................................13
6 Stakeholder expectations and corporate social responsibility ......................................................................14
6.1 Stakeholder Analysis .............................................................................................................................14
6.2 Corporate and social responsibility ........................................................................................................14
7 Corporate and Business strategies ..............................................................................................................16
7.1 Corporate strategies..............................................................................................................................16
7.2 Business strategies ................................................................................................................................16
8 Evaluation and selection of strategy ...........................................................................................................18
8.1 Feasibility .............................................................................................................................................20
8.2 Acceptability .........................................................................................................................................20
8.2.1 Virtual Mirror ....................................................................................................................................20
9 Strategy implementation and review and control process ...........................................................................22
9.1 Strategy Implementation.......................................................................................................................22
9.2 Review and control process ..................................................................................................................24
10 Success and failures of the present strategies ........................................................................................27
References ........................................................................................................................................................27

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1 Introduction to the organization

Odel is a public retail company, and the first department store

in Sri Lanka focusing on retail garment trade. It was
established in October 1990 by Ms Otara Gunawardhane as a
private limited liability retail company and was converted into
a public Limited liability company in June 2010.The Odel
brand’s promise is to inspire customers with trend setting style
and premium quality products. Odel retail experience consist
of delivering new trends, stylish products, friendly stage and
contemporary interior designs. According to LMD brand
annual report (2017) Odel is ranked under top most loved
brands in Sri Lanka. The strong mix of local and international brands create a hype around the Odel brand.
According to Brand Finance (2017) the Odel website attracts 12,850 hits each day while 1.4 million people go
through the store in one year.

Odel owns 22 stores and the main flagship store is situated in Colombo 07 which is a major tourist destination.
Further, Odel works with more than 3200 suppliers, 1500 of them are local small scale entrepreneurs. Odel
comprises a team of 430 people. In terms of financial performance the overall gross profit margin in 2017
improved to 45.8% from 43.4% in previous year and the revenue reached 6.94 billion LKR which is a growth of
7.5% compared to previous year. Moreover, total equity increase to 6.47 billion LKR in 2107 from 5.3 billion
LKR in 2016 through the retention of earnings and improved operating results. Odel offers high quality ladies,
men’s, kids and home wear under international and local / private brands. The private labels are streamlined along
with international branded range to offer a wide choice for customers. Private Brands such as LUV SL – Unique
souvenirs from local artisans, Backstage – Jewellery and accessories for females, Iconic – youthful collection of
women’s wear, Delight – confectionery and unique Sri Lankan indigenous food. It has several international
brands such as Mango, Levis, Michael kors, body shop, swatch,carvalli class, Charles and Keith, aldo.Odels
newly opened online store will provide island wide delivery and worldwide deliveryAs per Super Brand Sri Lanka
publication, the retail industry reported a steady growth of 20% each year with the demand for essentials such as
clothing and food. It assures with the increasing responsive for branded, expensive clothing as a result of increase
in individual disposable income. Odel PLC along with its’ competitors have contributed towards the demand of
arising retail industry in Sri Lanka. Odel operates at the top end of the retail fashion market, where it has carved
out a niche through a highly focused approach. Therefore Odel targets the upper middle class and higher income
group.

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2 Strategic direction of the organization in terms of Vision, Mission, key Goals and objectives

Odel is driven by the desire to inspire the world and provide a convenience shopping experience for customers
with unique local and international brands. It is growing rapidly in srilanka with new physical stores and digital
market places which gives a convenient and new shopping experience to its customers.Odels strategy is to lead
the retail industry by embarking an environmental friendly strategy and looking for the betterment of the
community.Odels strategy is to bring international retail brands under one roof. So they tries to acquire as many
well-known international brands.Odels new department stores will react as complete entertainment centres which
provides cinemas, games, shopping and food. Odel continually assess market trends and relationships for new
opportunities to broaden their market share and to provide a better shopping experience to their customers. Their
supply chain, sourcing, price mix and technology are also being geared up to match brand aspirations and keep
them competitive into the long run. Growing brand equity and by attracting and nurturing brand loyalty will help
them to support brand popularity and to focus on creating a common loyalty scheme for both Softlogic and Odel,
so that customers can shop in one group. The unique features of their newly revamped online store allow
customers to track their order online to see where the order is in real-time, receive delivery confirmation and even
send a customised message to a sender if a customer receives something .As a strategic initiative undertaken by
Odel to boost online sales significantly during the year, measures have been taken for the entire Luv SL product
portfolio to be available through major global online shopping portals such as eBay and Amazon, after
anticipating the high preference for this product portfolio by customers all over the world.

