The External Business Environment of the Target Market - Essay Example

Business, Essay Executive summary Nippon UK Martial Arts is a part of Nippon UK. Nippon UK Martial Arts as a brand wants to enter into a new market and grab the market opportunities. In this report, the strenghts and weaknesses of the company are highlighted with the help of external and internal analysis. It has been done with the help of tools such as SWOT, PEST and Porter’s Five Forces Model. Finally based on the analysis a country will be chosen and a stratgy will be recommended. Table of Contents Table of Contents 3 Introduction 4 Brand Identity 4 Internal and external analysis 5 SWOT Analysis 5 PEST Analysis 6 Porter’s Five Forces Framework 8 Recommendations 10 Target market 10 Recommended strategy 10 References 12 Introduction Nippon UK is the company established in 1993 with the aim of providing tutions of Martial Arts to the children and adults in many town and village locations in UK. The company is teaching martial arts to more than 300 primary and secondary schools and had a membership of more than 20000 people. Nippon UK having different brands such as Nippon UK Martial Arts, Nippon Retreats and Martial Arts Holiday, Nippon Uk Presents and Nippon Professional Development (Prestonmartialarts, 2012). Brand Identity Brand identity can be defined as the outer expression of a brand. Brand identity mainly includes trademark, name, visual appearnce and communication. In addition, brand identity helps in identifying a brand and distinguishing it from the other brands. Nippon UK Martial Arts offer their customers the opportunity to practise, learn and understand the martial art skill. The services provided are self defense, children and adult jujitsu, ladies and mixed kick boxing, little ninjas and judo (University of Texas, 2012). Hence the brand identity should reflect its dedication towards their target customer base. In accordance with the vision of Nippon UK martial arts following brand logo has been designed. (Source: Author’s creation) The slogan for the brabnd can be The perfect place which gives the right opportunity to know, learn, understand and practice martial arts and be self defendent (New Mexico State University, 2008). Internal and external analysis In order to carry out the internal and external environmnet analysis of the the company SWOT analysis, Porter’s five forces framework and PEST analysis will be used. SWOT Analysis Strengths – Nippon UK Martial Arts prides itself because of their professionalism. The instructors are highly qualified. They are CRB checked, first-aid trained and fully insured. Weaknesses – Nippon UK Martial Arts goes in a traditional way. The way they follow to teach the students is not fully advanced. So in this case any other school of martial art can take the advantage of using modern and technology based methods to operate. Hence the company has failed to set barriers of entry for new players. Opportunities – The biggest opportunity of the company lies in international expansion. Initially it can expand to the European Union countries. Apart from that the company also has the opportunity to make use of modern tools and techniques for training. Threats – The threat for Nippon UK martial arts comes in the form of intense rivalry within the industry. Training schools such as Freestyle Kickboxing, Red Dragon Martial Arts and Shinobi Kai Basingstoke offer stiff competition (Martialartsclubs, n.d.). The decresing popularity of martial arts can also be considered as a threat. PEST Analysis Through the help of PEST analysis, the external business environmnet of the target market will be assessed. Now since the company has the opportunity to expand in European Union countries, the proposed country is Germany. Higth popularity of martial arts in Germany can be cited as the reason for selecting the German market. Therefore the external enviornmneta analysis of Germany is presented below: - Political factors – the political factors repesents the way by which the government influences the business and the economy is also affected due to the political changes and as a result the business also has to do certain changes. Gemany has three levels of government as federal, states and local. Martial arts is a combat sport and allows to use both grappling and striking technique (UNESCO, 2008). However due to standard rules and regulations pertaining to safety, there is hardly any political turbulences. Moreover the stable political environmnet of Germany makes the condition favorable for Nippon UK martial arts to enter the German market. Economical factors – The economic factors includes exchange rates, interest rates, taxation rates, and inflation among others. All these rates have a great impact on a company operating in the country. Germany has the largest in the Europe and fourth largest in the world in terms of nominal GDP. The GDP of Germany is $ 3.571 trillion (The World Bank, 2012). Moreover the disposable income rate of country also high. Therefore the favorable economic scenario can be of great advantage to Nippon UK. Social factors – Social factors of a country plays a crucial role in running a venture. It includes population size, religion, age etc. Germany is country which is mainly dominated by Christian population. Gearmany has a rich history of martial arts. In addition, according to the recent studies, there is a growing inerest of the modern martial arts such as boxing, mixed martial arts rather than the older or traditional one such as judo, karate (Vertonghen and Theeboom, n.d.). Therefore Nippon UK can make use of modern techniques to cater effectively to the target audience. Technological factors – The technical infrastructure of a country is extremely important for the growth of an organzitaion operating in the country. It includes tchnical infrastructure, management information system, EDI (Electronic Data