Starbucks Micro and Macro Environment

For any organisation survival depends on its surrounding environment located. It means the trends in political, economical, social, technological, environmental and legal environment, which can influence business. Below the environmental factors are described
(P)olitical Issues:
Taxation policy – If government imposed high tax on farmers in countries producing coffee bean from where Starbucks buy their coffee, than Starbucks needs to pay higher price for their coffee they purchase. This effect will ultimately pass to the customer, because they need to higher price.
Government stability – Starbucks should carefully investigate the political stability of any country before they want to plan for expand to. It can affect in taxation and legislation when the government change.
International stability – The global economy must be carried into attention as it can affect Starbucks’ sales and markets.
Employment law – A decrease in licensing and permit costs in those countries producing the coffee bean for Starbucks will lower the production costs for farmers.
(E)conomic Issues:
Interest rates – An increase in interest rates means investment and expansion. And also mortgage repayments rate will rise so customers have less money to spend on luxury products such as coffee. Low interest rates have the reverse effect.
Economic Growth – If economic growth is low in the country of location of Starbucks then sales will fall down. Customer incomes tend to go down in periods of negative growth leaving less money to spend.
Inflation rates – Inflation is a term for increasing prices. It is measure by using Retail Price Index (RPI) in the UK.
Competitors pricing – Aggressive pricing and sales from competitors creates a price war for Starbucks, which can drive down.
(S)ocial Issues:
Population demographics – They need to identify and target their customers to aim their products on them.
Attitude to work – They have to find area where local population have high attitude to work. So their recruitment will be easy, training will be effective and staff turnover will be low.
Standard of education/skills – Creating new premises Starbucks needs to look for standards of education and skills locally. They must be up to date in order to make any business operation successful.
Working conditions/health and safety – They must accomplished high standard of friendly environment and follows health and safety.
Location – this is a major factor it should be in a easy access for both customers and staffs.
(T)echnological Issus:
IT development – Starbucks is well aware to extend and improve its Internet facilities and also tools to target customers, analyse data, and deliver new features to the market in the shortest time.
New equipment’s and processes – The technology like as coffee making machines and the computers system development that Starbucks use to operate their till registers will enable their staff to work more quickly and efficiently.
Research and Development activity – Starbucks has huge budget and have allocated the resources to have accurate Research and Development data.
(L)egal:
Trade and product restrictions – Starbucks have to ensure they don’t violate laws e.g., religious laws. Also they have to be attentive on the tariffs have to paid for import / export goods.
Employment law – Each country has some restrictions on employment laws. Like student work law in UK, the public holidays etc. Starbucks have to account these factors.
(E)nvironmental Issues:
Pollution problems – Customers increase a lot of rubbish that they leave the shop with their cup of coffee and then also leave it in the street. So the packaging for the cup should be carefully accounted to make it environmental friendly.
Work disposal – Starbucks have to carefully consider the process to dispose rubbish as there are strict laws in most countries.
Micro analysis or Michael Porter’s five forces analysis
Michael Porters has developed a famous model of the five competitive forces in his book. The competitive strategy that techniques he analysed for organizations and competitors. It tends to high light on single, stand along and business or strategic business unit rather than a single product or product range in the market.
Porter has specified these five competitive forces that form every company and every market. These are:

Threat of new entrance
Bargaining power of suppliers
The threat of substitute products
Bargaining power of customers
Competitive rivalry

Threat of new entrance
Economics of scale, high or low entry cost, ease access to the distribution channel; other cost advantages are not associated to the size of the company, whether other competitors will react. There will always be a continuous pressure for Starbucks to respond and regulate these new competitors.
The easier it is for new competitor to enter the market the more competition there is within the market. Although this should not be a problem for Starbucks as they have a large number of market share. Literally, it will be a threat for the new entrants. As a company’s volume increases, so does its experience and knowledge, which tends to increase the potential risk for the new competitors.

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Bargaining power of suppliers
If little large number of suppliers control the market more than large number of fragment sources, bargaining power of supplier is expected to be high. Even suppliers got certain quantities of power that is limited. But for Starbucks being ‘the most famous specialty coffee shop chain in the world’ reaching sales of $9.8 billion in 2009 and still increasing they still should be demanding coffee beans for some time. It is legal to say that the Suppliers need Starbucks, just as much, if not more so than Starbucks need their supplies.
The suppliers of Arabica beans were mostly owned by medium-size farm and typically sold their production to process by local markets. (Lee, 2007) Particularly, these farms had been placed in the Pacific Rim, Latin America and East Africa. (Lee, 2007) These farms were various and not related with one another, with separation, providing them small bargaining power. Even there was no straight alternative for the Arabica beans which had been use in special coffee production. Huge group of farms which had been supply the crop processed it easy for buyers to escape burdens to any specific farmer, which was difficult for suppliers. The farmers sold the Arabica beans to specialty coffee retailers who were reliant upon their constant business. Luckily for Starbucks they buy their coffee beans directly from producing countries: Latin America (50%), Pacific Rim (35%) and East Africa (15%).
Threat of substitute of products
It occurs when there is a product-for-product replacement or substitution of need. For example bald head reduces the need for hair gel, where there is common substitution and finally the attitude ‘we could always do without ….
An example for Starbucks would be if an alternative to coffee was offered e.g. a customer switching from coffee to tea, coffee to chill drinks or coffee to juice. Competitive rivalry: contribute to strong rivalry between existing competitors in an industry.
Bargain power of buyers
Buyer power is likely to be high if a number of circumstances are in place. There is an
awareness of buyers, additionally if the volumes of purchases of the buyers are high, the supplying industry includes a large number of small operators, there are substitute sources of supply, the component or material cost is a high percentage of total cost, the cost of switching a supplier is low or engages little risk, there is always a risk of backward integration by the buyer.
Competitive rivalry
Every day competitions are growing gradually against the Starbucks as the business growth. Competitors taking chance to reduce the price, introducing a rival product, insistent growth of production to enhance the market share. Starbucks significant innovation their products which also competitors start to keep up. It is very hard for Starbucks as a competitor to keep the fixed cost against the variable cost.
Starbucks don’t have any other competitive rivals that are of parallel size to them. So there are not any competitors in the market that would be measured in balance with them. However, they must retain their outstanding standards and always be on the watch out for new advances in order to survive as the market leader.
SWOT analysis
Aim of SWOT analysis is to identify the main internal and external factors that are very significant to achieve the objective. It is essential to be realistic about the strengths and weaknesses to help differentiate the company’s situation are today, and where it could be in the future. The strengths and weaknesses are named internal factors and external factors are opportunity and threats.
(S)trengths

It is a global coffee brand with a high reputation for excellent products and services
It has around 17,000 stores in 49 countries. 
It has strong ethical values, commitment towards the environment and community activists.
It is one of the most Top 100 companies which is work for in 2005
Starbucks Gift Cards, Starbucks Card and rewards.
Well-value, well train and well-motivated employees, best working place
Established logo, developed brand image, copyrights, own trademarks, website and patents.

(W)eaknesses

It has majority market share in the USA with more than three quarters of its stores located in the domestic market. In order to reduce business risk, expansion is needed.
It has a reputation for trying new products development and creativity. But, they always remain vulnerable to the possibility that their innovation can go wrong.

(O)pportunity

It has a chance to expand its global operations.
Co-branding with other manufacturers of food and drink and brand franchising to other manufacturers of other products and services both has high potentiality of success rate.
Technological advantage
Emerging multinational markets
New distribution channels
Supply agreements

(T)hreats

Its success has lead many competitors and copycat brands pose potential threats for market entry.
Starbucks is exposed to increases the cost of coffee and dairy products.
Farmers are poorly treated by false publicity in supplying countries.
Fragile state of worldwide production for specialty coffees.
Isolation of younger, domestic market segments.
Cultural and Political factors in foreign countries.

Marketing objective and strategy
Now we can identify external and internal factors of the company. Starbucks marketing objectives are being consistent with their business objectives. Significantly their marketing objectives should direct to sale. The marketing objectives should follow SMART objectives.
SMART objectives are:
Specific: organizations objective need to be identify what they want to achieve.
Measurable: organization has to measure whether they are meeting the objectives or losing to do so.
Achievable: objectives should be set, achievable and realistic.
Realistic: The firm is expected to attain the objectives with the resources available.
Timed: A timescale require being place for achieving the objectives.
The 7th of September in 2010, the company has announced that they expand distribution of Starbucks about 13,000 stores are available at more than 55,000 locations around all over the world. Starbucks is increasing its share of the $23 billion international coffee market. (VIA® Ready Brew through international grocery channels in Japan, Canada and the U.K.) Starbucks has stores in forty nine different countries as well as Canada, United Kingdom, Australia, Thailand, and Singapore (Starbucks 2010).
And in the U.K. total 80% coffee are selling every day, the product will be available in 2,300 grocery retailers including Tesco, Sainsbury and Waitrose, raising the total figure of distribution locations to more than 2,900 retail locations.
At present, Starbucks has expended stores in forty nine different countries as well as Canada, United Kingdom, Australia, Thailand, and Singapore (Starbucks 2010).
Starbucks consider which is important to have a good relationship with their customers wherever they are situated. That’s why; the company maintain the high quality products and services. This company would not be as successful as they are now. Because they are being considered without diversity as they pride it. They are identified to be recognising of various groups of people because they convey in notes for new growth prospect. Jim Donald, President and CEO of the Starbucks Corporation states, “When we embrace diversity, we succeed” (www.starbucks.com). Starbucks consider that without change, their company would not have matured into the highly successful global company that it has matured into today.
 

Macro And Micro Environment Analysis Of Ford Motors

Introduction
Ford Motor Company (Ford) is the largest automotive manufacturers in the world, operating in 200 markets across six continents. The brand includes Ford, Lincoln, Mazda, Mercury and Volvo. Ford also sells luxury sport car Aston Martin. The company primarily based in the US and Europe and employs 246,000 people as on Dec 2007. The goal of Ford is to build products that are immensely desirable so that they get profit. They also do this by increasing number of new product from around the world. On 2007 fiscal year, the company recorded $172,455 mill revenue, increase of 7.7% over 2006. But however, the net loss was $2723 mill in 2007, compared to $12,613 mill in 2006, with operating profit of $5631 mill in 2007 as comparison of $8,190 mill in 2006( datamonitor).
Macro and Micro Environment Analysis
Industry Analysis:
Overall the industry is segmented by the type of vehicles; Motorcycles 5.8%, Passengers cars 69.5% and light truck 24.7%. The faces tough competition with Daimler, Chryster AG, Fiat, General Motor, Honda, Nissan, Mitsubishi, Toyota, Suzuki. In which Ford motor company has the market share of 9.4% ( datamonitor, 2009).
The industry fluctuated over 2004-2007 affected by global economic downturn and declined in 2008. However, the performance is predicted to accelerate with compound annual growth rate of 4.4% for 5 yr period of 2008-2013 to a value of $1,831 billion by end of 2013.
Despite US Govt. providing billions of dollars to Ford’s rival GM and Chrysler, Ford is OK with the situation. Despite its loss in 2008 and dwindling cash supply, Ford is widely expressed in media as financially stable  .
PEST Analysis:
Political: The Company has to go with rules and regulations formulated by the government such as CO2 Tailpipe Regulation. Companies get respect from government for powered IWO wheelers. Ford has to go through the European Union vehicle approval.
Economic: Depression hits the Automobile industry. Ford, GM and Chrysler face problem in this situation. Factors such as Central London congestion charge, call to become all gas guzzlers , European union reduced pollution certificate and London low emission zone affect the manufacturing of the Ford cars.
Social: There has been growth in road traffic slowing. Society is concerned with ‘more green cars to be sold’. Road safety for everyone should be considered by Ford.
Technology: New technologies like using bio-fuels and digital radio should be considered. Ford has invested in car safety. Similarly, Ford also invested in CO2 reducing technology.
SWOT Analysis:
The company’s strong brand portfolio gives it a competitive advantage.
Strengths: Ford has a strong brand portfolio and engineering capabilities. Ford has wide network of distributors and dealers and high employee productivity. Ford operates in an industry which has customer who highly value brands who believe strong portfolio of established brand gives competitive advantage which helps in brand equity. This helps in launching new product range and penetrating in new automobile markets.

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Weaknesses: Ford faces continued decline in market share in US from 20.5 % in 2003 to 15.6% in 2007 similarly in UK 19.5% (0.3% down from previous year in 2006). This was due to increased competition, industry moving away from traditionally stronger segment, reduced vehicle sales, daily rental companies, and discontinuation of company’s vehicle lines. Likewise Ford got 3 complaints on leaking fuel or oil ignition. Several product recalls inadequate quality assurance and quality control system and declining operating efficiency and weak returns (datamonitor).
Opportunities: Ford Company has the opportunity to expand in India and China. Company launches new models often now and then according to the choices of customers. They can produce hybrid vehicles. They face increasing demand of dual fuel vehicle.
Threats: The profitability of the business relies on performance of the economy in which the company operates. If EU and US shows economic slowdown continuously the company’s business will face negative impact. Similarly, sluggish light vehicle produced in the developed market also acts as a threat. The company also need to consider EU vehicle regulations.
Porters Five Forces Analysis:
Buyers in the automotive industry are large with significant financial power. Buyer’s power of dealers is affected by brand strength of top market players. An increase in raw materials costs put pressure in both market players and suppliers. Barriers of government regulations high fixed costs exit barrier puts new entrants into difficulties. Competition arises as a result of economic downturn.
Buyer Power: Buyers in this industry have financial strength, if its high, they can make large purchase and put pressure to reduce prices. But Brand strength weakens buyer power. Retailers like distributor have one market player and thus buyer power is reduced. Overall the buyer power is moderate.
Supplier Power: Supplier of raw material, assembled and semi assembled, energy like- steel, aluminium. The power of suppliers is strengthened further by the necessities of the automobile industry requirement of raw materials of high quality. Reliance of supplier is minimized by different companies. The power over all is moderate.
New Entrants: Small firms are unlikely to enter in this industry which needs intellectual property. Entry is further made difficult by getting distribution channels. Similarly, company has to meet government requirements and invest on continuous development. The threat is moderate.
Substitute: Used cars acts as substitutes. However, affordable power diminishes used cars. Awareness of environmental issues and climate change might lead people to walk, cycle and use public transport. The companies are making hybrid( petrol, electric) cars. Overall the threat is weak.
Rivalry: Competition in this industry remains fierce, among the top 4 market players 38% of market value. Toyota, GM , Daimler and Ford. High fixed price exit barriers raw materials costs lead to unpredictable production costs and post pressure on market players. Most company produce diverse range of cars .The rivalry is very strong.
Marketing strategy option for Ford Motors
Social Responsibility and Ethical Marketing Communication:
Ford emphasises on being a good corporate citizen, by focusing on the global community by understanding envirionmental issues and investing on people. Similarly, organise programmes to promote tolerance and equal opportunities and support social and environmental protection programmes.
In 2006, Ford was the first automotive manufacturer to produce dedicated hydrogen fuel V-10 engines. (datamonitor). Ford introduces new vehicles which offer fuel economy and reduced environmental impact. In Britain, from April 2009, the government encourage the manufacturer to produce cleaner cars, and Ford should adopt the policy and motivate customers to opt for least polluting cats  . In short- run, they focus on clean diesel engines, hybrids, flexible fuel vehicle ethanol vehicles and turbo charged direct injection ‘Eco Boast’- Superior performance, which provide 20 % better fuel economy, 15% fewer CO2 emissions.
In the long run Ford has invested in plug in hybrids, fuel cells, hydrogen internal combustion engines, advanced technology. Ford believes that these are right and responsible things which would give customers better goods.
Target Markets and Segmentations:
Ford has broken down its diverse markets into two manageable segments, Financial and Automotive services. Inside these more segments on geographic and organisational structure. Similarly Ford attracts younger demographic.
Automotive: Ford segments its customers based on the car types- passenger cars, trucks, buses and vans, sports vehicles, accessories, after sale parts, maintenance and vehicle repair services. This business division consists of design, development, manufacture, sale and service of trucks, cars and service parts. Hence make small, medium, large and premium ranges.
This segment is further divided into geographically, Ford North America, Ford South America, Ford Europe, Premier Automotive group, ford Asia Pacific and Africa Mazda. Each has their own manufacturing process, like- Ford North America- design, develop, manufacture and service vehicle ad parts. They have servicing as maintenance and light repair, collision, vehicle accessories and service warranty.
Financing Service Segments: These include financing products to and through automotive dealers. Three categories- retail financing, purchase retail instalment sale contracts and retail lease contract from dealers and offering financing to commercial customers. Similarly, they offer loans to dealers to finance the purchase of vehicle inventory.
External marketing communication:
Ford develops advertising, sales promotion, sponsorship and merchandising programs  . Fords advertising policy is do best by building and selling the most innovative cars and trucks  . Ford adopted ‘Bold Moves’ campaign, a form of transparent marketing( via webisodes , the assessment of past and present performances), emotional appeals (interview with employees) and product oriented work with an emphasis on drivers than steel metal.
Ford has done Sync campaigns  which deals with TV and radio commercials, print and online advertisement, a promotional tone and dealership training which targets Black and Hispanic consumers.

Chris Brown appeal young urban consumers.
Give radio commercials
Online sync with chrisbrown.com- launched Nov 12, 2007.
Columbian Rocker Jaunes
Multicultural marketing communications
Emphasis on digital promotion.

