Pestel Anlysis Children Clothing

Report on surroundingsal analysis & patience consolidations Introduction This business relationship is some the importance of environmental analysis for the companies run in the UK alcohol fabrication and what kind of tools is available for analysis. Also report go away highlight the labor consolidation in the light of Greene fag recognise.Importance of environmental analysis This analysis is habituated to measure the inside (Strengths and weaknesses) and immaterial (opport social unities and threats) environment factors which accept companies in prospective and also divine service to fasten a strategy to compete environment bewitchs. (J&S) If companies do not go bad their internal and external environment then it would affect the companys produce and others impart have a chance to lay out agonistic advantages. Boiled frog syndrome is a slap-up compositors case for sympathy the importance of environmental analysis. Lecture notes 1, 28. 09. 2005) Procedure T here atomic number 18 three models for analysing the environment (J&S) PESTEL analysis Industry life cycle porters beers fin forces frame work But in this report only two models give be used for see the environment. PESTEL analysis recognises the opportunities & threats for companies from internal or external environment and Porters Five Forces model recognises the line of competitor. Firstly this report will look at the PESTEL analysis and how could companies use this model for analysing the environment.PESTEL analysis is used to see the future tense adjoin of environmental factors. There are six categories of environmental factors in PESTEL analysis i. e. Political, Economical, Sociocultural, Technological, environmental and Legal. (J&S) Secondly this report will look at the Porters five forces model for identifying the source of competitors in an diligence. (J&S) Findings PESTEL analysis for environmental s placening Political factors regimen stability Taxation p olity Foreign bargain orders Social welfare policies (Adapted from J&S)Report will show how these political concerns sour alcohol industry. According to Philip Webster and David Rose (The multiplication, 27. 10. 2005) take has been ostracisened in whole pubs in Scotland and Northern Ireland and now formation is concerning to put a toss away on smoking in pubs that serve food in England and Wales. This young threat will affect the industrys profitability as it has menti unmatchedd in Greene antecedent case study. It will also affect the presidency stability. Government is also externalisening to lessen the utilization of alcohol by putting to a greater extent(prenominal) assesses on alcoholic drinks.Again it will affect the alcohol industry and prices of alcoholic drinks will rise. If the Government decide to put more tax on alcohol industry then they have to metamorphose the policies for tax-free product and also they have to control the black trade that exser ts cheap cigarettes and alcohol. Otherwise vernal law will not be affective. Therefore companies take in to consider the Government regulations that could jeopardise the profitability and plan for future strategies in regularise to compete those influences which they could have direct impact on companys performance.Economical factors Inflation Interest rate currency fluctuation and exchange rate Unemployment Disposal income Money supply (Adapted from J&S) Companies drive to dismember economical factors that affect alcohol industry. For instant if the Government decide to increase the taxes on alcohol industry in order to the alcohol consumption then it will increase the prices of alcoholic drinks. unexclusives health is major concerned from the Government prospective merely it will affect the companies profitability and their share value.Because high inflation reduces the consumers spending power. (According to Greene baron case) graduate(prenominal) interest rate a lso affects the presidential term income. Because it reduces the investment in business and consumer spending power. So it is very historic for companies to analyse the economic factors which they could influence the companys profitability or growth. Socio-cultural factors Change in modus vivendi Social mobility Demographic changes Distribution of income development and health (Adapted from J&S) Socio-cultural is another important factor. It needs to analyse continuously.Consumer life style provides opportunities and threats to companies. But it depends how they will tackle them as a valuable fortune and threat for future strategy. Un embody income dissemination also affects the consumer power. So companies need to analyse different level of income and then make their strategy accordingly. commonplaces health is an important concern for alcohol industry. Therefore, they need to analyse Government policies on the industry that affect the humanitys health. For example in G reene tabby case Government is more concerned about public health and sentry duty.This is the reason they are provision to increase the taxes in order to reduce the consumption. Another social concern is increased inebriety hours that could cause violence and noise. Therefore companies need to analyse those factors to make their future strategies accordingly. Technological factors Government spending on research Speed of engine room transfer New development Government and industry focus on technological effort (Adapted from J&S) The technology factor can influence the companies.It is necessary for companies to make a continuous effort to develop their technologies. It has a direct impact on companies performance and could jeopardise the profitability. Companies need to analyse external environment for updated their technologies for its future strategies. Sam Smiths, an owner of train of pubs, is using CCTV technology. According to companys spokesman it is much easier to wa tch either single floor at a same time. (Greene King case) Environmental factors Environmental protection law Waste disposal animation consumption (Adapted from J&S)Environmental factors also affect the companies reputation and performance. Companies should analyse the new environmental law regarding wastage and energy consumption. There are two obvious reasons, public health and environment for government. According to The World Health geological formation alcohol is the third- biggest threat to public health (Greene King case). Resent view shows that 10% increase in alcohol prices would cut the alcohol link deaths by 28. 8% for men and 37. 4% for women. (Greene King case) Legal factors Monopolies order Heath and safety law Employment law Product safety (Adapted from J&S) Government is planning to introduce a complete ban on smoking publicly or in social places. An industry magazine reports that 42,000 pubs serve food and about 65 per cent of their guests forage (Web ster, P and Rose, D, The Times, 27. 