2.1 Vision

Vision gives a long term direction to the organisation. And it cannot be created or set. But needs to be discovered
or articulated. Vision should be shared collectively with all employees in the organization. The vision of Odel is,

To inspire the world

2.2 Mission

A mission is the operational component of the vision. The Mission of Odel Plc is to provide a complete Mind,
Body and Soul experience as the premier fashion and lifestyle retailer promoting sustainable and unparalleled
levels of retail experience.

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2.3 Key Goals

The main goal of odel is to create distinctiveness in a crowded marketplace through focus on excellence. It aims
to provide high quality local and international products by using quality human resources. And enhances
environmental conservation and social responsibility to contribute to community development. Odel tries to
enhance the partnerships with top international designer brands around the world to revolutionize the fashion
industry in srilanka.

2.4 Objectives

Completion of the department store at the Shangri La Mall will feature as the main objective of odel which is to
be opened in 2019 June which accounts of 82,000 sq. ft. along with introducing new international brands. Odel
takes action to cut the standard delivery time for online purchases according to the new online store which
provides online tracking systems of the online purchases to provide better services. And also as a strategic
initiative they are taking measures to Offer e-commerce in all Odel store markets as well as in other markets
which makes shopping experience easier for their customers.

2.5 Core values

Odel is guided by strong shared values such as,

We love, we serve, we style, we innovate, we give, we save, we enjoy and we inspire

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3 Understanding the strategic position

Strategic position is the understanding the factors and forces that should be considered when we develop the
strategies. It is concerned with the impact of the following on the strategy.
▪ External environment
▪ Internal environment
▪ Expectation and influence of stakeholders
▪ Organization culture

External environment includes all elements (factors and forces) existing outside boundary of the organization
that have the potential to affect to the organization. Thus we can use the below mentioned tools to analyze
the macro environment in which ODEL operates.

3.1 Macro Environment Analysis

Economic Environment
▪ Growth of retail sector
Growth potential of Sri Lanka’s retail sector continues to be high with increased customer preference
toward branded products. According to the A.T Kearney Global Retail Development Index Sri Lanka is
ranked as 12 in 2017 from 20 in 2011.Retail sector expects to grow by 6% through to 2019 according to
a study done by A. T Kearney. Hence ODEL has a high potential as a retailer.

▪ High consumer durable sales taxes

Sri Lanka has one of the highest consumer durable sales taxes in the region. In 2017 November 1, value
added taxes was increased from 11% to 15% which impact the prices to rise and hence the purchasing
power of the customers.

▪ Depreciation of Exchange rates

In 2018 one of the worst performing currency is the rupee. Since 70% of products in the fashion retail are
imports the prices of clothes, footwear and accessories will increase which leads to lower demand.

▪ Household expenditure
Consumption patterns of Sri Lanka resemble those of western pattern compared to other South East Asian
countries. Sri Lankan’s tend to spend on life style products than other South East Asian countries. This is
proved since Sri Lanka’s gross domestic savings are lowest among South East Asia. Decreased disposable
income levels have led to reduced spending power (2017-4.3%, 2016-10%). Discretionary spending on

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 items such as clothing, footwear showed a decline in the face of rising food prices, education and medical
expenses.

▪ Development of retail space

Quality retail space is limited in Colombo where rent has been increased by around 30% in the second
half of 2015 however at least 10 malls are in development with and expected to add more than 1.5mn sq.
feet of retail space (Oxford Business Group, 2017).

▪ VAT free shopping for tourist

The tourist Vat refund scheme is 2018 budget proposal which will provide a significant boost in tourism
and retail. Since high end retail shops are popular shopping destination, tourists would visit increasingly
for the sole purpose of shopping (ecomoynext, 2018)

Technological Environment
▪ Age group of 19-40 is addicted to social media (Social Media as a New Trend in Sri Lankan Digital
Journalism, 2015). Demand for advanced technology, websites, and social media marketing increases. In
Sri Lanka the digital presence is mostly from 19-40 age groups. Future customer base is mostly between
19-40 age groups therefore the group shows a potential for e-commerce.
▪ Sri Lanka’s e-commerce business sector is projected to hit US $ 400 million by 2022. Sri Lanka’s annual
domestic ecommerce sales value including services is around an estimated US $ 40 million (Sri Lanka Rs
6.4 billion). This can grow to US $400 million by 2022 (Dailynews, 2018). ODEL is the one of the
pioneers to open online retailing in Sri Lanka however now competitors such as Kelly Felder, Gflock,
Zigzag, Cool Planet are more active on social media compared to ODEL. Increase use of credit cards and
cash on delivery has helped to grow online retailing in Sri Lanka.