Ford adopts mantra of ‘Change or Die’ which has reached the parent company of its largest advertising agencies  . The company hires best talented employees, consultants and contract workers, who are devoted to administrative, media and band experience service. Using ad agencies for delivery would promote the most stunning product. Mark Fields, Ford’s President of America, focus on customers’ needs and brands. Ford spends $757.5 million to advertising in US media on 2005.
Automakers like Ford, GM are the biggest budget cutters in media and advertising. Ford cut their spending on Hispanic media more deeply in fourth quarter which feel 31.2% last year to $46 .7 million, but according to RNS it is still continuing a long tradition as the executive car sponsor for Univision blockbuster’ Sabado Ginate’ show. In April 4, in this show the Host Francisco drive the new 2010 ford Fusion to the studio and hosted Ford Fusion game to give away a new car to a winner in the studio audience  .
In UK, Ford sponsors events like UEFA champions- football tournaments and charities. They sponsor various events and organisations from family fantasy, Disneyland Paris to 60 year old musical and military prowess, the Edinbrugh Tattoo. The sponsorship focus on all the target markets form children to elderly, which shows that company is building image in the community as a form of goodwill for the company itself.
Recently Ford Company launched Ford Focus, the commercial is beautifully made. The Ford Focus Orchestra- in which musicians are shown playing the instrument made from the real car parts. The main aim of this advertisement is to show customers that all the car parts are important and has best quality. The journey made with this car would never make you feel long with the experience of comfort cabin with striking exterior and improved technology.
Primary Survey Analysis:
Customers:
As research done on the customers of Ford Cars, most customers are influenced by friends and family. They are likely to buy cars which are recommended by peers. Thus company can focus on giving best service and product to all target customers and also positive word of mouth communication (message is transmitted from the sender to many receivers, Pickton and Broderik).
Similarly, customers look after the style and comfort of the cars, like size- 4 wheelers, small for single individual. What they look for is the use of cars like vans, trucks and their storage, capacity, fuel, engine, warranty. So, what Ford needs to understand is the needs and wants of the customers.
Likewise, customers are influenced by the advertisement in the cars and magazines. Advertisements which use celebrities are likely to influence more customers. Ford uses cars in James Bond movies, science fiction drama Fringe  . Ford can adopt celebrity endorsement, using celebrity as a spokes person for project (Pickton and Broderick).
Customers are also influenced by the established brand name. They look after the brand loyalty and its strength in the market (Allan K).
Sales person influence the most when customers visit showrooms, the form of direct marketing- persuading and informing customers at the spot. Therefore, Ford can invest in best customer service personnel and give training to employees.
Recommendations
Klara Roberts argues that even though all the promotional activities Ford have done so far, will not help sales grow  . There are more marketing communications mix (internet advertising, direct marketing and e- commerce, sales promotions, sponsorship etc.) to be adopted to communicate directly with target markets (Seminik R. J.).
Managing Corporate Identity: Ford can maintain the image of being dynamic, goal- orientated, attention-getting, active and pioneering .According to the Chris Fill, 2002, Ford has many stakeholders and small corporate gap and hence can adopt incremental process in maintaining this gap. Similarly, Ford should try to be a good corporate citizen, by managing corporate identity among various stakeholders, like- employees, local community and government. All the promotional and marketing activities done by the companies are based on maintaining corporate image.
Push Promotional Strategy: Ford can adopt this strategy, a form of promotional effort by the manufacturer or suppliers to encourage trade channel members to promote and sell their products (Pickton and Broderick). Sales forces, internal part of communication, can be targeted as the main form of push strategy.
Pull Promotional Strategy: Ford can also adopt pull strategy, a form of promotional effort to end customers and consumers to demand more by adding benefits and other activities (Pickton and Broderick). Such as discount promotion- a process of discounting the price for the product so that customers are encouraged to buy however this involves financial aspects (Hans and Duncan) . Similarly, they can improve on their weaknesses to minimize product recall and improve product efficiency which adds benefits.
Relationship Marketing: Ford can put its emphasis on relationship marketing, between various stakeholders. They can focus on delivering more to the target customers by being more specific. As researched on the consumers, they are affected by the positive word of mouth marketing. Ford should focus on customer relationship management (positive communication and long term customer relationship management, Hans and Duncan). Even though they give services like financing, service and maintenance, they can add more features like style and safety.
Brand Strategy: Most customers considers brand before making purchase decision. What Ford can invest in establish long term brand image by using more of communications mix which are explained further. This will help as a source of competitive advantage and create entry barrier. Brand strategy helps in improving the product by introducing innovative technology (Semenik). Similarly, Ford can also look for brand future, by adjusting in future changes in legislation, technology consumer patterns (Pickton and Broderick).
Business 2 Business Marketing: This form of marketing acts as a lead generator, brand awareness and relationship development. If Ford fails to recognize the trade customers, they looses the first line customers. The agencies should change their cultures break down barriers and generate new marketing initiatives and creative ad content.
Promotional Mix/ Intergrating Marketing Communication Mix: Analysing Ford Company, we can see that they have adopted various forms of promotional mix such as advertising, sponsorship. However, they can invest more on these factors and decide on what to adopt ( Kotler and Keller).
Advertising Expenditure: Ford can also expend on intermedia (options for deciding media such as cinema, TV, press & posters, magazines etc). Ford can target TV commercials (Ford Orchestra) as lots of people see TV everyday during free period. Buying a car is high involvement product where more risk is involved in buying decision (Hierarchy of Effects Model). People look for the best advertisement and are influenced by the positive aspects of commercials. Thus Ford could be more focused on creative advertising procedures.
Public Relations: Ford can make an effort in this field by having sound relations with employees during the time of redundancy and closure, which is happening at the current economic downturn. Similarly, Ford can invest in ethical marketing, doing best for the public, like donations, conserving environment. All these helps in dealing with the negative publicity and crisis management and develop to make the corporate image (Pickton and Broderick) and helps brand signatures( Kotler and Keller).
Internet Advertising: In Sept. 2008, Google was criticised for charging companies like Ford, for their share of profit in return of internet advertising  . There are various negative consequences that are faced by company in internet advertising such as fraud and scam. However, Ford can invest in internet advertising through websites which acts as an agent for the car companies.
Personal Selling and Sales Management: As a research done on the customers, they are influenced by the presentation of customer service advisors. Similarly, the role of distributor is very important as they act as the main source to deal with the sales and marketing effort (Pickton and Broderick).
Future Marketing communications: The form of media is always changing. The generation of use of media depends on the innovation and technology ( Broderick and Pickton). Firstly, there was a use of newspapers, then radio, television and internet. Future is based on the electronic marketing, known as ecommerce. Ford needs to go along with the change in media adaptation by the consumer and thus invest in communication via such medium.
 

Macro Environmental Analysis Pestl Of Zimbabwe Finance Essay

The survival rate of small business is quite small, and the proportion of those surviving that go on to success and long term sustainability is even smaller. It would appear that Colins’s (2001) research has much to say about what it takes to build an exceptional company and sustain it over the long term. His view was to try and identify what it was that enabled some companies to be continuously successful through negative and positive external conditions. This research seeks to establish the sustainability and growth strategies of partnerships in legal practice in Zimbabwe with a focus on Mawere and Sibanda Legal Practitioners in Harare. These are classified under small and medium enterprises (SMEs). In view of the survival threatening nature of the operating environment in Zimbabwe, the research seeks to proffer further the valuable insights into the sustainability and growth strategies available for adoption by the legal practitioners for their viability and sustainability in business. It also seeks to establish contributing factors in long term success and growth.

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1.1 Background
Starting up is one thing – actually surviving the changes that accompany rapid growth provides different challenges and can require very different skills. The abbreviation “SME” occurs commonly in the European Union and in international organizations, such as the World Bank, the United Nations, and the World Trade Organisation (WTO). The term “small and medium businesses” or “SMBs” is predominantly used in the United States of Africa (USA). The current WTO definition categorizes companies with fewer than 10 employees as “micro”, those with fewer than 50 employees as “small”, and those with fewer than 250 as “medium”. In the United States, by contrast, the Small Business Administration sets small business criteria based on industry, ownership structure, revenue, and number of employees, and is typically capped at 500. In Zimbabwe SMEs takes a similar structure and are taking a bigger and more significant role although the SME story has not been quite rosy (Relevance??). Law firms fall into this category as well. Although from a government perspective, the recognition of SMEs is considered?? as a dominant part of the economic matrix it is yet to fully happen. Historically, the sector has been referred to by the term “informal sector”, and was represented initially as a department in the President’s Office, prior to being awarded full Ministry status relatively recently. Even after this recognition was awarded, the Ministry’s emphasis has been more on micro-enterprises, with the proper SME sector as defined internationally seeming to fall into no-man’s land.The SMEs are becoming as important as large firms in the creation of gross and net new jobs in the country as a result of the high unemployment levels in the country in the new economic order. As small business entities, they are very flexible and move fast to adapt to any environment. In this study legal practitioners both solo and group or partnerships operating in Harare shall therefore fall under SMEs.
1.1.1 The legal system in Zimbabwe
Zimbabwe employs a dual system of law that is the traditional law and the Roman Dutch Law. The traditional law is mainly applied by the traditional chiefs, who are the custodians of the traditional law. The conventional law is the Roman Dutch Law. However, both laws are accepted and the decision arrived at based on each of these systems is legally binding. Zimbabwe has a relatively vibrant legal sector providing essential services with more than a thousand registered firms. Legal service providers range from individual (sole) practitioners to group practices.
There has been a significant increase in the number of group practices in Zimbabwe since 2004. In previous years, before the economic downturn, which is from around 2000, legal service providers in the private sector enjoyed success in their businesses and sole (solo) practitioners was part of the thriving business approach to this sector. The years to follow saw a drastic downturn of the economy which led to the dramatic crisis experienced from the years 2004 to 2008. This period saw the collapse of virtually most of the businesses as inflation and brain drain, among other issues, raked havoc on the economy. The legal sector was not sparred either although Mawere and Sibanda somehow survived the storm.
In particular some sole practitioners closed their firms and left for greener pastures and the remaining few kept on struggling. The elections held in 2008 brought in a government of national unity in 2009 which ushered a new economic environment. This new dispensation gave rise to a new business environment which brought hope and expectations of economic growth. Although some businesses are on the road to recovery, with some sectors reaching around 50% to 80% capacity utilization, the current economic environment has impacted on the operations of the legal practitioners in Zimbabwe. The Government of National Unity (GNU), ushered in a new dispensation of the multicurrency system. This has given rise to further challenges on the legal practitioners, which include high operational overheads, liquidity crunch, unemployment as well as new practices from newly qualified lawyers who prefer to start their own business as compared to working under others.
1.1.2 Environmental analysis
PESTL, (Political, Economic, Social, Technological, Legal and Environmental factors), is a business measurement tool often used within a strategic analysis Strengths, Weaknesses, Opportunities and Challenges (SWOC) which are used to assess the market for a business or organizational unit strategic plan. The unstable macro-economic fundamentals and adverse socio-political conditions that affected the country since 2004 have not spared the operations of the legal practitioners in Harare. According to Thompson and Strickland (2003), studying and interpreting the impacts of social, political and economic events help in an effort to spot budding trends and conditions that could become driving forces for business. The external environment in which the legal firms are operating in is analyzed below.
POLITICAL – LEGAL FACTORS
GNU gives political comfort as there is relative stability.
Imposition of tariffs.
Weak entry/registration barriers
Uncertainty which comes with violent general elections in Zimbabwe. No one is prepared to invest in this environment.
ECONOMIC FACTORS
Low commodity prices
No long term finances
Less salaries and high unemployment
No meaningful international lines of credit
Liquidity constraints
SOCIAL FACTORS
Deteriorating social structures like education and health
High brain drain
High HIV prevalent rate
TECHNOLOGICAL FACTORS
Good infrastructure
Poor technological development in the industry.
Over reliance on imports
Source;Mintzberg (2007)
Macro-environmental analysis (PESTL) of Zimbabwe
The changes that occur in domestic, regional, international and global business environments are characterized by periods of discontinuous and large scale changes (Nyandoro and Matanhire, 2002). Only by continuous revisiting of processes will organizations be able to keep aligned with their environment and survive. Therefore there is need to continuously scan the environment, as stated by Mullins (1993), “organizations must adapt or die.” PESTL analysis helps companies to come up with new strategies that address current environmental factors. Political, legal, economic, societal, technological and cultural factors were used to scan the macro-environment.
Political/legal environment
Businesses are affected by the political environment in a country because at times they might suffer a loss. Government actions can result to change in the political environment at all levels, from the central government level to the local authority level. Therefore, businesses must be fully prepared for the fallouts in government politics. The apparent divisions in the Zimbabwe’s inclusive government do not auger well for a stable business environment,” according to the recent Kingdom Financial Holdings Limited (2011) report. “Conflicting government policies or stances on policies not only confuse the business community but also stall the current economic recovery process. A good example would be the indigenisation law whose implementation has raised more uncertainty.”
“The uncertainty over the timing of the elections, combined with the mixed policy messages coming from the current inclusive government negates the business environment and is weighing heavily on the country’s ability to attract much-needed foreign investment. The 2011 rankings (World Bank) indicated that the major decline in ranking was on the enforcement of contracts where Zimbabwe slid 29 places to 110.”
There are however factors on how political environment affect a business, either negatively or positively depending on the current situation of a country. Here are the four main factors perceived to affect legal practices in Zimbabwe.
1.1.2.1 Impact in the Country’s Economy
The political environment existing in a country primarily affects the economic environment. As a result, the economic environment also affects the business organization’s performance. In Zimbabwe, a considerable number of differences can be seen in the two main political parties the MDC and Zanu PF and Democratic policies. The two parties have been opposing for years regarding their rules and regulations. This often has implications for government spending and taxes, which may in turn affect the stable economy and business of a country. With higher level of spending in the government body, it may stimulate the economy as well.
1.1.2.2 Change in Government Regulation
Additionally, the change in government regulation is another known factor that affects business. With the constant change in rules and regulations, this can relatively have an effect in all businesses. In Zimbabwe the indigenisation policy that require all foreign firms to hold only 49% control in their companies has had an effect of affecting flow of incomes in businesses.
1.1.2.3 Political Stability
Apart from it, a lack in political stability may in particular affect businesses that operate internationally. In any country, a hostile takeover may overthrow a government that could also affect the business. This can lead to looting and rioting as the businesses in turn will become general disorders of the society. These may all disrupt the operation of a business, such disruption has occurred in Sri Lanka which went through a civil war. In Syria and Egypt, they have been subjected to disturbances as their citizens agitate for their own rights. Law firms thrive in a very stable environment. This kind of disturbances if they occur here, may affect political stability thereby affecting the current business environment as well.
Economic Environment
The Economic outlook.
The uncertainties surrounding the pre-election political and regulatory environment, the associated high risk profile and the concomitant negative investor sentiments has maintained a misty business environment, characterized by the extensive capacity under-utilization. The economic environment is characterized by high interest rate. This has made borrowing in the country very expensive. The country still does not have its own currency since February 2009 when the use of multi-currency was introduced.
The Minister of Finance, in his 2012 Budget presented in November 2011, stated that the prevailing economic environment has kept inflation rate below 5%. However, the market is highly illiquid, with lower levels of disposable income, affecting the purchasing power of clients. The Zimbabwean economy is also characterized by lower levels of investment. For instance, the capacity utilization in the industrial sector is below 60% (STERP, 2009). The banking sector lacks adequate capital to advance to prospective customers and hence it requires well-calculated investments. The tax rate is very high. According to the Zimbabwe Revenue Authority (ZIMRA) the corporate taxation rate is 30% (www.zimra.co.zw, accessed on 09/12/11). This high tax rate discourages potential investors.
Law firms have been greatly affected by the above scenario mainly because of the low disposable incomes of the clients and hence low profitability and growth.
Social Environment
Zimbabwe Statistics (ZIMSTATS) (2010) estimated the unemployment rate is estimated to be 85% in the year 2010-2011. The scourge of HIV/AIDS has not spared the skilled labour. The levels of corruption practices continue to increase having a bearing on the crime rate. The turbulent economic environment resulted in disintegration of families as a result of spouses leaving for greener pastures in the Diaspora. The high corruption and criminal levels in the country has seen an increase in litigation cases handled by law firms in Zimbabwe.
Technological Environment
According to the Minister of Finance, in his 2012 Budget presented in November 2011, Zimbabwe has a better infrastructure compared to other countries in the region besides South Africa. However, the country continues to lag behind technologically. This has caused unsustainable high production costs resulting in loosing cost and quality competitiveness. Law firms are yet to fully embrace and adopt the use of high technology in their operations since most of them are not yet digitalized. Law firms in Zimbabwe are using emails, phones and faxes for communication but have not yet embraced Voice over internet protocol (VOIP) and video conferencing technologies available.
Legal Factors
The major concern about Zimbabwe is the rule of law. Many believe that all institutions including police, army, parastatals and courts have been politicized. Laws continue to be changed more frequently with the most recent one being the Indigenization Act which requires at least 51% local ownership on businesses.The operations of law firms in Zimbabwe are governed and monitored by the Law Society of Zimbabwe.
1.1.3 Mawere and Sibanda Legal Practitioners
Founded in 2001, Mawere and Sibanda Legal Practitioners is a full service law firm whose main thrust is in corporate law, with offices in Harare’s central business district at 10th Floor, Chiyedza House, Corner First Street and Kwame Nkrumah Avenue, Harare. The firm’s areas of business in on international trade, banking, finance and insurance law, commercial and corporate law, administrative and labour law, conveyancing and intellectual property law, civil litigation and alternative dispute resolution.
It appreciates the implications of globalization on its clients and has been positioned as a player by developing close relationships with law firms in various parts of the world in order to provide and coordinate a cost effective legal service across different jurisdictions. The founders of the firm also founded Makuyana legal Practice in Botswana, the beginning of its expansion into the region and the continent. The firm is divided into departments of the various facets of law, which are headed by partners who specialize in those particular areas of law. As a result of the partners’ extensive experience they are usually involved in all departments to ensure the proper and constant supervision of the junior lawyers.
The firm’s Vision
The firm’s overriding vision is embodied in the following commitments;
To understand the clients’ business, commercial and legal needs
To develop long term mutually beneficial relationships with clients and other business associates
Compliance with the highest ethical, moral and professional standards
To keep abreast of technological developments.
To provide an efficient, quality and cost effective legal services to clients.
Mission Statement
The firm’s mission is to provide a high quality, creative, and result – oriented legal team to individuals and businesses, and serve as a primary resource and partner in all aspects of clients’ business growth and development.
The Partners’ Background Skills and Experience
Mr Vulindlela Bongani Sibanda who holds a Masters in International Trade Law from Potchefstroom University in South Africa heads the International Trade, banking, Finance and Insurance department. He studied various aspects of international trade including taxation and many facets of cross-border sales and financial transactions. He has been involved in many areas of commercial law. He is also a registered legal practitioner in Botswana and has also practiced in that country before.
Gloria Mawarire is the Managing Partner. She is also the Partner in charge of the Conveyancing and the Intellectual Property Department. Like her colleagues Gloria holds a Bachelor of laws degree from the University of Zimbabwe and a Masters in Business Administration from the Midlands State University and has been in private practice since 1995. She ran her own practice before joining the firm as a partner in 2006. She specializes in advisory work to corporate firms and individuals as well as developing and implementing strategic plans for the firm. She sits on the boards of several institutions.This e-mail address is being protected from spambots. You need JavaScript enabled to view it
Munyaka Wadaira Makuyana obtained his Bachelor of laws degree from the University of Zimbabwe in 1994. He worked in private practice in Harare for two years before moving to Botswana at the end of 1996. He co-founded the firm in 2001. He also holds a Masters in International Trade Law with special emphasis on Import and Export Law from Potchefstroom University in South Africa. Munyaka is also admitted as a legal practitioner in both Zimbabwe and Botswana. He is presently the Managing Partner of the Botswana office, which is directly linked to the Harare office.
Tatenda Mawere heads the Litigation department and the Foreclosures and Debt Recoveries. He is also extensively involved in Corporate and Banking Law department. Tatenda obtained his Bachelor of Laws degree from the University of Zimbabwe in 1994. He worked for the Ministry of Justice as both an Assistant Magistrate and Public Prosecutor before going into private practice at the end of 1996 and co-founding the firm in 2001. Tatenda is admitted as a legal practitioner in both Zimbabwe and Botswana.
Interestingly the four partners were in the same class at the University of Zimbabwe and their coming together seem to have contributed to the success of the firm as they formed a very formidable team.
1.3.1 SWOT Analysis of Mawere and Sibanda
According to Pearce II and Robinson, Jr (2005), SWOT is an acronym for internal strengths and weaknesses of an organization and environmental opportunities and threats facing an organization. Thompson and Strickland (2003), asserts that SWOT analysis provides a good overview of whether a firm’s business position is fundamentally healthy or unhealthy. Hill and Jones (2004) contend that its central purpose is to identify the strategies that will create an organization-specific business model that will best align, fit or match an organization’s resources and capabilities to the demands of the environment in which it operates.
A SWOT analysis is a powerful diagnostic tool to assess Mawere and Sibanda law firm and its environment. Whereas the firm has little or no influence over the external environment, it has full control of the internal environment; it can change the internal factors in reaction to changes in the external environment (Mawere and Sibanda Strategic Plan Document, 2011-2012).The internal strengths of the firm are the source of its competitive advantage. The intention of the SWOT analysis is to enable Mawere and Sibanda to build on its strengths, minimize its weaknesses, and take advantage of identified opportunities and counter possible threats. The SWOT analysis was carried out in a consultative manner and the results of this environmental scan are summarized below:
Table 1.1: SWOT Analysis
Strengths
Weaknesses
good corporate brand,
loyal clients,
high net worth,
large market share,
good reputation,
wide experience by all our senior lawyers
well trained Professional Assistants
High staff retention
slow growth rate,
slow adaptability to market conditions
poor brand awareness
Opportunities
Threats
growing market share,
unexploited business in the region
changes in the society beneficial to the firm. expansion of business into mining sector,
new investment opportunities that arose as a result of relatively stable environment experienced in the past two years in Zimbabwe.
increase in competition due to the influx of law firms being established on a daily basis.
The current social, political and economic environment pose a threat in that political posturing by politicians bring some level of uncertainty and unpredictability that leads to business stagnation.
Source: Mawere and Sibanda Law firm strategy document 2011-2012
Strengths
The strength of Mawere and Sibanda lies in the good corporate brand locally and regionally. This makes it easy for the firm to attract and retain key customers. Clearly, lawyers have a significant depth of experience in the core product a law firm produces, intellectual legal services and material. With years of experience in most firms, there is no shortage of expertise. And combining older attorneys with new recruits fresh out of law schools with the latest information creates a synergy in finding and using the right information to win cases. This makes it easy for the clients to access services on a wide range of areas from the same law firm. Some of the firm’s strengths are that the firm has a large market share, good reputation, well trained Professional Assistants and high staff retention. This has led to the building of an organizational culture perculiar to the firm where the firm is seen as one big family.
Further, lawyers must deal with people all day long. This develops relationship, and more importantly sales, skills in providing services. Combined with expertise and knowledge, the aggregate produces revenue for the business via clients.
Weaknesses
Pearce II and Robinson Jr. (2000) defined a weakness as a limitation or deficiency in one or more resources or competencies relative to competitors that impedes a firm’s effective performance. Thompson and Strickland (2003) indicated that threats and weaknesses affect the company’s profitability and competitive well-being. As much as lawyers know the law, they frequently have poor business skills until they’ve spent a significant amount of time running a business. Accounting, personnel issues, operational management, facility management and general leadership issues are not taught in law school. Too often lawyers learn these skills the hard way, and an analysis can quickly gauge the business weakness of a firm by evaluating its administrative resources. (Mawere and Sibanda Strategic Plan Document, 2011-2012). These issues among others have affected the competitiveness of Mawere and Sibanda.
Opportunities
An opportunity is a major favorable situation in a firm’s environment (Pearce II and Robinson Jr., 2005). Thompson and Strickland (2005) avers that opportunities shape a company’s strategy. There are a lot of opportunities available to Mawere and Sibanda. Significant advancement in technology has opened up new arenas in property rights, information management and related laws, criminal law, international law and many other areas. These are all legal-prone topics that need guidance and expertise to avoid problems in the future. Law firms can easily make a name for themselves in these areas and use them as business opportunities that can pay long-term dividends with technology clients.
These include customer relationship management; access to capital, broadening the product range and huge and untapped market for legal services. These make the business outlook promising.
Threats/Challenges
Pearce II and Robinson Jr. (2005) stated that, a threat is a major unfavorable situation in a firm’s environment. They went on to say that threats are major impediments to a firm’s desired position. There are a considerable number of potentially devastating threats to Mawere and Sibanda Law firm. The increased competition among competing law firms continues to be the number one threat to the legal business. The field continues to become more and more glutted with new lawyers and ventures trying to make a go in the same crowded territories. As a result, law firms that are innovative and lock a niche on specific areas of law better than others will win out, particularly if they can show a record of winning cases on the given subject matter.
A SWOT analysis should compare expertise availability and case win/loss statistics with affected client/customer populations to gauge how much of a threat competition is to a reviewed law firm. (Mawere and Sibanda Strategic Plan Document, 2011-2012).
Thompson and Strickland (2005) concludes that a good SWOT analysis will however take all of the above elements of a law firm and conclude that a law firm’s greatest asset, it’s lawyers and partners, can also be the firm’s greatest weakness. How these two factors are balanced will dictate whether new market ventures can be taken advantage of, or if bad planning lets competitors take over valuable clients.
1.2 Statement of the problem
Most legal firms in Zimbabwe appear to be performing well. The question now is for how long they are going to sustain their current performance and whether they are going to continue growing. It is against this background that this study is premised to proffer valuable insights on survival and growth strategies for partnerships in the law fraternity in Zimbabwe in a dollarized economy for their survival and growth in business.
1.3 The Main Research Objective
The overall objective of this study is to establish and identify suitable models of the survival strategies for the growth, viability and sustainability of the law firm business practices in Zimbabwe.
1.6The Specific Objectives
The specific objectives of this study are to:
Identify the strategies for growth that are being used by Mawere and Sibanda Legal Practitioners?
Justify how these strategies (if any) can be relevant for the possible growth of Mawere and Sibanda Legal Practitioners?
Establish whether How can these strategies be used to yield expected results in form of Social responsibility, profits and company growth?
Identify the key survival and growth strategies that are appropriate for partnerships in law practice in Zimbabwe.
Establish the challenges faced by partnerships in law practice in their business operations and growth.
Identify the challenges to partnerships in law practice in general.
Assess the extent to which the group practice has been established as an alternative approach to sole practice.
Determine the best sustainable ways in which partnerships in law practice can adopt for business growth.
1.4 The Research Questions
What strategies for growth are used by Mawere and Sibanda Legal Practitioners?
What strategies (if any) are relevant for the possible growth of Mawere and Sibanda Legal Practitioners?
How can these strategies be used to yield expected results in form of Social responsibility, profits and company growth?
Which key survival and growth strategies are appropriate for partnerships in law practice in Zimbabwe?
What are the challenges faced by Mawere and Sibanda as in law practice in Zimbabwe?
What are the challenges to partnerships in law practice in general?
To what extent has the group practice been established in Zimbabwe as an alternative approach to sole practice?
What are the best sustainable ways in which partnerships in law practice can be adopted for business growth?
1.5 Research Proposition
The research proposes that the adoption of partnerships approach in Zimbabwe by law practitioners leads to efficient administration and business expansion opportunities.
1.6 Justification of the Study
The study will provide insight into the advantages and disadvantages in the adoption of either sole practice or group practice as sustainable business approaches. The study will also provide Mawere and Sibanda Legal Practitioners with adequate knowledge on the valuable sustainable and growth strategies that will, enable well informed decision making. The firm will also benefit from the recommendations which are meant to enhance effectiveness, efficiency in the operations of the law firm, through cost reductions, maximization of profits as well as the improvement of management and quality of their products. The provision of new insights and recommendations through this research will also benefit the academic fraternity as well as practitioners in the legal fraternity for the development of a roadmap towards improving business practices within the sector. There has been little or no literature on the area of the merits and demerits of sole and partnerships in law practice in Zimbabwe and thus this study will fill the literature gap. This will also work as resource material for academics, consultants and researchers in strategy formulation and implementation.
1.7 Scope of the Research
The research seeks to investigate the survival strategies for legal practitioners in Zimbabwe in a dollarized economy. The study will cover the period from January 2009 and August 2012. The research shall be carried out in Harare since this is where most of the legal practitioners are located and thus it is easier for the researcher to access the required information. This is also in keeping with the cost and other logistical constraints underpinning the conduct of this study. The respondents of the study shall be staff and management from Mawere and Sibanda Legal Practitioners, selected law firms and representatives from the Law Society of Zimbabwe in Harare.
1.8 Assumptions of the study
The study assumes that:
It will receive maximum cooperation and support from the legal practitioners.
It will be objective in data collection, analysis, presentation and discussion of the study findings.
The respondents will provide accurate information to the best of their knowledge.
1.9 Limitations
There will be limited time since the research is done on a part time basis and preparations will be done after work and during weekends. The researcher will not get ample time off from the employer to have uninterrupted time to concentrate on the research. Accessibility of some of the respondents might also be a challenge in this study since some of them could always be busy and constantly be out of office.
1.10 Dissertation Structure
The following is the outline of the study:
Chapter 1:- This chapter contains the background of the study, background of the Zimbabwean law delivery system, problem statement, research questions, research objectives, research proposition, scope of the research, significance of the researc
 