Exchange) platforms etc. Germany has a strong technical infrastructure and most of the modern technologies heve been already implemented throughout the country. Technology is very much important for providing martial arts training. In addition, strong technical infrastructure helps to improve the way of imparting training. The instructors of martial arts may also get benefited by the use of technology. The students can increase their skills and knowledge by attending the workshops and short courses (National Careers Service, 2012). Therefore from the analysis of the external environment of Germany, it can be stated that Germany offers favorable condition for Nippon UK in all the aspects. Therefore the company should enter Germany as a part of their international expansion program. Porter’s Five Forces Framework Porter’s five forces model is a tool for the development of business strategy and industry analysis (Porter, 2008). The five forces as highlighted by Porter are threat of new entrants, bargaining power of buyers, bargaining power of suppliers, existing rivalry and threat of susbtitutes. The martial arts industry of Germany will be assesed as the company will enter the German market. Figure 1 (Source: Larsen, 2009) Bargaining power of Suppliers – Suppliers are also other organizations that offer company with raw materials. It is about the ability of the suppliers to increase the cost of the company. The suppliers are gyms, MMA schools, wrestling schools, minor league events and TUF. The power of the suppliers over the firm are less because there are many suppliers in the market who can supply students to the martial art school. Bargaining power of Buyers – The bargaining power of the buyers refer to the ability of the customers to bargain and reduce the price of products or services. The customers are mainly in the age group of 4-30 years. The bargainig power of buyers is dependent upon the number of martial arts training provider in Germany (Douris et. al., 2009). Since the number of providers are less, the bargaining power of buyers power is low. Intensity of Competitive Rivalry – The competitiveness of the industry is determined by the intensity of rivalry among the existing players. Due to less number of players in this industry, the intensity of competition within the industry is moderate. Threat of Substitute Products or Services – Substitutes are the products or services that performs similiar function as that of the core product and offer similar benefit. The substitutes in this context are Strike Force, Dream and WEC among others. Due to the presence of large number of subsititues the threat of substitue is high. Threats from New Entrants – Threat of a new entrant is charecterized by the possibility of new player entering the industry and increasing the level of competition. The country is favorable for business and the industry hardly has any entry barriers. Hence the threat of a new entrant is high. Recommendations It is better for Nippon UK Martial Arts to enter the market of European Union countries as it will be easier for them to grab the market with their strength i.e. professionalism and variety of martial arts taught (wide range of services). As those martial arts are not being taught in other countries. Therfore considering all the aspects, it is recommended that the company should enter the German market. Target market Nippon Uk has made an advancement in the national and international market, so they should concentrate in those countries where there is demand but variation of martial art techniques are not available. So it should concentrate in Germany and provide the customers a variation of martial art skills. The target customers are as follows: - Children of age group: 6-17. Young adults of 18-30. Adults above 30 years of age. Recommended strategy Nippon UK Martial Arts should offer the customers of the German market with those skills of martial arts which are not taught by the professionals in that country. It will create a great demand for the the skills and techniques taught by the company. It is also recommneded that the company should focus highly on the promotional startegies in order to increase its visibility. Social media, television and newspaper can be used to promote the offerings of Nippon UK. In addition, penetrative pricing can be used to gain initial market share. Finally the company should conduct socially responsible tasks in order to operate effectively in the market place. References Douris, P. C., et al., 2009. Martial art training enhances the glutathione antioxidant system in middle-aged adults. [online] Available at: [Accessed 10 December 2012]. Larsen, S., 2009. The Five Forces Model. [online] Available at: < http://blog.bootstrapbusiness.org/the-five-forces-model-18-02-2009.html> [Accessed 13 December 2012]. Martialartsclubs, No Date. Search Results. [online] Available at: [Accessed 13 December 2012]. National Careers Service, 2012. Martial arts instructor. [online] Available at: [Accessed 10 December 2012]. New Mexico State University, 2008. Brand Identity Program. [online] Available at: [Accessed 10 December 2012]. Porter, M., E., 2008. The Five Competitive Forces That Shape Strategy. [online] Available at: [Accessed 10 December 2012]. Prestonmartialarts, 2012. Nippon UK - Professional Martial Arts. [online] Available at: [Accessed 10 December 2012]. The World Bank, 2012. Germany. [online] Available at: [Accessed 13 December 2012]. UNESCO, 2008. A comparative look on dance and martial arts with the Japanese company « O-getsu-ryu » and the Brazilian caopeira masters. [online] Available at: [Accessed 10 ecember 2012]. University of Texas, 2012. Brand Identity. [online] Available at: [Accessed 10 December 2012]. Vertonghen, J. and Theeboom, M. No Date. The social-psychological outcomes of martial arts practise among youth: A review. [online] Available at: [Accessed 10 December 2012]. Read More