Social Environment
▪ Changing consumption patterns
High and middle income consumers increasingly shifting towards lifestyle oriented products, particularly
in the fashion, food, transport and home products segments and hence international retailers like ODEL
are facing considerable opportunities for future expansion. With the influence of social media, movies
Consumption patterns of Sri Lankan consumers resemble those of Western nations It creates a high
demand for international brands in Sri Lanka.

Legal Environment
▪ Both ODEL and Softlogic are listed companies at Colombo Stock Exchange. Therefore changes in rules
and regulations of stock Exchange commission, Inland Revenue and other regulatory bodies affects
ODEL.

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3.2 Industry and Sector Analysis

Porters Five Forces Model is used to analyze the industry and the sector that they are operating. When it
comes to ODEL their;
1. Existing Rivalry –The main players in the industry are Hameedias, Crocodile, House of Fashion, GFlock,
Kelly Felder etc, where some of them markets own brands and well-known brands such as Levis, Reebok,
Charles. Some of them only market well-known brands where they are the authorized distributors in the island
for those brands who have built their brand image in the market. All these competitors offer similar product
with little or no difference to customers. Hence the competition is high in the industry.

2. Threat of new entrance – the fashion industry is expected to experience a growth In the Sri Lankan
economy, thanks to the influence on social media and the end of war. Hence this growth might attract
international companies and brands such as Marks and Spencer to the market.

3. Bargaining Power of Customer – Customers switching cost is very low since there are lot more
fashionable wear stores in island such as Hameedias, Crocodile, Levis, Roma Four and House of Fashion
who offers similar product with no or little difference and are located in several places.

4. Threats of Substitutes – As stated earlier customers have many options to choose. But advantage which
ODEL has is the reputation that have gained by offering quality goods, where this has made ODEL to thrive
in the market place yet other fashion chain market has capacity to distribute international brands like Gucci,
Prada, Armani yet their target market Is currently different.

5. Bargaining Power of Suppliers-The power of ODEL in the market place and the large quantities it
purchases from the suppliers and the suppliers are not ready to lose the opportunity to supply to such a
powerful dealer. There are over 1000 suppliers and 200 plus factories locally and globally supply ODEL with
incredible range of products which give ODEL the leverage and options.

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3.3 Competitor Analysis

In this section we will be looking at the strategic groups for the products ODEL & CLOSET produced by ODEL.

Odel brand

PRODUCT QUALITY

High Low

P High Odel
Kelly felder
R
GfLock
I Avirate

C
Nolimit
E Low CIB
Fashion Bug
D &G

Odel produces its own brand odel and sell at a high price. Kelly Felder, GFLock, Avirate brands are much similar
to Odel’s brand and also sell at a price similar and with a similar quality to ODEL. Nolimit, CIB, D & G, Fashion
Bug brands do not compete with Odel since they are offered at a cheap price with low quality.

Closet Brand

PRODUCT QUALITY

P High Closet
Mango
R

I Low Nils

Closet offers work-wear wardrobe essentials that bring out the “Body Lady” in every woman. It offers stylish,
versatile and functional designs that give woman confidence to conquer the work week and goals. Same like
ODEL’s brand, Closet brand is offered at a high price with high quality. Hence Closet’s main competitor is
Mango and Closet does not compete with Nils office wear.

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4 Internal environment analysis
4.1 Resources
Resources are the assets that organization have and combined to achieve a competence. Superior growth in the
market, ability to innovate depends on the unique recourse of the firm. Below resource and capability audit
identifies the resources that Odel currently processes.

General resources 20 years of experience in the retail industry

Strong relationship with international brands
Human resources Over 900 employees
Experienced visual merchandising team
Regular product training for international
brands
HR open day which allows employees to
discuss their concerns with senior
management.
Financial resources Odel brand is estimated to be worth USD
50,000
Increased gross margins. (The GP margin in
2017 improved to 45.8% from 43.4% in 2016.)
Physical resources 640,000 square feet mega department store in
Colombo 07.

4.2 Capabilities
Strategic capabilities are the company’s strengths, which gives it a competitive advantage. Below are the
capabilities that Odel currently processes.

✓ Goodwill and reputation

✓ Large network of outlets
✓ Extensive brand management
✓ Admirable customer service

4.3 Competencies
Core competency, by its definition, is the foundation of the companies’ competitiveness. Odel being one of the
leading brands in Sri Lanka, has the core competency of ‘having the ownership of Luv Sri Lanka and Backstage
brands.’