Using The Macro External Environment Analysis

Macro external environment here includes the factors such as issues related to politics, economical reforms and achievements, social behaviour, technological enhancements and inventions, environmental changes and environmental concerns and legislation and legislative changes. All these factors bear a significant effect on any industry and business. A business has take into consideration all such effects and then formulate its strategies and policies to work along with them and prosper.
PESTEL analysis tool helps in determining the effect of all such factors on an industry and businesses. With the help of PESTEL analysis we will be seeing the affects of such factors on Indian Bakery and Dairy Industry.
“PESTEL analysis is a technique for identifying and listing the political, economic, social, technological, environmental and legal factors in the general environment most relevant to an organisation.” (Boddy, D (2005). Management An Intoduction. 3rd ed. UK: Pearson Education. 88.)
Type of Factors
Effecting Factors
Political
Economical
Social
Technological
Environmental
Legal
Exemption on Customs on Sugar Raw Material Import
Shortage of Milk
Need for Healthy Eating Habits
Cloning of Livestock
Change in the Climatic Conditions
Raising the Norms for the Probiotic Food
VAT on Biscuits
Rise in Sugar Production and Duty Free Sugar Imports
Problems with Cloned Livestock
New Age Packaging
Removal of Import Duty on Dairy Products
Globalization
Incentives to Build Cold Storage Facilities
Requirement for Logistics
Political
Exemption on Customs Duty on Sugar Raw Material Import
Due to the shortage in the production of sugar the deadline for the exemption on customs duty on raw sugar imports has been extended by the government to April 1, 2011 (Dey, A & Jha, Dilip K (2010) Duty-free sugar imports extended till April 2011, Business Standard). Since sugar is a major input in the bakery, the price of sugar highly influences the price of inputs of the bakery industry. Exemption on customs duty will help in purchasing sugar at lower cost, which in turn will control the cost of production.
VAT on Biscuits
The VAT of 12.5% on Biscuits, being the only processed food item to attract such high VAT rates, will affect the pricing of the product (Bhushan, R (2009) Biscuit prices to rise by 10%, The Economic Times). Price of the biscuits might need to be increased due to the high VAT rates which may result in switch of brands due to the highly competitive market.
Removal of Import Duty on Dairy Products
The whole-sale price based inflation indicates that the milk prices have moved up by 14.73% over the last year. Worried about the rising prices government announced the removal of duty on Skimmed Milk Powder (SMP) and other dairy products (Govt removes import duty on dairy products (2010), Business Standard). The imports at cheaper rate would help in reduce the cost factor for dairy products.
Incentives to Build Cold Storage Facilities
Wastage of food items due to lack of cold storage facilities lead to a loss of Rs. 500 billion every year. The government announces schemes and incentives to attract investments in cold storage warehousing (Union Budget 2010: Cold-storage incentives to attract fresh funds (2010), The Economic Times). Increase in the number of cold storage facilities would help in preserving products better and reduce the wastage cost.
Economical
Shortage of Milk
Even though the milk production has risen by 4.6% compound annual average growth rate, it still cannot match up with the increasing demand. The demand for milk has been growing at a faster rate than the growth rate of milk production resulting in the shortage of milk supply (Milk output would stagnate (2010) The Economic Times). India cannot meet its expected demand if the demand and supply rise at the same rate. For the same the reason, the milk prices are on a constant rise. Price of milk increased by 12.6% to 13.6% (Goyal, K (2010) India’s Food-Price Inflation Holds Near 11-Year High- Business Week). This can cause an increase in the input cost for the dairy products and which in turn can lead to hike in price or lower profit margins. If the company increases the price of its products, it may affect the sales as it might lose on consumers.
Rise in Sugar Production and Duty Free Sugar Imports
The total sugar production in the first six months ending September 2010 is expected to be 22% more than the output in the unchanged phase last season, the total production expected is at 16.7 million (Press Trust India (PTI) (2010) Sugar output rises 22% in first half of 2009-10, Business Standard). Due to the shortage in the production of sugar the deadline for the exemption on customs duty on raw sugar imports has been extended by the government to April 1, 2011 (Dey, A & Jha, Dilip K (2010) Duty-free sugar imports extended till April 2011, Business Standard). The increase in sugar production and the duty exemption on raw sugar can help in purchasing sugar at lower prices and this in turn can help in producing goods at lower prices.
Globalization
Globalization a universal phenomenon is affecting each and every industry. The world is coming closer, the communication gap is closing and the businesses are going global. This can serve as an opportunity to expand the business to a global level but on the other hand there is a threat of new entrants from international market.
Requirements for Logistics
Logistics in India suffer due to the poor infrastructure and other limitations. There is a high demand for sophisticated third party logistics so the domestic logistics service providers are trying to improve their service. International participation is also expected in the logistics industry (Pandey, S & Basu, A (2010) Logistics cos ramp up supply chain to meet rising demand, The Economic Times). Sophiscticated logistics system will help in proper supply chain management and on time delivery of goods, which help in maintaining the shelf life of goods on meeting the demand on time.
Social
Need for Healthy Eating Habits
Studies say that Indians are more prone to Coronary Artery Disease (CAD), which is the major independent risk factor causing Cardiovascular diseases, due to the smaller calibred arteries found in Indians (Isalkar, U (2009) Indians more prone to heart disease, The Times of India). This suggests that Indians should move towards more healthy food and diet. This could be a new area to explore for Britannia with its new health associated products like Nuti-Choice biscuits and Actimind flavoured milk.
Problems with Cloned Livestock
Cloned animals are supposed to be suffering from large-offspring syndrome. The mother cows face a problem in giving birth to the cloned animals as they are larger than normal. Also these cloned animals suffer from health issues (Gogoi, P (2007) The case against cloning, BusinessWeek). It is morally wrong to clone animals as they cause problems to the mother during the birth and moreover the cloned livestock suffer from health issues which might make unsafe to consume the produce from them.
Technological
Cloning of Livestock
India, a late entrant in cloning research, is now moving with a great pace in cloning technology. ‘Hand guided cloning technique’, a technique very different from the conservative cloning practice has been a successful venture (Mahalakshmi, BV & Chowdhary, S (2009) Cloning Glory, The Financial Express).
New Age Packaging
The new packaging systems help in protecting food from micro-organisms by creating shelter layer. It uses new technologies like oxygen scavenging function, atmosphere control, biodegrability etc. and is low cost (Han, J Packaging Innovations, Bakers Journal). The packaging technology helps in preserving food for longer by protecting them from micro-organisms with the help of new technologies, thus resulting in longer shelf life of the food. The advantage of low cost packing and longer shelf life could be very beneficial for the company in increasing its profit margin.
Environmental
Change in the Climatic Conditions
Climate plays an important role in the agriculture process. The change in the rainfall pattern has been a matter of concern now in India. The agriculture sector in areas which are monsoon dependent suffered badly due to the change in the rainfall pattern. The sector suffered a huge loss in terms of total output (Bhosale, J (2009) Farmers worried over climate disturbances, The Economic Times). The loss in crop will affect the input supply and this might delay or cause problems in the production. So the industry might not be able to meet the demands resulting in the loss of customers.
Legal
Raising the Norms for the Probiotic Food
There is a need for setting the standards for probiotic food. Clinical tests should be conducted on the probiotic foods before they could reach the market for sale. The Indian Council of Medical and Research has submitted the proposal for the same to the government (Das, S (2009) Probiotic food likely to come under clinical trial ambit, The Financial Express). Strict norms will help in raising the quality standards but on the other hand the cost and time of production might subsequently increase.
Micro External Environment Analysis
Factors that influence the micro external environment are Competitor Rivalry, Threat of New Entrants, Threat of Substitutes, Buyer’s Power and Supplier’s Power. These factors play a vital role in determining the current situation of the business and to plan strategies accordingly.
With the help Porter’s Five Forces we will be analysing these factors and their immediate effect on the company.
“Five forces analysis is a technique for identifying and listing those aspects of the five forces most relevant to the profitability of an organisation at that time.” (Boddy, D (2005). Management An Intoduction. 3rd ed. UK: Pearson Education. 83.)
Competitor Rivalry:
BIL has a market share of 38% and has been growing at 27%, compared to the industry growth rate of 20% (Saxena, R (2007) Battle-scarred Britannia on expansion spree, Business Standard) and has many competitors based on the nature of product.
Parle and ITC (Sunfeast) pose a great competition to BIL (Biscuit Industry: India (2010), Market Research India). BIL earning major of its income from the biscuits (Britannia Annual Report 2007-08 (2008)), and Parle and ITC are the other major players in biscuit market.
BIL is also into the production of dairy products, where the two major players in market are Amul and Nestle. Amul is the leader in the dairy industry.
There is also a high level of competition from the unorganised baking sector.
Overall rivalry is high.
Threat of New Entrants:
The entry on a small scale dairy industry and in the unorganised baking sector is easy.
But on the other hand to enter the large scale dairy industry and organised baking sector a huge amount of investment is required in terms acquiring assets and to establish supply and distribution chains.
Government regulations pertaining to food norms and others may also seem to be unattractive.
Looking at the latest trends, the bakery industry is expected to earn huge revenues which might attract new entrants (Vijay, N (2008) Indian Bakery sector foresees high growth and increasing interest in product offering, FnBNews.com).
So the threat of new entrants is moderate.
Threat of Substitutes:
Savoury snacks, crisps, cereals, fruits and other fast food can be substituted for biscuits.
Dairy products are dubious to be replacing with other products as they key ingredients of majority of people’s diet.
So the threat is a very moderate threat of substitutes.
Buyer’s Power:
The buyer’s of these products could be a retailer or the consumer.
Both the dairy and bakery industry are price sensitive, so a little increase in price might lead the consumer to shift other brand or product.
So the buyer’s power is calculated to be very strong.
Supplier’s Power:
The major supplies for a bakery industry include wheat, sugar and other agriculture products. And the major supplies for dairy product is milk.
It’s difficult to bargain with the suppliers of the above mentioned inputs as the price of these inputs is majorly influenced by the production of these inputs. The prices tend to be high as the demand for these products is rising at much faster rate than supply.
The secondary supplies include the packaging material.
The secondary supplies can be easily substituted with the low-cost ones to save on cost.
Overall the supplier’s power is assessed to be moderate.
Conclusion of Five Forces Analysis:
There is an existence of major players in the market with a moderate level of threat of new entrants and substitutes.
The supplier’s power is moderate but the buyer’s power is measured to be strong.
So the rivalry is suggested to be high.
Stakeholders and Corporate Social Responsibilities (CSR)
“Freedman (1984) defines a stakeholder as any individual or group who can affect, or is affected by, the achievement of the organisation’s objectives.” Further in addition to that, Clarkson (1995), stated that the government and the other communities that effect the working of the business and the market also form as a part of stakeholders. Stakeholders, except the employees, have a high power over the strategic change ideas (Hayes, J (2007). The Theory and Practice of Change Management. 2nd ed. UK: Palgrave Macmillan. 153).
Internal Stakeholders
The internal stakeholders are the ones associated with the company internally. For BIL its internal stakeholders would be:
The Shareholders
The Board of Directors, and
The Employees
Currently, nearly 51% of shares are held by Corporate Bodies and the rest 49% is held by the public (Statement showing shareholding pattern (2009), Britannia Industries Limited). The board consists of 11 members (Company Overview, Britannia Industries Limited) and employees nearly 2000 people (Britannia Industries Ltd. Overview, MarketLine).
External Stakeholders
The external stakeholders are the ones who are not immediately associated with company but influence the decision making of the company. To BIL the external stakeholders are as follows:
Customers
Suppliers
Contractors
Government
Regulatory Agenices (like Food Safety and Standards Authority of India, etc.), and
Society
Britannia being the leader in the baker industry of India has a huge amount of customers to cater. Britannia has to keep up the tastes and quality preferences of its customers. The government plays an important in influencing the market by creating and changing the policies. BIL has to adhere to the rules and regulations formulated by the regulatory agencies. The suppliers and contractors form an important part of a business. Britannia completely relies on its suppliers and contractors for its raw materials.
Corporate Social Responsibility (CSR)
For years corporate entities followed the practice of providing goods and services and maximizing wealth. But the trends have changed over the period of years. The companies are now expected to be more socially responsible. The company now has to be responsible to the stakeholders, society and environment. They are expected to pay back to the environment and society for all the affects that are caused due to its operations (Idowu, S & Filho, W (2009) Global Practices of Corporate Social Responsibility. Berlin: Springer. 1-2).

