Kindly answer both a) and b)

Situational Analysis lecture 2 & 3 Bowland Bowland Carpets Ltd is a major producer of carpets within the UK. The company was taken over by its present parent company, Universal Carpet Inc., in 20X3. Universal Carpet is a giant, vertically integrated carpet manufacturing and retailing business, based within the USA but with interests all over the world. Bowland Carpets operates within the UK in various market segments, including the high value contract and industrial carpeting area - hotels and office blocks etc. - and in the domestic (household) market. Within the latter the choice is reasonably wide, ranging from luxury carpets down to the cheaper products. Industrial and contract carpets contribute 25% of Bowland Carpets' total annual turnover which is currently 80 million. Up until 15 years ago the turnover of the company was growing at 8% per annum, but since 20X2 sales have dropped by 5% per annum in real terms. Bowland Carpets has traditionally been known as a producer of high-quality carpets, but at competitive prices. It has a powerful brand name, and it has been able to protect this by producing the cheaper, lower quality products under a secondary brand name. It has also maintained a good relationship with the many carpet distributors throughout the UK, particularly the mainstream retail organisations. The recent decline in carpet sales, partly recession induced, has worried the US parent company. It has recognised that the increasing concentration within the European carpet manufacturing sector has led to aggressive competition within a low growth industry. It does not believe that overseas sales growth by Bowland Carpets is an attractive proposition as this would compete with other Universal Carpet companies. It does, however, consider that vertical integration into retailing (as already practised within the USA) is a serious option. This would give the UK company increased control over its sales and reduce its exposure to competition. The president of the parent company has asked Jeremy Smiles, managing director of Bowland Carpets, to address this issue and provide guidance to the US board of directors. Funding does not appear to be a major issue at this time as the parent company has large cash reserves on its balance sheet. Acting in the capacity of Jeremy Smiles you are required to outline the various issues which might be of significance for the management of the parent company. Your answer should cover the following: (a) To what extent do the distinctive competences of Bowland Carpets conform with the key success factors required for the proposed strategy change? (10 Marks) (b) In an external environmental analysis concerning the proposed strategy shift what are likely to be the key external influences which could impact upon the Bowland Carpets decision? (10 Marks)