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5 SWOT Analysis
STRENGTHS WEAKNESSES
▪ An affluent customer base and a good tourist ▪ Lack of stores- the stores is only
customer base. located in Colombo which limits the
▪ Recognized own brands like ODEL, Otone, customer acquisitions.
Backstage and Embark. ▪ Main target group is tourists.
▪ Ownership of international brands in Sri Lanka. ▪ Lack of brand recognition in
▪ A diversified product mix with over 1500 products international market.
(Shoes, Hand bags, Accessories, Home wear) ▪ Lack of customers’ loyalty towards the
▪ Being the ambassador for reputed global brands business.
like Doir ▪ Spending a huge expenses on interior
▪ Being the only major global designer brand retailer designing
in Sri lanka ▪ Lack of presence on social media to
▪ Ownership of more than 20 stores in Sri Lanka attract customers.
▪ Having own manufacturing facilities. ▪ High prices compared to other
▪ High brand equity competitors
▪ Good relationship with local designer wear brands
▪ A qualified marketing force with knowledge and
experience in designing effective advertising and
promotion campaigns
▪ Having an online shopping
▪ More 25 years of experience.
▪ Availability of efficient back office operation which
provides customer friendly environment.

OPPORTUNITIES THREATS
▪ High social recognition due to quality service and ▪ Depreciation of Sri Lankan rupee leads
CSR activities leads to minimize the external to higher prices.
pressure group activities. ▪ Lack of retail space in urban areas.
▪ Availability of quality cloth suppliers domestically ▪ Decrease household expenditure
with competitive price leads to deliver their values ▪ Increased consumer durables sales tax
to the customers
▪ VAT free shopping scheme will help to attract more
customers.
▪ Growing sportswear market due to shifts in
consumer lifestyles towards fitness and healthy
living.
▪ Increasing trend for more comfortable and casual
clothes for working out.

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6 Stakeholder expectations and corporate social responsibility

6.1 Stakeholder Analysis

Mandelow (1991) analyze stakeholders groups based on power and interest of the stakeholders. Mandelow
matrix allows us to identify the most important stakeholders with high power and high interest which should
be managed closely (Robinson & Pearce , 2012). Below matrix depicts the stakeholders of Odel.
Inte
H res L
i o

Key Players Keep Satisfied

Employees Government
Board of Community
Directors
Shareholders

Keep Informed Minimal Effort

media Public
Suppliers Pressure groups

Expectations of stakeholders
Stakeholder Method of engagement Areas of concern

Customer Promotions, social media, surveys Price, Quality, Brands

Shareholder Investor meetings and open door policy for investor Business development and
inquiries. financial performance.
Price and growth
Suppliers Monthly meetings, joint business planning. opportunities

Government and Meetings with officers, Housing development CSR Community impact,
community project and wild life conservation projects. business sustainability.

6.2 Corporate and social responsibility

LUV AVURUDU GAMA

This is a special kind of promotion to celebrate local essence of avurudu. Along with showcasing traditional
sweets , clothes and cultural products, customers were also given the opportunity to experience traditional
activities that make avurudu a memorable festival.

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Mothers Day and Fathers Day

They kept wide range of products specially gift ideas in the showcases and kids were invited to create their own
Mother’s and Father’s day cards using the stickers and other craft materials.

World Environmental Day – LUV SIGIRIYA

Odel is an environmental friendly brand and has leveraged on its popularity and influence to drive home messages
about preserving the flora and fauna of the island. Also they created t shirts to make awareness about loving
Sigiriya.

Also staff of ODEL cleaned the Sigiriya rock.

World Animal Day

Many of Odeal products such as t shirts, caps and souvenirs created in order to make awareness about the value
of protecting the wild life of Sri Lanka.

Valentines Day – Ignite the love bomb

They gave a chance to 5 couples to enjoy a weekend in Ceysand’s resorts and spa. Odel loyalty card who qualified
for the draw over the Valentine ’s Day weekend were provided an opportunity to play a game of Love Roulette
at which they won instant prices of gift vouchers, toys, cupcakes.

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7 Corporate and Business strategies
7.1 Corporate strategies
Corporate strategy by its definition, is the long-term vision that organizations set, seeking to create corporate
value and motivate the workforce to implement the proper actions to achieve customer satisfaction.

Odel PLC has a corporate strategy to be a cost leader, as they have achieved continuous and steady improvement
in gross profit margin over past three years.

The overall gross profit margin in 2018 improved to 46.9% from 45.8% in the previous year. Improved products
and efficient supply chain management activities contributed to the improvement of gross margin.