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BIL believes in working with the society and the culture. It gives a premier importance to the nation and its policies. It believes in being a good corporate citizen by not just adhering to the rules and regulations but also by helping the community to improve the quality of life. BIL involves itself in initiating and providing support to community health and family welfare, water management, vocational training, educating people and encouraging the application of modern techniques and technologies. BIL believes in ethical behaviour.
 

Macro and Micro Environment Trends in the Gaming Industry

Sony, a highly-technologically driven multinational Japanese corporation, is amongst the leading companies in producing and selling electronics worldwide. Its quality electronic products associated with laptops, mobiles, cameras, video game consoles have enabled them to achieve a significant advantage over its competitors in the aggressively ever-changing technological market. Play Station, Sony’s best invention, is one of its prominent electronic devices which have taken Sony to new heights due to its mass consumption and fierce consumer loyalty. As a result, the success of the new Sony Play Station 3 prompted us to focus on how it tends to survive in the market over the next few years. (2011-2013). The current and future environmental scan of Sony Play Station 3 will help us identify several upcoming challenges the cooperation must address in order to maintain their success. Lastly, the geographic area we are focusing on is the impact of Play Station 3 in UAE and how the market for gamers in the Middle East continues to grow.

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The structure of this report will begin with the designing of the product market structure along with the relevant market where Sony Play Station 3 and its competitors are serving its customers. In addition, we will analyze the external and internal environmental trends that can affect the continuity of the brand. Also, we will focus on other important issues which are likely to arise in the future and shift the focus of segmentation, primary and selective demand, SWOT and competitive analysis.
 
Unquestionably, the 7th generation video game consoles like Play station 3 with a cult following has not only provided Sony with tremendous economic benefits but also an image of being a company that continuous to utilize the improving technology and create such astonishing machines which are being used worldwide. The non-portable and the portable gaming industry are dominated by fierce competitors who adapt successful marketing strategies to divert focus of potential customers from one boundary to another. The relevant market, for non-portable game consoles, in which Sony Play station 3 strives to operate with continuous success along with other recognizable brands offer game console devices with similar features and experiences. We tend to focus on the impact of Sony Play station 3 in the present and the future non-portable gaming console relevant market of United Arab Emirates, next three years (2011-2013), and what strategies it will have to undertake in order to achieve sustainability and ensure long-term survival. Baldwin (2010) reports, “Tim Stokes, Sales and Marketing Director for PlayStation Division, estimated that gaming in the Middle East is worth up to $1 billion or “two per cent of the global market” of $45 billion in total international sales”. Therefore, it is interesting to see know the Middle East market’s contribution to the success of gaming devices and it prompted us to focus on this underrated UAE market that continuous to be a hot prospect in this gaming field. Furthermore, identifying the relevant market for Sony Play Station 3 considers two important factors which are “degree of substitutability” and “managerial perspective” will be applied to understand the product market structure.
As showcased earlier, our product market structure simplifies the understanding of which product category Play Station 3 and its competitors fall. Even though this market has many other competitors; however, it is being dominated by few due to their fierce mass loyalty. In other words, non-portable game console is a consolidated industry with few dominant market leaders with large market shares and worldwide presence. The first layer which deals with the customer needs mainly is the machines that can support video games. These machines, which are video game supporting devices, are applicable for all types of video games ranging from Arcade to family oriented games.
It is then broken down into the second important layer, product class, which is the video gaming console and the personal computer devices where we experience the interactive games. The impact of the improving technology in both personal computers and video game console devices has highly increased the degree of substitutability between the two. This degree of substitutability between PC’s and portable/non-portable game consoles in the UAE market is currently very high as both devices are being upgraded to provide similar graphical experiences. In short, the PC’s are also doing a very successful job in competing with the 7th generation video game consoles and in taking some of the customer’s who enjoy playing games suitable with a keyboard and more importantly the mouse. Understanding the degree of substitutability between the game consoles and PC devices is present due to several factors. These factors can range from the perceived benefits, in terms of convenience and price, to the features the superior device has to offer that is compatible with the both games and customer’s requirements.
Moreover, in the third layer, product form, the video game consoles are then separated on the basis of being portable (handheld) and non-portable devices. The degree of substitutability is not likely to be present between the two at current stage in UAE since handheld devices to not provide the same thrilling experience as compared to a game being played on a bigger screen. Also, the portable game console devices with two main devices, PSP and Nintendo 3DS, tend to target a different type of target market which are mainly children. For a hardcore gamer, a big screen experience and competing via social networking is an essential tool which can only be excitingly through the non-portable gaming consoles. However, in the later stage of the report, we will emphasize on the importance of size being now considered as a huge factor in the decision making process and how the movement towards portable video game console devices is on an incline. In short, we will emphasize more on the switching between the boundaries of the relevant market in the implications phase to justify the reasoning of the increased degree of substitutability between the non-portable and portable devices in the coming years.
Lastly, Sony Play Station 3 along with its current competitors comes in the last layer, brand specification, under the Sony category that dominates the non-portable game consoles in the relevant market. As mentioned earlier, our report is limited down to the dominance of non-portable gaming devices, and the focus being PS3, and their implications in the coming years. This report will give a detailed analysis of how Sony PS3 can be chosen based on various rational and emotional aspects. Determining the degree of substitutability between the 7th generation gaming consoles that are Sony Play station 3 and X-box 360 is very challenging due to the amazing features they both offer and hence making it difficult for buyers to recognize which one is better. Moreover, this degree of substitutability is supported with the concepts of Primary and more importantly Secondary Demand that aids in the decision making of current and future customers in which console to choose. In addition, the micro and macro environmental trends were carefully taken into account to ensure what steps has already been taken to establish a competitive advantage; moreover, the steps Sony Play station 3 will have to consider over the next years in order to stay competitive in its relevant market.
In short, our managerial focus is analyzing the successful non-portable devices which belong to these cult brands that are Sony Play Station, Microsoft X-Box and Nintendo. In addition, the managerial focus is highly dependent on the future market of UAE and how Sony Play Station 3 should utilize this market to its maximum potential and understand its current and potential competitor’s position in the coming years. Furthermore, the relevant market with respect to the non-portable game console devices in which Play Station 3, X-box 360 and Nintendo Wii compete may be saturated with these prominent leaders; however, our research primarily focuses on Play Station 3 and we will try to place its position in the relevant market in the current and next two years.
Macro environment
Political legal
Copyright laws
Counterfeit or copied video games and software are prohibited in several countries including the UAE. Different authorities in the UAE are collaborating with one another, foreign governments and with organizations such as Microsoft to capture counterfeit goods of different kinds including video games and software (Oct 19, 2010, Dubai Customs foils…). The customs inspectors take specialized courses in combating commercial fraud which enables them to uncover any attempts to threaten the national security of the UAE (Oct 19, 2010, Dubai Customs foils…). According to the IPR -Intellectual Property Rights- department at Dubai customs there were three seizures of counterfeited CDs in 2010 compared to five seizures in 2009 (Oct 19, 2010, Dubai Customs foils…). In the years to come these laws are going to be more effective due to advances in technologies and the more experienced customs staff and inspectors.
Economical
The GDP growth in 2009 was – 2.7% compared to 2.6 % in 2010 (Central Intelligence Agency, (2011)). The economy is expected to rebound slowly and the challenges faced include dependence on oil, expatriates and greater inflation, the inflation rate in 2010 was 2.2% (Central Intelligence Agency, (2011)). In the next few years the UAE is planning to increase diversification and improve education and private sector employment for the UAE nationals (Central Intelligence Agency, (2011)). The economic crisis had a negative effect on income which is considered to be a main determinant when buying a game console since the price of the consoles can be high. The economic crisis is expected to be reduced in the next few years, the GDP increased from 2009 to 2010, and following that income may rise and more customers become able to purchase game consoles.
Sociocultural
Statistics from the ESA -Entertainment Software Association- show that in the United States 25% of game players are less than 18 years old, 49% in the age group 18 – 49 and 26% 50 and older ((2010). Essential Facts about…). Also, 64% of the gamers play video games with other persons which is a higher number than in 2008 and 2009 ((2010). Essential Facts about…). Parents participate with their children in playing video games as 48% play video games with their children ((2010). Essential Facts about…). The reason for this participation includes fun for the whole family and socializing with the children ((2010). Essential Facts about…). We can relate these statistics to the demographics in the UAE as 78.7% of the population is in the age group 15 – 64. The percentage of video gamers differs of course but in the UAE most of the gamers will probably fall in the age group 15 – 30.Video games and video game consoles in particular are becoming more users friendly and as in the Nintendo Wii there are games that target the whole family and children. In the future more video games and technologies like the ones that exist in the Nintendo Wii are going to be introduced. These video games will appeal to a wide range of demographics of both genders.
Technological
Augmented reality
Augmented reality is a new technology that is very popular today and a technology that is still being developed (Wen, H., Jan 26, 2010). In video game consoles augmented reality can be seen in the play station eye toy where images from the real world such as the user and display it on a computer screen (Wen, H., Jan 26, 2010). Then the user is able to interact with virtual objects on the screen through software (Wen, H., Jan 26, 2010). The annual sales of augmented reality are expected to rise from approximately 1 million in 2209 to 732 million in 2014 (Wen, H., Jan 26, 2010). The technology still faces several limitations but developers and researchers are improving and developing the technology (Wen, H., Jan 26, 2010). The researchers are trying to integrate real world images with graphics instead of just displaying them on a computer screen ((n.d.), How Augmented Reality Will Work). This technology will create a feeling of the five senses and separate the users from computer generated graphics ((n.d.), How Augmented Reality Will Work).
Motion sensing game controllers
The Nintendo Wii was introduced with a motion sensor called the Wiimote which can track movement and positions (Sung, K., Feb 2011). The technology was simple and proved that well engineered technologies with appealing games can be very profitable (Sung, K., Feb 2011). The Nintendo Wii was cheaper than Xbox and PS3 and it was considered a success (Sung, K., Feb 2011). Following this success Nintendo introduced the Wii Motion Plus which is an attachment to the Wiimote that improves accuracy and response time (Sung, K., Feb 2011). Sony reacted to this success by releasing the Playstation Move which is a motion controller for the PS3. Sony’s motion controller was more accurate than Nintendo’s controller and acquired reputation quickly (Sung, K., Feb 2011). After that the Xbox released its Xbox Kinect system in 2010 which contains state of the art technologies (Sung, K., Feb 2011). The system is a USB accessory for the existing Xbox 360 instead of being a whole new game console (Sung, K., Feb 2011). This shows that video game consoles manufacturers are moving towards technologies and devices based on human computer interface (Sung, K., Feb 2011).
The next generation of video game consoles
Video game consoles can be categorized in seven generations depending on the technologies introduced with each console. PS3, Xbox 360 and Nintedo Wii are considered to be in the seventh generation (Miller, M., Apr 1, 2005). The next generation is predicted to be more powerful with increased graphical power which will increase the costs of making games for the consoles (Morris, C., 12 Jun 2009). The costs are expected to rise from 20 – 30 million to 60 million per game (Morris, C., 12 Jun 2009). The higher development costs of video games raise the cost of video game consoles manufacturing (Morris, C., 12 Jun 2009). Onlive is a company that is attempting to stream video games directly to the computer or TV through the users internet connection at home (Morris, C., 12 Jun 2009). The technology is early but promising and can increase the life cycle of the current game consoles (Morris, C., 12 Jun 2009). However, this technology can be present in the next generation consoles. The next generation is expected to arrive in 2011 or 2012 as mentioned by Yves Guillemont the CEO of Ubisoft -video game developer- (Yam , M., January 23, 2009).
Micro environment
Consumer Behavior
As mentioned earlier, Sony’s target market segment, of the Play Station 3, is gamers, particularly teens or adolescents; Teens and young adults are the main contributors to the high sales revenue being generated by the Sony Corporation through the gaming console.
A common purchasing ideology in the UAE, shared by most of its citizens, is having or owning the latest technology or releases of electronic equipment; this might have been an influencing factor in Sony’s decision of having “”significant stock inventory” be made available to local retailers, safeguarding against shortages that have frustrated retailers based in launch markets such as Japan and the United States” (Nov. 30, 2010, GITEX Showcases Convergence). Such preparations, although in 2006, suggest that the corporation viewed the UAE as a demanding market. Four years following the release of the PS3, sales of the console or its updates continues, with stock being replenished in major stores such as Carrefour and electronics stores such as Jacky’s. In 2008, it has been reported that “the UAE gaming console market has achieved Dhs17.78m sales from January to May…with 4.448 million units sold” and the PS3 dominating the UAE console market with 59% (Aug. 16, 2008, UAE Gaming Console Sales…).
Having achieved such a success back in 2008, and without the existence of present statistics on its current sales rate, it is safe to assume that the UAE consumer market continues to grow in favor of the PS3 and by 2012 the UAE consumer market will still be into buying the PS3.
By 2013, though, with the forecasted advent of Sony’s new console, the PS4, there might be a decrease in the sales of the PS3. Yet, the release of the new console might not affect the sales in an entirely negative manner; with the introduction of the PS4 to the market, the price of a PS3 would decrease making it more affordable for consumers who were not able to purchase it when sales were at its peak. Also, the introduction of a new console into the market, according to Summers, “the previous system still has a lot of value because the new one is still going to be able to play your old games, and because the old one is still going to have new games released for it” (Summers, n.d.). Hence, this ensures that UAE sales of the PS3 are to continue, with a little depreciation, despite the introduction of the PS4.
However, the UAE consumer market may exhibit a low demand to no demand for the PS3 by 2014, depending on the release of the PS4. If released in late 2012/ early 2013, the new console would have a year to achieve its success and take control of the gaming console market, due to the promised advanced technology it is to offer and the improvement of the real life gaming experience that is being offered by the PS3. Hence, 2014 may be the year where the PS3 takes the bench in the UAE market.
Nature of Buying Decision
The PS3 targets hardcore gamers, who would want to feel as though they are part of the game. Hence, the specifications offered with the console, such as Hi-Definition gaming graphics which makes the games as realistic as possible, and so on. However, the PS3 does come with a hefty price tag, making it a hard choice for those who would want to purchase it since similar specifications can be found on other consoles that are much cheaper. This is the point of buyer motivation.
The PS3, most of the time, releases games that are considered to be exclusive to the consoles, hence maintaining the consoles uniqueness. Furthermore, other incentives are offered with the console, such as a Blu-Ray player, allowing the user to watch movies of outstanding graphical quality and clarity without having to purchase a separate player to indulge themselves in such an experience. Hence, Sony provides its gamers and consumers with a complete package with the PS3.
The United Arab Emirates houses some of the most hardcore gamers and currently marked itself as a major gaming market. Hence, since the console offers so much potential along with extras, such as those mentioned above, easily capture a purchaser’s attention in this country. Also, gamers in this country like to look for the unique gaming experience, and this is exactly what the PS3 offers. Moreover, elsewhere, the hefty price tag would have been a factor influencing the choice. Yet, the UAE’s rebound from the recession, along with the technology owning competitive nature of its citizens, helps maintain the current growth in sales of the PS3 as well as the sales for the next two years.
Loyalty Segments
Having previously released two consoles, the PS1 and PS2, which satisfied their consumers and entertained them beyond measure, Sony is able to secure their loyal ‘fans’. The PS3’s release into the market was already a guaranteed success due to the reputation earned by its predecessors in the gaming world. All that was needed to attract the attention of the consumers was a change in the console design, making it sleeker and easier on the eyes, and a slight change in the gaming experience previously offered, such as smoother interface, introduction of a complete operating system housing all the consumer needs, and better graphic drivers to make the games resemble reality.
Many of the people who purchased a PS3 in the UAE have previously owned, at least, the PS2. Moreover, since the PS2 has been a success in the UAE as well as the region, according to Yasuhide Yokota (Computer Gaming Major Sony…), the country has a large and loyal fan base, in turn assuring the PS3’s growth in sales within the next two years.
Competition
The PS3’s current market rivals, in the UAE, are Microsoft’s Xbox 360 and the Nintendo’s Wii, even though the latter does not pose as an obstacle since it does not come with half of what the PS3 has to offer to the UAE gamers. Gamers in the UAE seem to have two main interests when it comes to console gaming: Football/ Soccer and racing games. Hence, it is the Xbox 360 that is considered to be a threat to the PS3 since it offers almost all the unique gaming experience specifications, such as high resolution graphics and smooth real life play, as well as the most demanded games, for a cheaper price.
In addition, having mentioned the UAE’s consumer market’s tendency to constantly purchase newer technology and devices, another one of PS3’s competitors, although a product of the corporation, is to be the PS4, which is forecasted to be released on “Q4 of 2012 or Q1 of 2013” (Naik, 2011) as per the release timeline of the PS3 and its predecessors, even though no official release dates have been mentioned by Sony. Since the PS4 is to be an 8th generation console, it is going to offer advanced technology and better gaming experiences than the PS3 making it a target product for the country’s consumers.
Moreover, games are a major influence in the choice of consoles for the consumers in the UAE. Game manufacturers offer their services to all the consoles mentioned above, but these games could differ slightly, as with the case of the PS3 and the Xbox. Since the PS3 and Xbox fight over control, in the graphical aspects, such as real-life gaming experiences, the enabling of high definition game-play and use of surround sound, and other such characteristics that complete the advertised and highly anticipated gaming experience, Sony keeps their consumers through the introduction of exclusive gaming experiences such as the introduction of games that cannot be played other than on the PS3 and such, as well as creating games with titles in Arabic to accommodate and further satisfy the UAE’s market.
Porters’ 5 forces
Having laid out Porter’s strategy, in general, for the PS3, relating it to the console and the market of the UAE over a time frame of the next three years is as follows:
Threat of Substitutes: As mentioned above, computer games/ PC games pose as substitute to console gaming in general, and it is gaining popularity within the UAE. However, computer games do not offer the same gaming experience that the PS3 has to offer, and are only interesting when played online. This gives the PS3, as well as its console competitors, an advantage; interactive online and offline gaming experiences. Moving on towards the console competitors, the PS3 has been able to establish its place in the market due to offering more as a package, than the Xbox 360 and the Wii, for a price that is within the range of the other consoles, and shares the same life-span, which is an estimate of 10 years. Moreover, with the release of the Wii 2 (2012-2013) which is to have Hi-Def graphics, the price for that console will be higher than the PS3, in turn allowing future consumers and current ones to purchase or remain with the PS3 which offers the same, if not more, level of graphics.
Threat of New Entrants: Until the 3rd quarter of 2012, the competition for the PS3 remains the same: Microsoft’s Xbox 360 and Nintendo’s Wii. Furthermore, since Microsoft has released that the corporation has no intention of releasing a new console (Dumitrescu, 2009), the PS3 will maintain its current position in the UAE market. By the 4th quarter of 2012 or the 1st quarter of 2013, however, Sony is expected to release the PS4 (n.d., PS4 Release Date…), following the trend set by their previous console releases, which would pose as the PS3’s newest competitor, and by the end of 2013 it might relieve the PS3 of its domination of the UAE market.
The Intensity of Competitive Rivalry: Within a year (by 2012), the PS3 and the Xbox will definitely have games that exploit their graphical abilities to a great extent. However, since the PS3’s entire potential has not been wielded yet (n.d., PS4 Release Date…), the chances are that the UAE market is going to stay with the PS3 since the games released then will/ might require specifications more than what the Xbox 360 has to offer, specifications-wise. In addition, further development of the Playstation Eye will take place, maybe perfecting the flaws of interactive-reality gaming, which takes the Wii out of the equation. Despite the release of the PS4 by the end of 2012 and the beginning of 2013 though, the PS3 will remain to have a stronghold of the market, for then the price of the PS3 is going to decrease and the games offered by PS4 are going to be similar to those available for the PS3, allowing consumers to enjoy the same degree of gaming quality that the PS4 has to offer. However, through the course of the year, after the PS4 might have had its time to position it-self in the market, newer games, that might exceed the potentials offered by the PS3, will attract the consumers.
Bargaining Power of Buyers: This will remain the same over the next three years, for the market is controlled by the three console manufacturers. Until the release of the PS4 and Wii 2, the UAE market is to be the same as it is now. By 2013, when the new consoles are released onto the market, the prices of the PS3 and the Wii will depreciate, in turn forcing the Xbox 360’s prices to decrease as well. However, since Nintendo’s history shows that the introduction of new consoles is synonymous with the halting of production – games and gadgets – for previous ones, and Sony has done otherwise with the PS3’s predecessors (Summers, n.d.), then consumers will consider the PS3 as a safer investment.
Bargaining Power of Suppliers: Since the competition is set, and the games sold are similar if not the same for each of the consoles, then the UAE market would remain the same for the next three years, even with the release of new consoles.
Stakeholder’s analysis
PS3 Customer Implications
PlayStation 4 is expected to have great demand if prices are reasonably high compared to the price of ps3 in an effort to provide as many customers as possible with the opportunity to purchase PlayStation 4. By launching play station 4, consumers will by buying more PS4s than Xbox 360s and Wiis as a result Sony will lead the market for coming years.
PS3 Environment Implications
These are the plans for the next 3 years regarding the Environment in UAE.
Sony’s Environmental Plan “Road to Zero”
Green Management 2013
Green Management 2013
Environmental Management Structure
Campaigns and advertisements boosting these plans and events will enhance Sony’s image in UAE as the brand appears as an environmentally friendly product as a result as the demand for the brand increases demand for ps3 will also rise.
These CSR and environment protection activities are costly and will put on a rise to the price of Sony products and therefore the increase in cost will be pushed to the price of ps4 when launched.
PS3 Community Implications:
Sony is expecting to have a positive impact in the coming 3 years through CSR activities by powering its products and business activities globally. PS3’s indulgence in CSR activates is likely to enhance its image in the long run as it will be perceived as a device which not only is entertaining but also environmental friendly.
PS3 Distribution Channel Implications
Distribution cost will fall in the coming years, consumers will have more pleasant shopping experience more specialized stores and sales people who know exactly what the customers are looking for. Consumers will also start seeing Sony Retailer Network logo in Ads and POS displays. The more enhanced shopping experience will also increase the demand for Sony and therefore result in higher prices in the coming years.
Implications over the next three Years
 
