Page 5: Responding to the changing business environment
The other strategy adopted by Dixons was that of internal development. This is usually a particularly effective strategy for developing products and services in markets where high growth is likely to take place. For Dixons this led to the development of The Link and Mastercare. Dixons used internal developments to segment its markets, increase its market penetration, take advantage of further business opportunities and improve its overall competitive advantage. Both the development of The Link and Mastercare enabled Dixons to move into related areas which complemented existing markets.
The objective for The Link was to develop a specialist communications chain trading in a market in which substantial growth is expected over the next few years. The Link is concerned with communication products such as phones, faxes, pagers, organisers, connection devices and navigation equipment such as Traffic Master. The speed with which this niche-category store expanded and developed was unrivalled. Within a four year period The Link has moved from 0 to 127 stores to develop a pre-eminent position in the High Street arena.
To have the strongest image for customer service among the electrical and electronic retailing multiples was paramount if Dixons was to maintain its competitive advantage. Customer service together with product after sales service, is a cornerstone of the Group’s strategy. Mastercare was designed to help provide sustainable competitive advantage for each of the retail chains.
Mastercare today employs over 1,500 skilled engineers and technicians, reflecting greater numbers of in-store repair and technical centres in Currys and PC World Superstores and the expansion of personal computer service. Dixons may be market leader in the retailing electrical and electronic markets but it cannot afford to be complacent. Changing technologies offer many opportunities for moving into new fields of business but provide a threat if these new fields of business are not successful. Dixons has to be aware of the development of niche markets where small businesses may offer specialist products and services on the one hand and worldwide-backed organisations on the other.