Another main strategy which Odel has gone through is the acquisition by Softlogic Holdings PLC. Softlogic PLC
being one of the largest conglomerates in Sri Lanka, Odel now has the reputation and specialized knowledge and
economies of scale which Softlogic PLC processes.

7.2 Business strategies

Business strategy by its definition, is the plan that management use to secure a competitive position in the market,
carry on its operations, please customers and achieve the desired ends of the business.

We could identify the following business strategies which are adopted by Odel PLC.

✓ Virtual mirrors
Virtual mirrors allow users to see how an item looks on them without physically trying it. These
mirrors uses a sensor to display the customers own reflected image on screen. Customers can use
this technology to determine which item fits best and what other piece of apparel or accessory
goes well with that item, offering an unlimited number of clothing options during a short period.

As competitors to the virtual mirror system, the first virtual mirror system in Sri Lanka was
launched by Avirate in 2017, one of the high end store in Colombo. Together with virtual store
Avirate also launched an Omni channel to provide an integrated shopping experience.

✓ In store mobile app

Mobile store account apps offers optimal payment options and personalized offers based on
purchase history. Apart from ordering through app shop assistant will receive a notification when
the customer enters the shop with his/her purchase history and customer profile, this will help the
assistant to offer the best product preferred by the customer. Further customers can make the
payments using the app.

Direct competitors such as Kelly Felder, GFlock has introduce mobile apps however they don’t
offer personalized offers to customers and they don’t have the technology to identify the customer

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 with their profile once they enter the shop. Since most customers can order through Facebook use
of the App is comparatively low.

✓ Introducing international brands and existence through shopping malls inside Sri Lanka
Odel has set a forth unified strategy of expansion of international brands whilst securing sizable
retail space in new malls which are earmarked to open within the next few years. By 2020 along
with the significant brand stronghold and presence as the anchor tenant in these main shopping
destinations Odel will be able to create a significant impact in the retail sector of Sri Lanka.

During the year Odel introduced a range of well know international brands to Sri Lanka. ALDO a
Canadian footwear brand, Michal Kors and Armani Exchange are some of the key brands which
have recorded encouraging sales levels at its initial stages displaying the market acceptance and
demand for such brands. Furthermore, with Odel’s experience of introducing mid - range luxury
brands to Sri Lanka the significant retail space which has been reserved within ultramodern
shopping malls would serve as an opportunity to gauge the Sri Lankan market sentiments and
brand uptake within the next few years. This will also create a platform to test the market appetite
for high end aspirational luxury brands.

Odel aspires to create shopping experiences in par with international standards to cater to the Sri
Lankan market which shops abroad to purchase internationally recognized brands as well as
capture an emerging brand savvy segment of customers who wish to keep up with the latest trends.
By introducing latest fashion trends Odel hopes to emotionally connect customers with brands
developing brand loyalty and inspiring Sri Lankans to keep abreast with current fashion trends.
All international brands marketed offer merchandise which is line with the current trends and
seasons which are being traded concurrently in international stores. Odel’s team of fashion
forecasters and designers ensures that merchandise is in line with current trends The Colombo
City Centre Mall which is the country’s first hyper mall with 210,000 sq. feet of retail space is
scheduled to open in 2018. ODEL is the anchor tenant of this mall having leased out 40,000 sq
feet of shopping space to showcase international brands such as Mango, Fossil, Luxe, Odel Sports
and Swarovski etc. ODEL is also the anchor tenant occupying 82,000 sq feet of the Mall at One
Galle Face which is expected to open in 2019.
In 2020 ODEL plans to open its own mega mall comprising of 640,000 sq. feet which will be a
landmark in the city offering retail, lifestyle, fine dining and living. The mall will house leading
international brands under one roof. Further the complex will consist of 39 villa type
condominiums with lush green sky gardens, two floors of multiplex cinemas and parking facilities
for 550 vehicles. The Odel Mall will be a landmark in the Colombo city enhancing the shopping

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 and lifestyle experience of discerning Sri Lankans with a wide variety of restaurants offering
gastronomic experiences coupled with superlative amenities all under one roof.

8 Evaluation and selection of strategy

In Odel PLC strategic evaluation is done by organizational director board with specialist who specialize to
particular subject area of strategies.

Evaluation is the process of appraising or assessing effectiveness of the developed strategic options in order to
select the best strategic option for the implementation. Which is differ from situation to situation as well as
organization to organization. Suitability, Acceptability and Feasibility could be used to assess the viability of
strategic options.

Suitability

Odel PLC’s director board and higher management check whether the strategy would fit with strategic aims of
the company, key drivers, expected changes with the environment and be appropriate in terms of cultural
influences and context of stakeholder expectations.