Unfortunately, the boundaries of the Product market structure have already been broken due to several technological and socio-cultural factors. The increased substitutability is happening because of the demographics in UAE have evolved and are always looking for the devices that can offer the best gaming experience.
The first implication which is likely to increase over the next years is the emphasis on improving gaming portable devices such as Nintendo 3DS which was introduced in UAE in the first quarter of 2011. The owners of Nintendo 3DS understood the new socio-cultural trends ,which is currently enjoying the 3d technology, and created this device for users who want the 3d experience in a smaller screen without the usage of any glasses. Nintendo 3DS being the first ones to provide the gaming experience in 3d had created an enormous amount of buzz in the market; hence, the same idea is now being applied by other companies. Sony Play station 3 owners are yet to utilize this 3d technology; however, in order to compete in this portable gaming industry, Sony will introduce Sony NGP (PSP 2) in early 2012 that will provide an unbelievable gaming experience in small screens. “UAE Distributers will vigorously promote NGP towards the launch as the next generation portable entertainment platform and deploy various measures to further expand the portable gaming market”. (Stuart, 2011). Sony’s strategy of introducing NGP can provide them with a competitive edge in the portable gaming market; however, only time will tell if they had succeeded.
Secondly, the surprising success of portable PC devices like iPad and iPad 2 in the UAE market have created a very unique set of games with a large fan following. The games in the iPad are relatively easier to play and can be very addictive. Moreover, Blackberry that has been a global phenomenon with mass consumption in the Middle East market are introducing its own graphic tablet, with its own official set of games, by the name of “Blackberry playbook in the end of 2011” and hence making the portable gaming devices industry more demanding and competitive. (Shuey, 2010). In short, the games in these graphic tablets like iPad and Blackberry which are more motion and movement oriented has solidified their position as a serious competitor in the portable gaming industry for PC’s.
Thirdly, the improving features of the non-portable personal computers is another major threat which are designed for hard-core gamers who want enormous storage capacity features along with its incredible graphical experience. A perfect example of such computers which provide similar graphical experiences to PS3 and Xbox is Dell’s Alienware. Alienware might have been launched by Dell in 2008; however, it can support all playstation3 and xbox 360 games making their presence highly competitive in the market. Moreover, it is being upgraded and reintroduced on frequent basis unlike Playstation 3 which takes longer time for its next version to launch. The usage of mouse and keyboards makes the PC industry still a fierce competitor as games will always require fast and accurate hand movements that can only be used on PC’s. In addition, PC’s are also very economical due to the latest games which can be downloaded on the internet for free as opposed to PS3 games which can be very costly and can take months to arrive. Also, the restrictions of certain popular games with high sexual and violent content are banned by the UAE government; therefore, the PC gamers can enjoy the internet service and can quickly download and play
 

Macro Environment Analysis of General Motors (GM)

In reflecting the macro environment, it is vital for us to identify the factors that might affect the number of variables which can influence the organizations supply and demand levels and the costs as well. The drastic changes in society day by day will create an impact on the function of the whole organization (Allaya, 2008). The political environment is basically the laws and regulations that a particular business has to follow in order to make sure the business owners do not get arrested or being fined for not following the regulations. The domestic market of General Motors in USA has played an important in the political environment of the country.