10. 2005). If they continue to serve food then the new regulation could affect their earnings. Greene Kings annual report shows that they are planning to increase the amount of no-smoking floor in their pubs and making out-door areas for smokers.The British Beer and ginmill association wants to increase tipsiness hours. If the Government decided to increase drinking hours, then extra safety and security measure will be required (Greene king case). People will require frequent public transport after social hours to get their destination safely. Government intent to extant drinking hours will affect employees as well. Its mean they will have to work long hours. Some times new lawmaking brings new competitors in the securities industry which changed the companys monopoly in an industry. Porters five forces model for environmental scanningThere are five split of this model. 1. nemesis of entry 2. Threat of substitute 3. The power of buyer 4. Th e power of supplier 5. Competitive rivalry (See appendices for figure 1) Threat of entry Threat of entry will depend on the extent to which there are barriers to entry. These are factors that need to be overcome by new crank if they are to compete successfully. These barriers include legislation, economies of scale, capital requirement, distribution channel, own and relationship with supplier & customers. (J&S, page 113 to 115)In order to compete successfully companies need to analyse following barriers Cost of capital to enter in an industry with regards to technology and economies of scale Strong relationship of exiting company with supplier and customer could be apostrophizely for new entry Product differentiation or high quality operate could give agonistical advantage or barrier Existing high experienced companies could take an advantage in terms of speak to, customers and supplier loyalty Threats of Government policies Changes in technology would affect the compet itive advantage (Source adapted from J&S page 113 to 115)Threat of substitutes telephone exchange reduces demand for particular class of product as customer modify to the alternatives. (J&S, page 115) Threats of substitutes work when other companies provide the same product with more benefits and value. Therefore companies need to develop their products by analysing their environment. A Victorian style of pub is a good example where customers can have smoking and non-smoking floor separately. The power of buyers Buyers power likely to be high when customers could get same product at low price from different suppliers.Buyer will have more bargaining power when switching cost from one supplier to another is low. In order to reduce the buyers power companys needed to develop their products. So they could offer more benefits and value. (Adapted from J&S) For example if Government decided to increase tax on alcoholic drinks in order to reduce the crime and consumption rates then this impact reduce the companys sales. long-lasting drinking hours will increase the buyers power in terms of alternative. Its necessary for companies to analyse those factors so they can reduce bargaining power. The power of supplier Supplier power likely to be high when Limited sources and suppliers are available High switching cost from one supplier to another Different quality or services from alternative Powerful brand of supplier (Adapted from J&S) Analysis of these factors can increase bargaining power with supplier. I. e. change in tax policy could affect the suppliers power. In other word if Government increased the taxes on alcoholic drinks then whole production cost will change. Because supplier will charged extra and as response prices of alcoholic drinks will raise. Competitive rivalry Competitive rivals are organisation with similar product and services aimed at same customer multitude. Adapted from J&S, page 118) Factors affecting competitive rivalry High contumaci ous cost of products may increase price war customer could switch to other competitor if products are undifferentiated. High exit barriers could drive to increased in competition because of high investment in non-transferable fixed assets or high redundancy cost Competitors are in balance-roughly equal size lead to higher rivalry (Adapted from lecture note 2, 5. 10. 2005 and J&S) Therefore companies need to analyse those factors which are affecting on competitive rivalry. If they do not keep an eye on them then growth of company will be affected.Industry consolidation in light of the Greene King experience Industry consolidation in the light of Greene king experience is very successful. According to the case study, Greene king is the British pubs and brewery radical found in Suffolk. Since 1996 they have acquired 1,600 pubs (See appendices figure 2 for Greene kings acquisitions experience). instanter they are taking over Scotlands oldest brewery company Belhaven and Essex ba sed brewery & pubs group Ridley. Greene King has an opportunity to enter in a competitive market and expend their operations across UK.Greene king has a large distribution channel, 2,064 owned pubs which can sell their own brewed drinks. Industry consolidation reduces per unit cost of product because of the mass production and increases the profitability. Consolidation also reduces the supplier power and increase the bargaining power with supplier. It also increases the wealth of shareholders. crushed company has got benefit from being part of large company and has a chance to sale their drinks in new market. Its a good step for small companies to develop their businesses for the future. Consolidation reduces the competition in an industry and creates more jobs. Greene king case) Conclusion Environmental analysis gives better understanding for decision making and help to make positive strong future strategies. In order to competing environmental influences companies need to analyse their environment on continuous basis. Consolidation of industry is cost effective and has wide prospect of competitive market. It also increases the interest of stakeholders. Recommendation Companies need to analyse their internal or external environment on regular basis. This report extremely recommends the PESTEL analysis and Porters five forces model for environmental analysis. These models help in decision making and companys future growth.References Greene King annual report 2004 & 2005, access date 20. 10. 2005 and 01. 11. 2005. www. greeneking. co. uk Johnson, G and scholes, k (2002), Exploring integrated Strategy 6th ed UK Prentice Hall. Webster, P and Rose, D (2005) Pubs will call time on food to keep smokers in The Times newspaper, 27. 10. 2005, page 1 and 9. Wiscarson, G, Strategic Environment, Lecture notes 1, 28. 09. 2005. Wiscarson, G, Strategic Environment, Lecture notes 2, 05. 10. 2005.