The TOWS matrix, Ranking, Decision tress and Scenarios are the tools. Odel PLC uses the TWOS matrix as they
identifying strategic options on the basis of SWOT analysis and Ranking method. We have met some restrictions
to get details of higher level strategies evaluations and implementation process. Any how we would able to get
detail about two strategies those objective to enhance the customer engagement that is Virtual mirror and the
mobile app.

The first virtual mirror system in Sri Lanka was launched by Avirate in 2017, one of the high end store in
Colombo. Together with virtual store Avirate also launched an Omni channel to provide an integrated shopping
experience. Then odel has an opportunity of using this.

Direct competitors such as Kelly Felder, GFlock has introduce mobile apps however they don’t offer personalized
offers to customers and they don’t have the technology to identify the customer with their profile once they enter
the shop. Since most customers can order through Facebook use of the App is comparatively low.
Odel already has online purchasing method which is bit similar with the mobile app. And also most of the
customers are coming to the odel are likely to get shopping experience. Then Odel plc goes to the virtual mirror
as they have a opportunity regarding that. But still its in the implementation stage.

Ranking
Based on the above evaluation of the two innovations, balance score card is used to rank the innovation ideas.
Innovations has been ranked 1-5 based on the expected contribution made by each innovation.

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Factors Objective Measurement Virtual In store
Mirror mobile
app
Financial Increase sales revenue Sales Revenue 3 4
View by 25% in 2 years

Increase Market share by Unit market share 2 3

10%

Customer Increase customer Customer feedbacks on social 3 3

View engagement by 15% in 2 media regarding virtual mirrors
years and services of in sore mobile app.

Increase customer utility Frequency of using the innovation 3 2

using the innovation

Increase Customer life Customer survey on loyalty and

time value 15% in 2 advocacy. 3 3
years.

Internal Culture that promotes Employee rewards for innovations 2 2

Business innovative thinking
View
Improve the quality of Customer surveys 4 2
customer service by 10%
annually

Forming a digital Feed backs from customers on 3 2

communication team. digital platforms.

Learning Improve creativity and New developments by employees 3 2

and skills of employees and employee turnover.
growth
view Employee training and performance and productivity 2 2
development. percentage

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 Continuous Digital hearing percentage. 3 2
improvements led by
digital platforms

31/55 27/55
Ranking 1 2

According to the result of above graph it is obvious that first option is yielded than mobile app.

8.1 Feasibility
That means any strategy is concerned with whether it can be implemented successfully. When we discussed with
management of odel they mentioned that assessment of feasibility of strategy started during the process of
planning the details of implantation in environment process they consider. Financial feasibility is whether they
have adequate funds to implement that strategy and how will be the return from that. Under that financial
feasibility, people and skills and integrating resources are checked. Therefore, Odel PLC has identified they have
resources and competencies to implement the strategy of Enhancing Customer Engagement through the virtual
mirror. (Refer the Internal environment scanning)

8.2 Acceptability
Acceptability concerns about the performance outcomes of strategic options in term of risk, return and stakeholder
reactions.

8.2.1 Virtual Mirror

Returns

Easy access to matching outfits and accessories.

Most customers require assistant to find matching outfit’s accessories and the right size. Mostly customers have
to wait till one of the assistant find the right size or the matching garments from the stores. Very often customers
have to wait if the all the assistants are busy with other customers. Further customers have to walk around the
store to find the matching items for their outfits which is very time consuming. Hence customers expect a better
solution to find the right product.

Fashion Assistant

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Most females have a habit of to getting feedback or recommendations from another before purchasing clothes.
Therefore, customers like to have an adviser to select the best outfit that suites her body type and occasion.

Time Management

Due to busy lifestyles customers prefer to find the exact product they want with in a minimum time. Customers
tend to shop where they can find the right product more efficiently with great customer service.

Cross selling
Odel has the opportunity to give expert advice and options such as matching jewelry and shoes that goes with the
clothing item customer has selected.

Better store administration

The amount of damage goods will be reduced since the less usage of trial rooms. Further virtual mirrors will be
a solution for limited space issue. Retailer can accommodate more products in the store due to lack of trial rooms.

Customer relationship management (CRM)

This will help to fetch reviews and feedbacks from the target customers and help them with their queries

Risks

1. High Cost
Sophisticated scanners that use wave detector technology are too expensive to be used in Sri Lanka.

2. Most apparel items or accessories do not have CAD models created and require the 3D model to be
created from scratch. Though scarves can be static objects, they look better when dynamic with
physics applied.

According to the company’s perspective they have identified that the return will be higher than the risk in virtual
mirror.