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In the last election, the company has contributed almost $802,500 dollars with 52% of that amount given to the Democrats. The company congratulated President Barack Obama on his election by displaying the Detroit Auto Show 2009 as the first African- American president of the United States (Hardigree, 2009). This contribution has improved the reputation of the company. However, the company were declared bankrupt in 2009 and has affected thousands of jobs, shuttering dozens of assembly and parts plants and closing more than 1000 car dealerships worldwide (White, 2010) But with the help of the new President, he promised that these company will not face such problem in the future and the government will contribute almost $30 billion to reorganized the company.
1.2 Economical Environment
The domestic economic environment in each country is highly integrated with other countries as well. The understanding of economic environments of foreign countries and markets may help the managers in your company to predict how the trends and events in their environment can take effect of the respective companies’ future performance (Witiger, 2010). Due to the recent bankruptcy issue, the new Obama policy has caused the company to fall into the government’s hand with 62% of ownership.
Besides that, the company is making a drastic change which is affecting at least 20% of the salaried workforce to be cut off. Moreover, assets are sold at $4 to $7 billion and halting its quarterly dividend payout (Chubb, 2008). In a recent research, the first quarter of 2009, the Gross Domestic Product (GDP) decline of -5.7% which is considered as the worst performance of the company in 60 years of business. But personal consumption expenditures offered a positive contribution. It increased 1.5% in quarter compared to 4.3% in quarter four (Wall Street, 2009).
1.3 Socio-cultural environment
The social and cultural differences can influence the business from country to country. General Motors creates environmental principles to serve the society in United States by dedicating protection for human health, natural resources and global environment. The company is aware of the impact on the products and manufacturing facilities when integrating with environment. In order to follow the trend, the company is constantly improving the performance of the new vehicles and also the processes used to manufacture those vehicles. The initiatives to help the environment are fuel economy, reduction of green house gas emission, recycling and reduce air pollution. Moreover, contributions in monetary and intellectual to the education community are one of the socio-cultural as well. This initiative is designed to help the young people to ensure their involvement in thinking smart and provide workable solution for their future challenges (GM, 2010).
1.4 Technological Environment
Technology is highly reputable amongst various sources on strategic management. It is widely used in organizations and industry part of model which creates competitive advantage. Currently, technology that is creating impact in the US market is electric cars. These cars are expected to have major impact in the present and future auto industry as it can provide reduction in city pollution, less dependence on oil and expected rise in gasoline prices (Macalister, 2010) The company have launched the latest Chevrolet Volt which is an electric car that can operate under the range of weather climates and driving conditions which will not cause problem by a minimal battery level (GM, 2010) This new advanced technology innovate consumers to purchase one because it will help to improve the environment and to live a healthy lifestyle. Moreover, spending more money on research and development can help the company to provide the latest product for their consumers’ base on the new trends and brand type.
2.0 International Consideration
General Motors is a company with diverse brands and choices. The company sells over 7.5 million vehicles in over 120 countries worldwide and are confident to be the number one choice for the consumers and able to provide the latest technology that can benefit their customers.
2.1 Operations
General Motors have expanded their business to international market in North America, South America, Europe, Africa, Australia, and Asia/ Middle East as well. As we know, General Motors do not only manufacture and sell vehicles but the company also provide other product and services such as GM mobility which can help those people with special needs and disabilities, GM OnStar provide a comprehensive in-vehicle safety, security and communication service, and GM Cardmember Services. Besides that, genuine parts and accessories of General Motors are sold through GM Goodwrench and AcDelco brands to suppliers which is authorised by General Motors itself and to be distributed worldwide (GM, 2010).
2.2 Involvement in international business
The company’s recent involvement in global market is with South Korea with majority shareholders investing in GM Daewoo Auto and Technology Co. of South Korea. The GM Powertrain product has a purchasing collaboration with Suzuki Motors Corp, and Isuzu Motors of Japan. Big giants such as Toyota, Daimler, Chrysler and BMW collaborate with General Motors for its advanced technology in manufacturing vehicles (GM, 2010). As one of the top automotive manufacturer, it is best for us to have a better relationship with other countries because it will help to expand the company’s business and brand reputation. In order to expand our business internationally, we need to consider about the country that the company want to export or start a business, the cost, type of customers, and the competitors in that country which will be our rivals. It will not be an easy task for the company to globalise their business because we need to get licence from the government to start the business and we need to meet their requirement in order to sell our products.
2.3 Internationalization Method
There are several internationalization methods the company used in international business which are by export based consists of direct exporting and indirect exporting, acquisitions, joint ventures and strategic alliances . We are already exporting our products to China. Base on pass results, the company have managed to export $ 1billion worth of vehicles, component kits, machinery and equipments (Chinadaily, 2008). Besides that, General Motors have acquisition with AmeriCredit Corp and it is named as General Motors Financial Company. This acquisition is formed to help customers on their vehicle financing especially in US and Canada (GM, 2010). On the other hand, General Motors acquisition with Chrysler worth $5 billion turned into disaster as there were no sales to raise cash and the company lost $2.5 billion.
New United Motor Manufacturing Inc(NUMMI) was once run by General Motors, due to internal problems such sex, drugs and well known for producing defective vehicles, Toyota agreed to joint venture with General Motors to solve these problems. There were misunderstandings occurred between the Japanese and American because of differences in culture and behaviour. Some of our employees at NUMMI were not happy with the management, they sabotaged the vehicles, and they put coke bottles into the door panels to annoy customers. The reason why Toyota agreed to joint venture with our company is because they were facing import restrictions from US Congress and with this help they can start building small cars in US. But they decided to terminate the agreement due to lack of improvement in our management (Langfitt, 2010).
3.0 The Growth of Business
To potray alternative corporate growth strategies, Igor Ansoff created a market matrix that focuses on the company’s present and future products in the market. There are several ways to grow the firm’s existing product and new products along with existing markets and new markets. In order to achieve this strategy, there are four product market combinations in Ansoff Matrix which can help to establish the growth of business of General Motors.
3.1 Market Penetration
The first growth strategy the company should use is market penetration. This strategy is used to achieve growth in our existing products in our current market segment in order to increase the market share of this company. By maintaining the market share in a growing market will improve the growth of the product and we may have opportunities to increase our market share when our competitors have reach their capacity limits in the market (Botten, 2009).
In today’s world, more people are conscious about the environment therefore we should produce hybrid vehicles to meet the current market and increase our market share as well. As consumers are more concern about the rising of fuel prices that lead them to require alternative fuel sources, we should create a variety of hybrid cars base on consumer’s affordability (Gray and Pawlovski, 2007). In our current market, there are several hybrid vehicles which allow consumers to choose what type of vehicle they require. They can either choose Buick Lacrosse Hybrid, GMC Yukon Denali Hybrid, Cadillac Escalade Hybrid, Chevrolet Silverado Hybrid, Chevrolet Tahoe Hybrid, GMC Sierra Hybrid or GMC Yukon Hybrid. These vehicles are designed to efficiently boost their travels in busy city, streets or open highway (GM, 2010).
3.2 Market Development
Market development is the second growth strategy we should consider using. This strategy enables us to market our current existing products into a new market segment. Venturing this existing product into a new place will not be easy for us because we will have competitors in that new market. There are many possible ways in approaching to this strategy (Botten, 2009).
One of the strategies is by exporting our products to our branch in Shanghai GM, China. Previously, our company have raised its stake in a joint venture with Wuling Group in China which is the manufacturer for small passengers vans in Chinese market. Raising its stake in this company has helped us to generate profit in China because commercial vehicles in that country have a lower unit of profit (Schepp, 2010). Shanghai GM sold almost 1.8 million cars and trucks in China alone which is just below what we have sold in USA during that year (Mucha, 2010). As the second top seller of General Motors Co., we should start selling hybrid vehicles in this country so that the Chinese citizen will start practising this culture to be an environmentally-friendly. The Buick Lacrosse will be the best choice to start our first hybrid vehicle. This vehicle will go into mass production of Shanghai GM plant and we should not expect a high volume of sales in short period of time but we are able to bring this new technology into China’s new market that will support sustainable growth and lead consumers into the right direction to save the environment (Baker, 2008).
3.3 Product Development
Product development will be our next strategy which is to market a new product into our existing market. This strategy will be appropriate to our existing customers and it will not be an easy task for the company because we are implementing a new product and we do not know whether this product will generate profit to this company (Botten, 2009).
This new product will help us to have a better environment. Likewise, hybrid vehicles are created to save fuel and to have a cleaner environment. Chevrolet Volt will be the best option for us to market our new product. This car is powered by electricity and runs with gas and emission free. The advantage of having this car is it only commutes gas free on electric for an average of USD 1.50 per day. This product should be priced reasonably in order for us to impress our customers with our low price on electric cars (Evarts, 2009). If we set the price at a very high rate then it will damage the company’s reputation and endanger our financial future by taking us far behind from our competition in the industry.
3.4 Diversification
Finally, the fourth strategy is diversification and it is considered as the most risky among the four growth strategies of Ansoff matrix. This strategy requires us to create new products into a new market. However, diversification may tend to be less risky if we have the opportunity to generate high rate of return. As one of the top automotive manufacturers in the world, we should take advantage in any opportunity that we can get in this growing market (Botten, 2009).
General Motors can expand business in South American countries such as Brazil, Argentina and Paraguay. We need to spend at least $500 million to finance the manufacturing and this centre will be responsible in developing small cars of General Motors in order to support and boost our operations in General Motors Daewoo in Korea (Klum, 2010). There are six latest car models that we can sell in the new market. The models are Celtic, Classic, Corsa, Prism, Malibu, and Agile (General Motors, 2010). We need to have promotion for these cars to impress consumers to buy our product. Our competitor Honda will be releasing their latest Honda Accord in the market so our best product that can compete with Accord is Malibu (Klum, 2010).
4.0 New Venture
In order to venture our business in a country, we need to consider the economic strength of the country and whether the consumers have the capabilities in purchasing our products. As the new venture in the automotive industry, we might face risk in pure competition in rates of return across other firms and industries. To obtain a good business and strength we can use Porter’s Five Forces as our guideline to achieve this.
4.1 Rivalry
There is rivalry in every business industry and it is the main hub of porter’s five forces. Although at times rivalry amongst companies brings many positive factors, the negative should not be looked upon lightly. Competition constantly influences prices of automobile to drop. However, in Brunei rivalry takes place amongst imported brands such as Toyota, Nissan and Proton where car are priced at a cheaper rate compared to neighbouring countries. Thus, quality control plays an important role in the sales of cars. Besides that, the elimination of taxes also ensures that prices of cars are cheap. (Too, 2007) The automobile industry in Brunei is a thriving industry because although it is populated by approximately 400,000 people, sales of cars average at a thousand passenger vehicle a month (Too, 2010). Thus, Brunei provides a suitable market for our company to market our products.
4.2 Threats of Substitutes
Besides that, threats by new entry substitutes should also be considered. Generally, when a company starts up, they have price elasticity and this forces price down. However, this is only a small threat as entry barriers protect established companies. Buyers would always be inclined to purchase automobiles based on personal liking. Therefore, marketing of products play an important key in ensuring that sales of cars increase. The entry of Proton in the Brunei market for example, showed that buyers doesn’t necessarily buy new products based on promotion but rather the quality of vehicle at hand (BruneiTimes, 2009). Thus, as new ventures ourselves, we need to ensure that promotion of our product runs smoothly without any glitch to ensure establishment of our firm.
4.3 Barriers to Entry
Being a company interested in venturing our company into Brunei, barriers to entry must be taken into account. Barriers such as government policies, capital requirement and brand identity may hinder the set up of our company in Brunei. The government of Brunei will waive 20% of import duty however they would incur a 20% tax on excise duty (Brunei Times, 2008). In order for our company to venture in Brunei we would need a firm financial foundation. The capital requirement to start up the business must ensure that our operational cost to facilitate research and development, globalisation and flexible manufacturing is possible. (Beaudette, Fitzgeraldand and Morath, 2009) Lastly, the identity of our brand must be known to consumers. The attributes of a car is very important in promoting. The first attribute that is looked upon is the style and appearance of the vehicle. (Karolefski, 2003). Branding of our products should also concentrate on safety and performance of the vehicle to ensure satisfaction among users.
4.4 Buyer Power
The buying power of consumers in Brunei should be analyze before a venture takes place. In a country with more than 400, 000 citizens it would appear that sales would not be as promising but according to statistics, the average of car sales in Brunei is at a thousand passenger a month. Besides that, Brunei is ranked one of the top in the world when it comes to the Gross income per capita at $26,325.00 per person’in the year 2009 which is one of the highest in Asia. (World Bank, 2009) This shows that with the right marketing strategy, buyers would definitely purchase our cars. The amount of supplies must correspond with the amount of buyers. Being one of the smaller nations, this would probably be a setback in our set up. The product differentiation is also a factor when it comes to buyers. As some companies produce eco-friendly vehicles, our hybrid car would definitely be a competition to other companies. The first green car in Brunei which is Toyota Prius, would not be an issue if we can bring in a better product into Brunei such as Chevrolet Volt which is fully ran by electric compared to Prius which is only a Hybrid car. (Bahar, 2010)
4.5 Supplier Power
Lastly, before venturing our business in Brunei we should consider the supply power to ensure that we could meet the demand. The demand for smaller car has definitely increased due to the increase in fuel prices. Thus, it is crucial that our company has the supply to meet the demand of the consumer in Brunei. (Henry, 2008) Our company would do well in Brunei by marketing an eco friendly car as the only car in the market are hybrid cars. The differentiation would boost business as most consumers are more eco friendly. The presence of substitute input also lowers the power of the suppliers. For example in the automotive industry fuelled powered cars can be substituted with hybrid cars. This lowers the power of the petrol fuelled cars (Simerly, 2002). The lack of substitutes in the eco-friendly environment would guarantee an increase in supply and hence an increase in demand. As consumers are more willing to purchase new vehicles, the supply should always be balanced with the demand of consumers (Cristello, 2009). The availability of credit as well as the low prices fixed would determine the amount of demand that is created and as a new venturing company; our supply should meet the target.
 

Micro and Macro Environmental Factor Analysis

Business strategy involves seeking a position within an environment or industry that generates a sustainable competitive advantage (implying that a diversified company should have as many business strategies as it has businesses)
Analysing Macro – Environmental Factors:
There are many factors that will effect the strategies and decisions of managers of any organisation. Tax changes, new laws, trade barriers, demographic change, etc are some of the examples. To help analyse these factors, we can categorise these micro – environmental factors using PESTEL model. PESTEL abbreviates Political, economical, social, technological, environmental and legal factors.
Political Factors: These refer to government policy such as the degree of intervention in the economy. What goods and services does a government want to provide? To what extent does it believe in subsidising firms? What are its priorities in terms of business support? Etc
Economical Factors: These include interest rates, taxation changes, economic growth, inflation and exchange rates etc.
Social Factors: Changes in social trends can impact on the demand for a firm’s products and the availability and willingness of individuals to work. For example, in UK, the population has been ageing. This has increased the costs for firms who are committed to pension payments for their employees because their staff are living longer.
Technological factors: Technology is growing very fast nowadays. New and fast machineries are introduced every now and then. New technologies create new products and new processes. Technology can reduce costs, improve quality and lead to innovation. These developments can benefit consumers as well as the organisations providing the products.
Environmental factors: Environmental factors include weather and climate change in macro factors. Change in climate, temperature can impact on many industries. These can benefit one industry and can make other industry down at the same time. For example in hot sunny days, people love to go out and visit beaches instead of going to restaurants and places like them. With major climate changes occurring due to global warming and with greater environmental awareness this external factor is becoming a significant issue for firms to consider.
Legal Factors: These are related to the legal environment in which firms operate. The introduction of age discrimination and disability discrimination legislation, an increase in the minimum wage and greater requirements for firms to recycle are examples of relatively recent laws that affect an organisation’s actions.
LIFE CYCLE ANALYSIS:
Generally, the model assumes that industry growth follows an ‘S’ shaped curve. The flat introductory phase reflects the problems of establishing the new product. Once proven, growth becomes explosive until market saturation is reached. Sales now are limited by the rate of replacement sales and the rate of growth of the population in the market. Eventually the industry will come under pressure from newer technologies and substitute products with superior price performance.

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There are four stages in this model. i.e. introduction stage, growth stage, maturity stage and decline stage. In introduction stage, Pioneering firms often after considerable investment and repeated failures, introduce products based on a new technology. Costs tend to be high, and quality tends to be low because of lack of economies of scale or manufacturing experience and the product itself will be very basic. In growth stage, a dominant technology begins to emerge, and competitors standardise around it. There is likelihood of capacity shortages although costs and prices fall as standardisation and the adoption of large scale manufacturing makes possible economies of scale. At maturity stage, Overcapacity begins to emerge in the industry, products differentiation declines as technological know-how becomes widely shared, and price competition intensifies. Consolidation occurs within the industry as weaker firms are acquired by stronger ones. Sales to less developed markets, and the transfer of production to lower labour cost economies accelerates. In decline stage, The industry comes under pressure from new technologies offering superior performance, although this may be reduced by factors such as high price and switching costs associated with the new technology. Price wars erupt as the surviving firms fight for market share in a declining market, and exits from the industry, as well as consolidation within the industry, becomes more likely.
Analysing Micro – Environmental Factors:
The micro – environment consists of stakeholders who are directly or indirectly linked with any business. For example customers, consumers, suppliers, shareholders etc.
Suppliers: Suppliers are major pillars or any business as they provide all the materials essential for any business. Big deal with suppliers is that can they provide high quality products at low price. Can they do this reliably? Have they got the flexibility to respond to a firm’s demands? What is the bargaining power of these suppliers? How dependent is the firm on them? Does their approach to their staff and resources fit with your ethics? Firms must decide on issues such as who to use to supply them, on the responsibility it takes for these suppliers and on the terms and conditions it adopts. Some firms take quite an aggressive attitude towards their suppliers by trying to push down the prices and delay payments. Others view the relationship more as a partnership in which they are working together with suppliers and that by helping each other both can benefit. The importance of suppliers can be seen if things go wrong.
Distributors: Distributor’s job is to deliver your product to market place where it can be sell easily. Imagine you sell shampoo – what you need to sell this is to get it on the shelves in the leading chemists and supermarkets but this means moving someone else’s products off the shelves! So the challenge is to get stores to stock your products; this may be achieved by good negotiating skills and offering appropriate incentives. The distributors used will determine the final price of the product and how it is presented to the end customer. When selling via retailers, for example, the retailer has control over where the products are displayed, how they are priced and how much they are promoted in-store.
Customers: Customers are key to sales. Managers must keep the needs of customers in their mind and try to anticipate how these will develop so that they can meet these requirements effectively now and in the future. To help understand their customers firms are increasingly trying to gather information on them through mechanisms such as loyalty cards. By gathering data on shopping patterns and matching this to data on the individual shoppers firms can build up detailed pictures of their buyers and then offer them appropriate deals.
Competition: The success and behaviour of any business will depend on the degree of competition in its market. In some markets one firm is dominant. This is called a monopoly. If you are in a monopoly position this may allow you to exploit the consumer with relatively high prices (assuming your position is protected in some way) and you may be able to offer an inferior service if customers have no other choices. In other markets a few firms dominate; this type of market structure is called an oligopoly. In oligopolistic markets there is a high degree of interdependence and so firms will think carefully how their rivals might react to any actions they take.
Key Stakeholders, Their Needs & Expectations:
Key stakeholders of a business are:
 

Employees
Customers, suppliers and contractors
Shareholders
Investors
Communities
Government

Employees: are the major stakeholders of a business as they are strongly linked with the business. They want to work in a place where they can meet their personal needs and wants. Leaders who create job assignments, work environments, and visions help employees be both competent and committed to their work.
Customers: want leaders to build compelling products and services so that they can trust and when they do, customers will give share of wallet. Customers are key to sales. Especially in fast food industries like Burger King, we ( employees ) have been instructed to focus on quality service and food. Customers should be satisfied at any cost because without them, business is nothing. Suppliers and contractors want their loyal concern with payment of goods and profit respectively.
Shareholders and Investors: are those who bought company’s share and are part of ownership in the company. They are concern with maximum outcome in terms of cash from profit. Investors are those who invest their money into the business as capital to earn their share from the profit. Investors want leaders to keep their promises, develop a compelling growth strategy, align core competencies to the strategy and then to ensure that people are committed to delivering on these premises.
Communities and Government: Communities want leaders to build organizations that are socially responsible, through how they treat the environment and how they serve the larger community. Government are linked with business as to start a business, licence is required and government issue licence. And from the profit gained by a company, a percentage of profit goes to government in terms of tax which is used to build infrastructures etc.
C) SUMMARY:
The Burger King Corporation (BKC) was founded in 1954 in Miami by James Mc Lamore and David Edgerton. Following this, the famous Whopper sandwich was introduced in 1957 and it quickly became one of the best-known sandwiches in the world. Today, with the corporation’s brand promise: ‘Have it your way’, there are 221,184 possible ways to order a Whopper sandwich around the world. Burger King now operates more than 11,300 restaurants in approximately 70 countries. Food is necessary for humans to survive, but the wastes, chemical by-products, and inefficiencies in its production can have an immense impact on the environment. People demand perfect inexpensive year round food, which increases the use of pesticides, herbicides, and preservatives depleting the precious ozone, contributing to global warming, and polluting our lakes and streams. To help protecting all the dangerous fumes and chemicals, Burger King is doing it’s best. To help prevent contamination and other dangerous things, there are separate containers for different things. Strategy is affected by major changes taking place in the environment and for those changes, strategy has to be change accordingly in order to stay in business stream. Some change in micro – environmental factors will affect strategy in different ways. If business is losing customers then many strategies can be applied depending on the level of business loss. Prices of product can be decreased, or distribution of vouchers etc. One of Burger King’s most important tasks is to ensure that the business is continually meeting its customers’ needs. In order to achieve this, the organisation has a research and development team dedicated to product improvement. It’s mono is ‘ HAVE IT YOUR WAY’. It means that customers can have their food the way they want, with or without, more or less of anything in their food.
THREE TOOLS TO ANALYSE, SUMMARISE AND EVALUATE
 

EFFECTS OF CURRENT BUSINESS PLAN
POSITION OF THE ORGANISATION IN CURRENT MARKET
COMPETITIVE STRENGTHS AND WEAKNESSES OF ORGANISATION

PORTER’S FIVE FORCES ANALYSIS
The competitive structure of a company can be analysed by Porter’s five forces analysis. It analyse the attractiveness of a company within the market. Porter’s five forces model is:
Likelihood of new entry: it means that the extents to which barriers to entry exist. The likelihood of entering a market would be lower if:
 

The entry cost are high
There are major advantages for those firms which are already operating in market because of experience
Government policies prevent entry or makes it more difficult
Existing brands have high level of loyalty

Power of buyers: The stronger the power of buyers in an industry the more likely it is that they will be able to force down prices and reduce the profits of firms that provide the product. Buyer power will be higher if
 

There are few or many buyer of the product
The buyers can easily switch to other products provided high quality in low price

Power of suppliers: The stronger the power of suppliers in an industry the more difficult it is for firms within that sector to make a profit because suppliers can determine the terms and conditions on which business is conducted. Suppliers will be more powerful if they are less in number and the supplier can threaten to buy the firm so it is a stronger negotiation position.
Degree of rivalry: This measures the degree of competition between existing firms. The higher the degree of rivalry the more difficult it is for existing firms to generate high profits. Rivalry will be higher if there are large numbers of similar sized firm, the costs of leaving the industry are high, and there is little brand loyalty so customer are likely to switch easily between products.
Substitute threat: This measures the ease with which buyers can switch to another product that does the same thing e.g. aluminium cans rather than glass or plastic bottles. The ease of switching depends on what costs would be involved. Using Porter’s model, firms can generate high profit if the industry is:
 

Difficult to enter
There is limited rivalry
Buyers are relatively weak
Suppliers are relatively weak
There are few substitutes

BOSTON MATRIX:
The Boston Matrix model is a tool for assessing existing and development products in terms of their market potential, and thereby implying strategic action for products and services in each category.
Cash Cow: The rather crude metaphor is based on the idea of ‘milking’ the returns from previous investments which established good distribution and market share for the product. Products in this quadrant need maintenance and protection activity, together with good cost management, not growth effort, because there is little or no additional growth available.
Dog: this is that product or service of a company which has low presence in market. There is no point of developing goods and services in this quadrant. Most of the companies discontinue their product which they think fall under this quadrant. Businesses that have been starved or denied development find themselves with a high or entire proportion of their products or services in this quadrant, which is obviously not very funny at all, except to the competitors.
Problem Child: These are products which have a big and growing market potential, but existing low market share, normally because they are new products, or the application has not been spotted and acted upon yet. New business development and project management principle are required here to ensure that these products’ potential can be realised and disasters avoided. This is likely to be an area of business that is quite competitive, where the pioneers take the risks in the hope of securing good early distribution arrangements, image, reputation and market share.
Rising Star: ‘star’ products, are those which have good market share in a strong and growing market. As a product moves into this category it is commonly known as a ‘rising star’. When a market is strong and still growing, competition is not yet fully established. Demand is strong; saturation or over-supply do not exists, and so pricing is relatively unhindered.
SWOT ANALYSIS:
To determine what a company’s strategy should be, the managers must consider the internal strength and weaknesses of their company and compare them with external opportunities and threat. This process is known as SWOT analysis.
Strengths: are internal factors which a firm may build on to develop a strategy. They may include:
 

Marketing strengths
Financial strengths
Operation strengths
HRM strengths

Weaknesses: are internal factors which a firm may need to protect itself such as:
 

Marketing weaknesses such as limited distribution
Financial weaknesses such as high levels of borrowing and low rates of return
Operational weaknesses such as old or poor quality equipments
HRM weaknesses such as high rate of labour turn over and industrial disputes

TASK 2 – STRATEGY EVALUATION
To achieve an objective, managers must develop a suitable strategy. A strategy is a long term plan setting out how an objective will be reached. For example, if the objective is to reduce costs, the strategy could involve relocating or reducing the labour force. If the objective is to boost revenue, the strategy may be to launch new products or to invest in a big promotional campaign. A strategy may be developed by using a firm’s strengths to exploit the opportunities that exist. For example, a strong brand name may be used to extend a firm’s products into new markets. It may also use these strengths to protect itself against threats; for example, a retailer may use its finance to acquire key locations to prevent a competitor buying them. Strategies can be evaluated by many ways. One of the way is by using Porter’s Five Forces model. In this model there are five different sources which are strongly connected with the business and they must be kept in mind while making strategies. While making strategy for a business includes keeping those things in mind which will ruin the business. For example in case of a retail business, if a new retail business entered in, then strategy in this will be change accordingly in this case. Secondly if buyer’s power is strong in retail business, then it could be a negative or a positive impact on business. If they are strong then they can force down the prices of the product which will lower the profit, so in this case strategy will be evaluated very carefully as every step can change the course of business. Suppliers are the major part of any business so keeping them in mind is a necessary part in strategy evaluation. A firm may also want to protect itself against its weaknesses. For example, it may try to find alternative suppliers to reduce an over-reliance on a particular one; it may invest in a rebranding exercise to reposition itself. Fourth part is degree of rivalry. This measures the degree of competition between existing firms. The higher the degree of rivalry the more difficult it is for existing firms to generate high profits. Fifth and last part is threat of substitute. This measures the ease with which buyers can switch to another product that does the same thing. Keeping following things in mind will help effecting business in loss. If the second industry is easy to enter in market, if there is a high degree of rivalry between firms within industry, buyers are strong, suppliers are strong etc. The implication of Porter’s analysis for managers is that they should examine these five factors before choosing an industry to move into. They should also consider ways of changing the five factors to make them more favourable.
TASK 3 – IMPLEMENTATION
Evaluating strategies is a difficult task but implementing them in a regular and smooth manner is more complicated. The importance of strategy should not be underestimated. Changing the price of an item, changing the distribution strategy and investing in new equipment are all important decisions but if you are fighting in the wrong market with the wrong products then the details are almost irrelevant. The strategy sets out where and how the battles will be fought and a good strategy is essential to business success. This involves an understanding not only of what happens within the firm but also the ability to forecast changes in the external environment and their significance successfully.
This implementation is in fact a landmark where various organizations tend to falter. The extensive research and resources used up for the drafting of strategic plans often make organizations believe that whatever they have understood and devised is the optimum and therefore requires no second thoughts. However, what has been ignored is the fact that plans can be tested only if they meet actual usage. Only planning or theoretical application cannot be guarantee complete success. Actual implementation yields the true picture. A business plan is the textual version of a strategy, as it includes pertinent information regarding the company, including: vision and mission statements, measurable objectives supporting the vision, actionable tactics meeting the objective, resources, milestones and timeframes, accountability and role designations, as well as internal and external risks. The business strategy is not evergreen and should be evaluated routinely to ensure the company still has the competitive edge.
A business plan includes the primary and secondary objectives of your organization, an analysis of current policies and procedures, and the development of new policies or procedures to correct weaknesses within the organization.
Strategy is firstly introduced to lower managers and supervisors so they can act on it and tell to lower staff in order to work on it. If launching a new product or reducing the price of another product because of substitute available in market, all the staff must be aware of that, after that the new promotion or product or discounted product will be advertise in an attractive way in Television, radio and by distributing leaflets to let people aware of it. Focussing on excellent customer service will definitely help improve the business because the service given to customer will bring him back again.
Quality assurance of the product will increase the demand of product and will increase revenue. Introducing new and latest technology in the company will save a lot of time and give result much faster and effective. Giving training to all new and old staff about new technology, new products, and everything related to business and plan will help staff delivering a better quality service required.
For implementation of plan, money is the major and important resource required. So in order to get money there are many ways, selling shares of the company, retained profit, profit in terms of capital can be reinvested and by taking loans from banks etc. After implementing the plan, wait for the result and do surveys. Drop or put small questionnaire that will help letting you know how good is the strategy going. Taking customer’s feedback and evaluate the strategy. If it is going the way we wanted, then there is no need to change and if it’s not, then re evaluate and check where there is a mistake and sort it out.
 

Macro Environmental Analysis of the Indian FMCG Market

The life styles and culture of India is changing drastically. The population of India is increasing every year and this will have a direct impact on the FMCG industry and its organizations. Although population of India is increasing every year the population growth rate is decreasing over a period of time. In 2008 the population growth rate is 1.6%, in 2009 it is 1.5%. In 2010 the growth rate is 1.3%. Although the figures didn’t change drastically, the supply and demand of the FMCG products will be affected due to change in population structure. There will be decrease in demand and intense competition as the birth rates and number of customers decrease. Most importantly it is the change is life style of Indian customers and social behavior will affect the FMCG industry in India. It will demand a new products and services over the time and will lead to increase in investment in R&D of FMCG companies. Now the world is facing with food shortage leading to increasing invest in food production. If the organizations fail to offer products and services according to changing lifestyle and behavior then it will be difficult for any organization to survive in the market.
Economic:
Current slowdown in global economic scenario affected almost every industry across the world. There has been increase in unemployment and low consumer spending power. This leads to consumers not opting to buy expensive products or services. This further pressurizes the RMCG companies to reduce the prices for the products and services.
Organizations will have to review this economic ride and have to respond accordingly,
A successful organization will respond according changing economic conditions, consumer and stakeholder behavior. An efficient organization must be aware of the changing economic condition across the country and global and should employ a suitable strategy to stay in the market.
Political:
Political factors will have a greater influence on the organization and industry and it is the duty of the organizations to comply with it. It is necessary for the organizations to comply with the legislations implemented non conformance of which may lead to serious implications on the organization. The government has implemented certain restriction in the import policies. However tax exemptions in sales and excise duty are provided for the small scale industries. This will allow the SMEs to invest more and will increase the number of new entrants. Transportation and infrastructure facilities are improving not only in urban but also in the rural area which will help in distribution network.
Technological:
Advancement in technology boost the production with enhancement in quality of products and services rendered to the customers. Organizations began to adopt e-business to improve brand communication and market. Technological advancement makes the supply chain and transactions along the chain simple. Organizations reduced costs with effective IT technologies and increased the rate of information transactions. Technology is playing a key and huge part in the FMCG sector by developing the new packaging, increasing productivity and longer shelf life of food products.

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Better, stronger, more effective and faster are the key elements that all manufacturers in this sector push for, as it drives sales. The advancement enhances the sales by enabling the manufactures to produce better products with attractive packaging and better communication. With advancement in communication technology and rising social media network it enables the organizations to communicate better to the customers by improved marketing campaigns.
International trends:
The economic crisis and slowdown had greatly affected the sales FMCG goods across the world. However emerging economies like India, China and Brazil are not greatly affected and manage to do well to recover quickly. A common trend that was followed across the world during economic slowdown was trading down. Because, customers became more cautious looking for less expensive brands, special offers and discounts. This added tremendous pressure on the market prices due to severe competition and down trading. However emerging economies like India, China and Brazil saw development in hypermarkets helping the growth of FMCG markets in these countries.
Macro environmental opportunities:
India has Vast Rural Market with majority of population where the market is still untapped market. India has cheap labour to provide cost advantage over other countries. Many multinational companies are having cost advantage by outsourcing its product requirements from its Indian company.
ENVIRONMENTAL THREATS AND OPPORTUNITIES:
Industry structure:
The FMCG market of India divided into two sectors the organized sector and the unorganized sector. The organized sector has only few Indian companies and MNCS whereas the unorganized sector is crowded by a many local players.
Indian FMCG market accounts for about Rs.460 billion where the market has been highly occupied by local and unbranded products. This has been a challenge for many organized players to successfully launch a product and to occupy the market share. Distribution and supply chain has also been a challenge as India’s infrastructure and transport systems not quite helpful with millions of retail outlets in the country. Although infrastructure and transportation system is developing in recent times it is still considered as a challenge by many players.
The FMCG sector has a wide range of products including confectioneries, beverages, detergents, toothpaste, toilet soaps, shampoos, creams, powders, food products, cigarettes.
Typical characteristics of FMCG products are:
The products cater to necessity, comfort and luxury.
Price and income elasticity of demand varies across products and consumers.
Individual items are of small value (small SKU’s) although all FMCG products put together account for a significant part of the consumer’s budget.
The consumer spends little time on the purchase decision. He seldom ever looks at the technical specifications. Brand loyalties or recommendations of reliable retailer/ dealer drive purchase decisions.
Limited inventory of these products (many of which are perishable) are kept by consumer and prefers to purchase them frequently, as and when required.
Brand switching is often induced by heavy advertisement, recommendation of the retailer or word of mouth.
Distinguishing features of Indian FMCG Business
FMCG companies sell their products directly to consumers. Major features that distinguish this sector from the others include the following:
Design and Manufacturing
Low Capital Intensity as most of products in FMCG requires relatively little investment in plan, machinery and other fixed assets.
Basic technology required for manufacturing is easily available.
Third party manufacturing is common and the benefits include production and inventory planning flexibility, flexibility in controlling labor costs and logistics.
Marketing and Distribution
High Initial Launch Cost with huge investment in product development, market research, test marketing and launch. Creating awareness for a new brand requires enormous initial expenditure.
Huge Distribution Network as India has millions of retail outlets across the country making the logistics functions difficult for many players.
Competition
Market is crowded with many unorganized players. Presence of many unorganized players and highly capable MNCs provides fierce competition in the market to launch many new brands. This gives wide range of choice of brands for the customers.
PORTER’S FIVE COMPETITIVE FORCES:
BUYER POWER:
The consumer base of this industry is larger than any other industry and they have little or no influence on the price of the product. The consumer always possesses great choice of brands within the product category and they can shift from one to another without much influence. Hence, buyer power is not quite strong in this industry. But they have power when they provide threat to shift from one brand to another brand. In FMCG retailers should also taken into the account for analysis. Retailers can always decide which brand to stock and consumers don’t show much interest to wait if one brand of choice is not available. So retailers can always make choice between brands and they have more buyer power than consumers.
SUPPLIER POWER:
Supplier power is little or limited in the FMCG industry. The industry always has great number of suppliers with great size. There will not be any uniqueness in the product or service of suppliers and the manufacturer can always shift from one supplier to other supplier. However manufacturer faces some amount of supplier power due to the cost they have to incur when switching suppliers. Suppliers who do large business with manufacturers are always obliged to their customers.
THREAT OF NEW ENTRANTS:
Threat of new entrants is limited in this industry. The new entrants generally cater to local or small markets contributing to the large unorganized sector. Raw materials for most of the segments in FMCG industry can be easily procured. The investment will not be high for machinery and other assets required for most of the products in the industry. Also the basic technology is easily available. These factors can make the local or small manufactures to enter easily in the industry. But this industry requires high initial launch cost and distribution network is always a challenge. These factors act as a barrier for any new entrants in the industry and virtually provide low threat of new entrants.
THREAT OF SUBSTITUTES:
The FMCG industry bears a high threat of substitutes. The industry possesses many organized players with great number of local manufactures. The products in the industry can always be imitated and marketed. The industry possesses high level threat of substitutes in rural market than in the urban.
DEGREE OF RIVALRY:
The degree of rivalry is high in the industry. There are many global players along with local manufacturers. The industry enjoys low customer loyalty. The customers always have wide choice of brands and the switching cost is always minimum or negligible. There will be only slight difference in the quality of brands. So the competition is fierce in the industry to attract customers and retain them.
Strategic groups in the industry:
Among the FMCG companies in India Hindustan Unilever Limited is most catered company to almost every segment in the industry. Its competitors are only catered to certain segments but HUL faces stiff competition from all competitors in every segments. The major companies of strategic groups in FMCG industry are Hindustan Unilever Limited, ITC Limited, Nestle India, Emami Limited, Colgate-Palmolive (India) Limited, Dabur India Limited, Procter & Gamble, Godrej Consumer Products Limited and Cadbury India.
International Competition:
India is an emerging market and has become a hotspot for many multinational FMCG companies like HUL, Proctor & Gamble and Nestle. However domestic companies like Marico, Dabur and Emami are giving tough competition to them. These companies step into natural product category by offering herbal products and managed to occupy the market. For instance, Marico’s flagship brand Parachute Coconut Oil has no foreign competition. The presence of international competition is restricted to areas of where they can act and categories like natural products did not interest the global players.
Industry Threats:
The organized players in the industry are facing problems high magnitude of imitative products. The fake products are seen highly in rural markets and the Indian FMCG sector is losing large amount of money due to presence of counterfeits products. The industry is facing increasing input costs due to increase in price of the raw materials due to global economic slowdown and potential impact of rising crude oil prices
Industry Opportunities:
The FMCG sector is the fourth-largest sector in the Indian economy and has been growing considerably over the past few years due to changing lifestyle, consumer preferences and high disposable income. The rural market is being highly untapped and provides favorable condition for growth of the companies in this sector.
EVALUATING HUL STRENGTHS AND WEAKNESS:
VRIO Framework of Hindustan Unilever Limited:
The value of HUL lies in their ability to offer different products and cater to the different segments in the industry. The organization has international expertise and wealth of knowledge to cater to different segments satisfying the customer needs. The organization is displaying high standards of corporate behavior towards its stakeholders. The company realizes that its employees are the primary source of success and well committed to their employees. The organization encourages the open communication with customers to get feedback and improve its product offerings.
Rarity:
The company enjoys the competitive advantage in its robust supply chain and distribution network. Though the company resources are not rare it enjoys the competitive advantage in its resources employed in supply chain and distribution network.
Imitability:
The organization possesses valuable and rare resources in its supply chain and distribution network that the competitors did not have cost advantage in imitating the resource. The social relationships entailed in resources are complex that the competitors cannot easily imitate and manage well.
Organization:
The organization structure of HUL with its empowered managers across the company’s nationwide operations imparts speed and flexibility in decision-making and implementation. The organization leverages its resources for efficient management. The company realizes that its employees are the primary source of success and well committed to their employees.
Analysis of Corporate Strategies:
Hindustan Unilever Limited has robust supply chain and distribution network covering over 3400 distributors and 16 million outlets. HUL’s sales organization structure integrates the Household, Personal Care and foods distribution networks together. By this the organization aligns all the units of its organization towards the common goal.
Analysis of Business Strategies:
HUL introduces wide variety of products in different segments at different price points. HUL analyses its strategy to improve its foothold in the processed foods category which is largely unoccupied.
HUL Strengths:
The company has variety of products in each category giving wide array of choice to customers.
Robust Distribution Network covering over 3400 distributors and 16 million outlets.
The Company enjoys many reputed brands and created a well reputed brand image in the customers mind through advertisement.
Well developed quality management.
The company has highly capable and well developed R&D resources.
HUL Weakness
HUL not able to compete effectively with local competitor in the rural market:
The Company’s product mostly target middle class and lower middle class population. So the upper middle class population terms the company’s product as a cheap product with low quality
HUL is over dependent on Indian market and depends on it for majority of revenue generation. This makes the company subject to changes in weather, political and economic conditions and also makes it vulnerable to potential risks arising in India.
 

Macro Environment Analysis for Smyths Makreting Strategy

Smyths Strategic Marketing

Contents

Introduction

Macro Environment Scan

STEEP:

Micro-Environment Scan

Company:

Customers:

Competitors:

Suppliers:

Intermediaries:

Stakeholder/Public:

SWOT Analysis

Strategic Recommendations

Conclusion

References

In this report, the marketing environment is scanned thoroughly by using different frameworks. Macro and micro are two forms of environment, which assessment is critical to make informed marketing decision. For analyzing marketing environment, Smyths a UK based toy retailer is selected. By using STEEP framework, macro-environment of the selected firm is scanned. Micro environment is also analyzed. On the basis of macro and micro environment, findings are developed in related to the selected firm by employing SWOT framework (Silver et al., 2016). On the basis of findings, strategic recommendations are made for Smyths. Thus, the report includes the way of making strategic recommendations.             

STEEP:

For making macro environment scan, STEEP framework is used:

Socio-cultural factor

The population of UK is growing rapidly and it became 65.5m in 2016. In UK, the number of people aged between 0 to 15 years is reduced from 19.2 to 18.9 from 2006 to 2016 (ONS, 2017). Parents prefer toys, which provide opportunity of learning to the children. The preference of parents and kids has shifted from fad toys to learning based toys (Carter, 2017). Digital entertainment is becoming popular choice among the children of UK. Children spend 30 minutes to play outside in a week (O’Grady, 2016). The preference of consumers for toys is evolving constantly and this is likely to have considerable impact on the market share of Smyths.

Technological Factor 

In UK, innovation becomes a key aspect of business operations in which technological infrastructure plays a great role. The technological infrastructure is quite competent to support the operations of the business in an effective manner. Due to this, the demand of innovative toys is likely to increase more rapidly in the UK market. Smyths may face competition in terms of developing innovative toys to the customers and it could have either positive or negative impact on the firm’s ability to sustain and increase the market share (Robertson and Breen, 2013). The capabilities of conducting research and development will require intense development for increasing consumer base. Apart from this, internet technologies in this country is also increasing rapidly, which may have negative impact on the market share as it diverts interest of children towards the digital entertainment (Follett, 2014).  