Stake holder reactions

Since this is bringing long term benefit to the organization shareholders, top management, employees and
distributors have a favorable opinion about virtual mirror. Even though at the beginning they need to spend more.

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Management believe the stakeholders would react positively as favorable impact to the relationship with
stakeholders.

9 Strategy implementation and review and control process

9.1 Strategy Implementation

This is the most critical path where the chosen strategy is put into action. So when putting the odel new strategy
into the action a huge attention and a focus is given. Still the Odel is in the process of implantation. According to
this need to answer to the following questions.

What is to be implemented?

Programs

To enhance the customer engagement the Odel use the Virtual mirror strategy

Budgets

They have prepared the budget to the virtual mirror. And as they mentioned they have categorized the expenses
as

Glasses, Watches, Jewelry, training, Software, Hardware, Clothes, Headwear, and from these items they are
willing to pay higher amount to the software and hardware items.

Procedures

They have identified the following procedures

1. Conduct training programs to educate the employees about new innovations and its importance to sustainability
of the organization.
2. Introducing a reward system to appraise employees for their contribution.
3. Developing necessary resources and allocating budgets.
4. Find suppliers to purchase virtual mirrors
5. Implementation of virtual mirrors at main outlets.
6. Analyzing the feedback of customers and make necessary improvements.

Who should implement the strategy?

From top management to bottom line employees need to participate.
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 How are they going to do it?

This could be explained by using McKinsey’s 7-S frame work

Structure – there is a holistic nature in structure since it is based on team, product and customer

System - Odel uses ERP information systems, typical financial reporting systems, HRM systems, Customer
relationship systems towards smooth organizational affairs

Style - Participative management approaches. Odel done a market research and also get ideas from the employees
and let them to participate in decision making process of the virtual mirror as they are the one who close to the
customer than the higher management.

Staff – organization always dedicates for establish team concept in organization

Skills – Odel is commiting to make knowledgeable and emotional worker since they need high customer exposure
as service organization Odel has very skilled design makers and strategy makers and also very keen sales persons
who know how to manage the customers and keep them satisfied.

Shared values – Odel has their unique values as they need to maintain higher level of quality in each and every
thing they are doing. Respect to others, listen to others, high tem spirit, shared responsibility are the key values
of them.

When are they going to do it?

Still they are in implementation process and they are facing some challenges regarding this therefore there are
planning to solve the challenges and go ahead and hope to implement virtual mirror by early in the next year.
And now they are covering the initial steps which we have identified under the procedures in above.

Barriers to Implement Virtual Mirrors

Following internal barriers were identified to implement the strategy

1. Employee resistance.

New technology will result in major levels of resistance. Employees at Odel are not support for the introduction
of virtual mirrors since it reduces the number of staff needed.

2. Ineffective communication.

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Odel has invest in top down, one-way communication that don’t motivate people to move from the status quo.
Hence it will be difficult to communicate the advantage of these innovations to lower level employees. Due to
lack of communication it will be difficult to sustain the new processes.

3. Weak motivation to change.

Lack of motivation from senior staff to adopt in to new systems. Employees who have worked for many years in
the company may not be filling to change the way they work due to new technologies; this will also discourage
the new generation who is willing to adopt new technologies.

4. Time consuming.

Implementing new technologies requires time and attention of employees who have an extensive knowledge of
the business. It can’t be delegated to junior managers or junior executives. It need best people to test the new
system in every shop.

5. Budget allocation issues.

Releasing funds is one of the biggest challenge since Odel has now invested their budget on international brands
and for the new Odel mall project. Budget holders are faced with the task of identifying the most beneficial
allocation of money at any given time.

Culture

As the virtual mirror implementation is not hugely affect to the changes in key organizational factors in Odel
PLC management hope there may not any conflicts regarding the existing culture of Odel.

9.2 Review and control process

As we analyse below odel has a practice of analysis of their monthly management accounts to get an idea
about how their strategies work on.They analyse their outlet cost and benefits just to make sure
diseconomy sales are not taken place. Expect from that they are highly concerned about their brand.When
new strategies come they look how that affect to their brand.Management meet the employees and have a
discussion with them about the issues they face and how the new strategies are going on.Moreover odel use
the social media as instagaram and facbook to get customer feedback.The control process is done by the

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 higher management .They have a business process development team to support new strategies and for
innovations.

Impact of Odel Acquisition on Financial Statements of Softlogic(financial impact)

The Interim Reports of Softlogic for the quarters ended June and September 2014 were analysed to identify the
impact of the Odel acquisition on the company.

Profitability, Liquidity, Investment and Gearing Ratios were calculated and analysed as follows.