Ecological/Natural Environment Factor

The cost of energy and the level of pollution are increasing in UK, which may have considerable impact on the cost of manufacturing toys. Due to this, Smyths may face considerable in reducing cost of the offerings and to retain and attract the customers (Vaughan, 2017). It could have negative impact on its ability to increase market share. The demand for ecofrindly toys is growing rapidly in UK thus the environmental concerns tend the products’ suppliers to change their ways of manufacturing and marketing the toys (Lorna, 2016). The trend towards the environmental concerns may encourage Smyths to adopt the eco-friendly practices in operations such as reducing carbon footprint, waste and efficient use of environmental friendly materials.

Economic Factor:

The economic conditions of this country become vulnerable due to the “Brexit”. The rate of employment, GDP and inflation has affected greatly and this caused great impact on the economic growth (Bowler, 2017). The rate of UK economic growth due to which the household income has squeezed at the considerable level. This economic condition is likely to affect the demand of toys and consequently sales of Smyths (Perlam, 2017). Smyths may face problems and intense competition in terms of attracting customers and developing market share. Apart from this, the performance of economy is expected to decline, which may force firms to reduce cost of operations to sustain profitability.             

Political-legal Factor

The political and legal environment of UK for the operating firms becomes uncertain due to the decision of Brexit. This is one of the major events, which made the nation’s political and regulatory environment quite vulnerable. The exit of UK from the European Union (EU) through Brexit becomes a source of creating vulnerability in the rules and regulations, which may have negative impact on the ability of Smyths to handle the legal concerns and to operate effectively (Giles, 2016). The government of this country supports the growth of toy industry due to its contribution in the economic growth through the creation of job opportunities. But, government also raises consumer safety concern due to the use of toxic material in manufacturing toys (Begg and Mushövel, 2016). Toys safety regulations of UK may become stricter, which may have considerable impact on the market share of Smyths.

The scan of micro-environment includes analysis of the firm’s internal environment. In this, a scan of key related stakeholders such as suppliers, customers, competitors, intermediaries and stakeholders is conducted (Silver et al., 2016). Below is the analysis of Smyths’s internal environment is performed:

Company:

Smyths entered the UK market in 2007 and growing rapidly. This company offers large range of products in toys, baby, outdoor and other games at the low prices. This firm has a reputation as one of the leading toy retailer with having around 100 stores at the different locations in UK and Ireland (Smyths, 2017). The presence of this company is growing rapidly in UK. British Toy & Hobby Association awarded this company award of “Overall Toy Retailer of the Year Award”, which gave its recognition as excellence in the toy retailing (Smyths, 2017). It procures the products from the different suppliers. Pre-tax profits of the company went up in 2016 from £5.96 million to £10 million, which indicates its profitability become double in a year (Jahshan, 2017).  

Customers:

Smyths offers toys for the all ages which belongs to high and middle income class. They are the key buyers of this company, which seek fun, learning and creativity from the offerings. Customers make selection of offerings by either comparing online toy’s stores or visiting different physical stores. The range and prices are compared by the customer to purchase toys. Physical and online stores both are preferred by the customers. The sales of toys are mainly seasonal as most of the sales are made by the customer during holiday and festive season (Clark, 2011). Internet, TV advertisement and peer group are the main source of information for the customers.

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Competitors:

Toys’R’Us, Argos, Mothercare PLC, The Entertainer and Early Learning Centre are the key competitors of this company. These companies has significant market share in the UK market. Toys’R’Us and Smyths both are dominate players of this market (Mal and Rodger, 2017). Toys’R’Us is key competitor of Smyths, which have presence in the international market. This company has expansion strategy, which gives this firm the benefit of economies of scale. It also has more efficient distribution network and strong online presence. The nature of competition in this industry is intense as number of strong players operates in the UK toy market. Consolidated is the competitive structure of the industry as the size of the industry is large but small number of firms dominates the market (Dawson and Lee, 2014). Due to this, Smyths may face problems in capturing market share.

Suppliers:

The availability of supplier and cost influences the business of Smyths at the considerable level. Innovation is the key aspect of UK toy industry and thus patents increases the bargaining power of suppliers, which may increase dependency over the suppliers. There is lack of substitute of the retailers and it may influence ability of this company to bargain with the suppliers (Clark, 2011). The customers’ expectations are evolving continuously in UK toy market due to which Smyths may need to improve relations with the suppliers. Paper and plastic are two main materials to manufacture toys and thus increasing environmental concern may affect the availability of these material and consequently bottom line of the firm (Thompson and Martin, 2010). Digital entertainment and online games provide substitutes to the customers and thus it may have adverse impact on the ability of this firm to attract the customers.

Intermediaries:

The presence of strong intermediaries in UK toy market such as physical distribution, financial and marketing services agencies may help this firm to establish more stores in this country and to expand the consumer base. In presence of strong network of distribution, it could be less complex for Smyths to expand business within and outside UK (Silver et al., 2016).

Stakeholder/Public:

Customers, shareholders, regulatory agencies, environment and employees are the key stakeholders of Smyths, which may influence its ability to achieve the objectives. The needs and preferences of customers may tend this firm to make changes in its offerings and consequently operations (Heinemann and Schwarzl, 2010). Regulations regarding customer safety and environmental protection in UK are also evolving overtime and this has considerable influence over the operators of toy industry. Due to this, this firm may need to take measures to ensure consumer safety and to protect environment. Employees’ behaviour in stores is an important factor to encourage child and their parents to purchase a toy (Gov.UK, 2017). Their way of demonstrating a toy to the customer may have considerable influence on the potential to increase consumer base and to satisfy them.      

On the basis of the outcomes of the macro and micro marketing environment analysis, below findings is concluded in relation to Smyths. The findings are presented by using SWOT framework.

Figure 1: SWOT

Strengths

Recognized name in UK

Reputation as quality toy retailer

Effective presence in UK and Ireland market

Great customer service

Competitive prices

Wide range of offerings

Weaknesses

Lack of presence in international market

Weak distribution network

Lack of international experience

Absence of differentiation  

Opportunities

Increase in population

Expansion in international market

Trend of online shopping

Improving in-store shopping experience

Social responsibility in operations

Innovations

Less time to play outdoor games

Threats

Vulnerable economic conditions

Digital entertainment

Increasing trend of online gaming

Consumer safety issues

Environmental regulations

Intense competition

Cost of R&D

Consumer safety regulations

Decline in number of children in population

On the basis of above table, it can be stated that the areas of strengths and weaknesses of Smyths are several. This firm is one of the leading toy retailers in UK with having reputation as quality and cost-efficient toy retailer. It indicates its potential to take advantage from the increasing population and trend of online shopping (Proctor, 2014). Competitive pricing and great customer service could help this firm to improve presence in the market despite of the presence of intense competition and vulnerable economic conditions.

The weaknesses of this firm may affect its ability to capture the opportunities for improving consumer base and sales. Its absence in the global market makes it highly dependent on the UK market growth. It is likely to create uncertaininty in the operations. By using reputation and recognition in the market, it could capture the opportunities of expanding market in international market, which would be effective to reduce its financial dependency over the UK market (Hill et al., 2014).  

Firm may face intense competition due to the reduction in the size of target audience and increment in online gaming trend as it is likely to squeeze the market size, which may increase competition among the players. This is likely to affect the business of Smyths and consequently profitability. By making investment in R&D, this firm may understand the changing needs and preferences of customers and to bring innovations. This could be effective to bring differentiation in the offerings and to reduce the pressure of competitiveness (Parnell, 2013). By conducting socially responsible behaviour, Smyths can follow regulations related to the consumer safety and environmental protection. This may help firm to increase consumer base and market share.

Apart from this, this firm has also opportunity to differentiate the offering through the improvement in-store shopping experience. It could help this firm to attract the parents and children both and to increase the consumer base. The trend of online shopping can also be used by this firm as an opportunity to differentiate offerings and to create competitive advantage. By enhancing features of website, Smyths can improve shopping experience and it would be helpful to enhance the consumer base (Egan and Thomas, 2012). It is analyzed on the basis of SWOT analysis that this firm has potential to covert its weaknesses into strengths by capturing available opportunities and limiting threats. 

In order to grab market opportunities and offset the threats, it is required for Smyths to consider effective strategies to explore its strengths and overcome weaknesses. From SWOT, it is determined that Smyths’s quality at competitive prices and great customer services are quite well to draw the attention of the customers towards its products, but lack of differentiation is a big issue for the firm. Therefore, to obtain customer loyalty and handle the intense competition in toy industry, it is required for the firm to focus on differentiation strategy represented in strategy clock as below:

Figure 2: Strategy Clock

(Source: Dalton, 2016)

The firm needs to focus on providing wide range of products with innovative ideas that can be effective for it to get sustainable competitive advantage in the market. This strategy will be effective for the firm to consider the increasing trend of online gaming too and get advantages by focusing more on the digital entertainment (Dalton, 2016). At the same time, the firm can more focus on environmentally friendly aspects in manufacturing processes to attain sustainable competitive advantage in the toy industry. Company may attract the customers who want quality with affordable price that will make it different from others and increase market share in the industry. 

At the same time, the firm needs to use market development and product development strategies as per Ansoff Matrix. Market development strategy may enable the firm to launch its existing products in new markets. There are significant opportunities of expansion in international market in toy market. Therefore, the adoption of market development strategy will be effective for Smyths to expand its business in new markets and overcome from its weakness of lacking international experience (Blythe, 2013). 

Figure 3: Ansoff Matrix

 (Source: Schleier, 2010)

Apart from this, product development strategy may be useful for the firm to grab the opportunities related to improving in-store shopping experiences, online shopping and innovations (Schleier, 2010). Through this strategy, the company can use new distribution channels including more focus on online trading and introduce new innovations in its existing products. This strategy also complements the adoption of differentiation strategy (Dalton, 2016). However, the focus on these strategies may cause high cost of operations, but it can be compensated by focusing on economies of scale and countries with cost effective resources of production (Ackermann and Eden, 2011). It can be helpful for the firm to handle the threat related to increasing cost of production and get competitive advantages in the market and significantly improve market share.      

Based on the above discussion, it can be stated that there are several opportunities and threats for Smyths in toy retail industry but by adopting effective strategies including market development, product development and differentiation strategies, the firm may create competitive advantage and increase its market share. 

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Methods for Identifying Opportunities in Macro Environment

Capturing Market Insights

Introduction

This paper analyses the key methods for identifying opportunities in the macro environment. It discusses the importance of a marketing intelligence system, and attributes of good market research. It also discusses the methods for accurately measuring and forecasting demand.

Capturing Market Insights

Check Your Understanding:

A marketing intelligence system is a set of procedures and sources managers use to obtain everyday information about developments in the marketing environment.

A trend is a direction or sequence of events with momentum and durability; it is predictable and reveals the shape of the future by providing strategic direction.

Society shapes the beliefs, values, and norms that largely define tastes and preferences.

The last step in the marketing research process is to make the decision.

Research that is designed to capture cause-and-effect relationships by eliminating competing explanations of observed findings is called experimental research.

Marketing decision support system (MDSS) is a coordinated collection of data, systems, tools, and techniques with supporting software and hardware by which an organization gathers and interprets relevant information from business and environment and turns it into a basis for marketing action.

Marketing Intelligence

According to Kotler, P. and Keller, K. (2012), marketing intelligence is a methodology that leaders use to gather frequent data improvements in the marketing habitat. Managers and leaders analyze and make business decision from the data gathered. Kotler, P. and Keller, K. (2012) further describes steps that can help improve the quality of marketing intelligence.

Train and push top performers, develop new sales reps, and motivate the sales team to stay focused on adding value to customers. Educate the sales team on how customers leverage their products which helps gain insight and get feedback to enhance customer experience.

Inspire, motivate and drive partner network, distributors, vendors, alliances and channels to provide feedback and customer intelligence. This important information can be used to better serve customers.

Hire specialists to gather critical information from competitors. Collecting information such as how customers are treated, cleanliness of the facility and bathrooms, reward programs and so on.

Network outside the organization to gain insight into competitor product features and benefits, pricing, and target market. Networking to gather competitive intelligence across multiple business groups and locations help gain good knowledge about the competition and this would help prepare for any potential threats in the future.

Set up a customer advisory panel. Setting up a platform for customers to provide feedback. There is no better way to improve product benefits and customer experience than hearing directly from the customers.

Leverage government related information resources to gain insight into population swings, and demographic groups.

Buy data from research companies. Real time data and analysis can be obtained by third party vendors which would help companies with forecasting and demand.

Megatrends:

A megatrend is a large, social, economic, political, and technological change that is slow to form, and once in place, influences us for some time; for example, between seven and ten years or longer. The ten trends are: (1) aging boomers; (2) delayed retirement; (3) the changing nature of work; (4) greater educational attainment—especially among women; (5) labor shortages; (6) increased immigration; (7) rising Hispanic influence; (8) shifting birth trends; (9) widening geographic differences; and (10) the changing age structure.

Online Market Research:

Pros include: The capital and upkeep expenses are much lower than traditional market research. Companies need to hire a work force to gather and collect data. As far as online market research is concerned, all the pre work and preparation along with the collection and handling of data is done from a single location. This would exponentially reduce costs for organizations.

Once a computer application is set up, it facilitates the entire system of data collection, allowing data to be collected and handled in an organized and efficient way. When the application is built, it is automated and allows participants to input their data. This system can be replicated for different projects. This helps save time as well. Online surveys and questions can be sent out via email to multiple people at once and needs no paper, no printing and no work force. This will enable the work force to run not only one campaign but multiple campaigns at he same time. Online surveys and questions allows people to think about the questions before they can answer them. This helps especially when people are dealing with sensitive topics. The biggets pro with online market research is that there are no geographic boundaries. Online surveys and questions can be sent to any part of the world. Therefore you can reach a wider audience. Surveys can be rolled out internationally and focus on niche markets.

There are a couple of cons of using online market research. For example, organizations conducting research areas where people are not internet savvy could be challenging. Rural areas in countries like India, parts of Africa have no internet. Also towns that reside people over 70 years of age are not going to be internet savvy.

Allstate’s Motorcycle Market:

Allstate is an insurance business company dealing with property, power sports, life/retirement etc. While targeting the audience in the power sports area which primarily comprises of the motorcycle industry, it was revealed that 20% of the American population comprised of the generation Y consumers who had a penchant towards cool electronic gadgets such as mp3 , smartphone, fast bikes and notebooks . They were the major buyers in the motorcycle industry, purchasing around 1.2 million motorcycles in the year 2006. In order to deal with this generation Y customers, the marketing executives needed an integrated marketing strategy which included advertising on platforms such as social networking sites, text messaging, internet, mobile websites etc. Allstate marketing executives found out that 600 of its 14,800 agents were also passionate riders and this could reap positive results as then the interaction between the potential customers and the agents could reach a new high due to their common passion for fast bikes. The marketing executives of the Allstate Company captured the above fact and organized a downloading service through the Rolling Stone Magazine as part of a digital advertising campaign which aimed at music lovers from amongst the riders and also sponsored races aimed to pamper their customer needs.

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In this case study, All State Insurance has been known for attracting a conservative, mainstream target market. Having a new focus in lifestyle strategies, however, All State has recognized and understood the increasing interest in “baby boomers and Generation Y consumers”, with a relative increase in sales “for the past five years” (Brooks). This information helped direct All State to market towards motorcycle riders in order to broaden their complete insurance coverage policy as well as “revamp some of its advertising and marketing strategies” (Brooks). Since other insurance companies, such as State Farm and Geico, continued to focus their marketing advertisements to the general population, their catchy tunes “like a good neighbor, State Farm is there” focuses primarily on conservative automobile insurance holders, and not so much of the non-conservative motorcycle niche market. This differentiates them in a competitively unique niche market where there are very few competitors who already have an established customer base. In addition to these changes in marketing strategies, All State’s market research also found that “over 600 of its 14,800 agents were devout motorcycle riders themselves,” (Brooks) and thus decided to incorporate its policies to its current employees and extended family members and friends. What better way for a company to promote its current products and services, than having actual employees be a part of the company’s range of products and services in this newly established motorcycle insurance policy, while at the same time maintaining a rapport and word-of mouth promotional strategy with fellow coworkers, family, and friends who also happen to be a part of the motorcycle community.

When market research indicated motorcycle riders weren’t even considering Allstate Insurance during the insurance purchasing process, the company knew something needed to change. In 2008, Allstate launched the website Allstategarage.com, created by Chicago agency Leo Burnett. It allowed visitors to plan a ride, find an agent and get a quote. It also included safety themed features, such as 30 second vignettes starring well known motorcyclists. The goal of the website was to show that Allstate understands what the biker’s needs are. In the first two months, the site generated more than a 100,000 unique visitors, with the average visit length approximately 7.5 minutes.

For the third year in a row, Allstate was giving away a custom motorcycle designed by legendary bike builder Dave Perewitz. Allstate motorcycle insurance offers one of the most competitive policies in the industry with many product features, including: first accident waiver, guest passenger coverage, custom parts coverage and towing coverage. If eligible, motorcycle owners can save up to 40% off of their premiums with a variety of discount just for switching to Allstate. Insurance and discounts are subject to qualifications and availability.

Conclusion

Overall, the findings of this study suggest the importance accurately measuring and forecasting demand.  Hence, it is vital for companies to track and identify opportunities in the macro environment; and asses return on investment in marketing.

References

Kotler, P. and Keller, K. (2012). Marketing Management, 14/E. Prentice Hall

Hine C. (2005). Virtual Methods: Issues in social research on the Internet. Oxford: Berg.

Kvale, S (2003). InterViews: A guide for social social science students and research. London: Sage.

Kemick, David (2011). How to claim your business on Yelp. 

Agresti, Alan (2002). Categorical Data Analysis. Hoboken: John Wiley and Sons.

L. Devroye, G. Lugosi (1996). A Probabilistic Theory of Pattern Recognition. New York: Springer-Verlag.

Tukey, John (1977). Exploratory Data Analysis. New York: Addison-Wesley.