3 months to
3 months 30th
to 30th September %
Category Ratio Formula June 2014 2014 change
Change in
Revenue Revenue/previous
Profitability Growth period Revenue*100 11.6% 6.5% -5.1%
Change in Operating
Operating Profit/previous period
Profit growth Operating Profit *100 78.5% 16.8% -61.7%
Operating Operating Profit
Profit margin /Revenue*100 7.5% 8.2% 0.7%
Net Profit
Margin PAT/Revenue*100 4.1% 2.6% -1.5%
Current assets/Current
Liquidity Current Ratio Liabilities 1.19 1.57 32%
Current Assets less
Inventories/Current
Quick Ratio Liabilities 0.67 0.92 37%
Operating Profit
/Capital
Efficiency ROCE Employed*100 4.5% 2.9% -1.6%
Operating Profit/Total
ROA Assets 1.67% 1.69% 0.02%
Debt/Equity Non-Current
Gearing (Group) Liabilities/equity 45.8% 68.2% 22.4%

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 Operating
Interest Cover Profit/Finance Costs 1.23 times 1.32 times 7%
Profit After
Investor EPS (Group) Tax/Number of Shares Rs. 0.05 Rs. 0.13 160%
PER (Group) Share Price/EPS 276 times 122 times -56%

The revenue growth for the three months ended 30th June (1st April to 30th June) was 11.6% while the revenue
growth for the three months ended 30th September (1st July to 30th September) was only 6.5%. The revenue grew
at a greater pace for the first quarter of 2014 compared to the second quarter during which the acquisition took
place. In line with this trend the operating profit growth too was higher in the three months ended 30 th June
(78.5% growth) compared to the second quarter of 2014 (16.8% growth). Although the operating profit margin
has risen over the two quarters by a marginal 0.7%, the net profit margin too has fallen by 1.5%, which in turn
could have been caused by the increase in finance costs.

The Segment’s current ratio has improved over the two quarters, showing an increase of 32%, along with the
quick ratio which rose by 37%. Closer analysis of the financial statements for the two quarters show that this
improvement in the liquidity ratios is due to the fall in inventories and a greater fall in current liabilities compared
to the fall in current assets.

The gearing ratio of the Company as a whole has risen by over 22%, that is, from 45.8% to 68.2% from June to
September’14. This is mainly due to the investment made in acquiring Odel, which, was wholly financed by
borrowings. This rise in debt resulted in a 9.2% increase in Finance costs of the Segment. However, the increase
in finance costs of the segment has not affected the interest cover, which improved by 7% over the two quarters,
as the increase in operating profit was greater than the increase in finance cost.

Cultural aspects - ODEL, closely-held by Otara had a novel structure culture and Softlogic has another
culture under the leadership of Ashok. Traditionally, mergers and acquisitions square measure envisaged to
be viable in monetary and commerce terms, nevertheless yield poor ends up in orientating two distinct
cultures. This invisible culture plays a crucial role within the success of mergers and acquisitions. thus
Softlogic thought of this facet seriously, together with different connected problems like modification
management, transition amount, retention of workers, etc. And Softlogic was ready to keep the culture of
the Odel as previous.

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10 Success and failures of the present strategies

Firstly we can give comments about the success of their corporate strategy by their financial ratios.

ROE (This year) = 5.2%

ROE (Last year) = 3.91%

Comment - We can safely conclude that ODEL’s corporate strategy because their ROE has been increased in
this year more than last year. It indicates ODEL achieved the targets in this year more than last year.

Gross Profit

We can conclude that their corporate strategy has been succeeded because of the increase in their gross profit
margin in this year more than last year.

Liquidity Ratio

Their liquidity ratio also is at a good level because of the improvement of their current ratio. This indicates their
corporate strategy has been successed because they could be able to make optimum use of cash in-ows with the
help of the group treasury division, ensuring the group-wide interest exposure is kept to a minimum & performing
regular reviews of the actual performance against planned to ensure achievement of budgeted targets.

Non-financial Indicators when analyzing the success of ODEL’S Corporate strategy

During 2016/17, the company’s Human Resources operation steadily enhanced its model such that it is an equal
partner in the business by expertly managing the key asset of the company – its people. Odel was able to double
the retail space currently available in the country.Many brands are interested in entering Sri lankan retail sector
as they identify the existence of international retail.Because of more international brands tourists spend more on
odel products.Odel has increased their market share by opening new stores across srilanka.

References

Primary Sources-Interviews conducted with the employees of odel

Interviews conducted with customers

Secondary sources- Odel annual report(2016/17)

Odel annual report(2017/18)

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