PEST Analysis for UK Bicycle Market - Case Study Example

Competitive Business Environment Table of Contents Section 3 External Environment 3 PEST Analysis 3 4 Dimensions of PEST 4 Section 2 5 PEST Analysis for UK Bicycle Market 5 Political 6 Economic 6 Social 6 Technological 7 Impact on Business Opportunities 8 Section 3 9 Conclusion 9 Recommendations 10 References 11 Section 1 This part of the assignment has provided a brief knowledge on the impact of external environmental factors on business performance of any organization. External Environment Entities, conditions, factors and events surrounding an organization, which generally influences its choices and activities, and decide its external opportunities and threats, are known as external operating environment. External environment of an organization includes external competitive business environment and influence of several external environmental factors on the business performances (Shaikh, 2010, p.17). It is highly important for the organizations to analyze and evaluate the external environmental factors. It helps to maintain conflict free, profitable and smooth business operation process. Effective external environmental analysis can help an organization to mitigate several external risks, such as legal barriers, economic crunch, environmental issues and political issues. This specific analysis will help the organization to develop effective strategies in near future based on the current external environmental issues that may affect its profitability in near future. This external environment analysis can help an organization to overcome current issues business operation practices. PEST Analysis PEST can be considered as an important strategic marketing analytical tool that helps an organization to determine the nature of different external environmental factors and impact of those factors on the business performance. PEST analytical framework consists of four external environmental elements, such as political factor, economical factor, social factor and technological factor. It is important for the organizations to conduct a PEST analysis before entering into a new international market place. It helps to determine the nature of different external environmental factors of that specific country (Jain, 2012, p.16). PEST analysis can be considered as an effective external environmental analytical tool that can help an organization to develop and implement global business expansion strategy. Bianchi can be considered as one of the leading bicycle manufacturing organizations. Recently the organization has faced several challenges in business operation process. The organization has decided to enter in UK market, which is highly saturated, competitive and volatile. Therefore, it is highly important for the organization to focus on the implementation of PEST analysis as it can help the management of the organization to understand external business environment of UK. It will help them to maintain a sustainable business growth rate in UK. 4 Dimensions of PEST It is clear from the above discussion that PEST analytical framework consists of four different dimensions, such as political environment, social environment, economic environment and technological environment. Different types of interesting and valuable things are examined in each of these dimensions. Analysis of political dimension generally helps an organization to determine the political environment of a country. It includes analysis of the impact of political factors, government regulations and views of several political experts on the business operation process of a particular industry. On the other hand, economic dimension generally analyzes economic environment of a country, economic stability of society and people, and impact of the current economic state on a particular industry as it helps the management of an organization to determine the purchasing power of entire community. In social dimensions, organizations analyze social demand for a particular product or service among entire population. It helps the management of an organization to develop marketing strategies based on the market needs and customers’ demand (Gopal, 2012, p.9). Technological dimension is also important as marketers generally examine whether the country or region is full of sufficient technological resources or not. This examination helps an organization to determine whether it can get sufficient amount of resources or not in order to run business operation process in that specific area. For example, recent financial crisis of UK affected the purchasing power of people. Therefore, it is important for the organizations to make some changes in pricing strategy in order to support the purchasing power of common people. In terms of social environmental changes, demand for high quality and healthy fruit juices and energy drinks is affecting the demand and sales growth rate of high carbonated soft drinks. These are the examples that can clarify what types of examinations are effectively conducted in the PEST analysis. Section 2 This part of the assignment will conduct a PEST analysis of UK bicycle market regarding the decision made by the management of Bianchi to enter in the UK market. Moreover, this section will identify external opportunity and threats based on the results of conducted PEST analysis. PEST Analysis for UK Bicycle Market This PEST analysis will help the management of Bianchi to determine the impact of the external environmental factors on the business performance of the UK bicycle industry as well as Bianchi. Political Government and public agencies of the United Kingdom are trying to develop and introduce several policies in order to maintain environmental sustainability. Increase in number of fossil-fuel-run vehicles is increasing carbon emission. It is affecting the environmental sustainability. Reduction in the number of these vehicles and increase in number of these bicycles will help to reduce emission level of carbon in air. It will automatically help to maintain environmental sustainability. Mayor of London also wants to make bicycles as important and safest part of transport networks (London, 2014, p.1). In addition to this, government is supporting the growth of this industry as it may enhance economic and social development of a country. Economic Recent financial crisis and global economic recession affected the business environment of the United Kingdom. Low disposable income and limited purchasing power of common people are the major consequences of this global economic crunch. People are trying to purchase high quality goods and services at low and economic price level due to affected and low purchasing power. This specific economic slowdown also has affected the business performance of entire UK bicycle industry as it reduced sales growth rate of the brands within this UK bicycle industry. In addition to this, growing unemployment rate, high taxation and employment wage distribution issues in UK can hamper the business performance of Bianchi in near future. Social This UK bicycle industry is growing socially as the demand for different types of high quality and differentiated bicycles is increasing significantly. Cycling can be considered as the socio-cultural tradition of the people of UK of all ages. The people of UK have huge demand for city trekking bikes, mountain bikes, junior range bikes and road bikes. Moreover, cycling can be considered as a popular game among the people of UK. Therefore, the people of UK always have a significant and potential interest towards different types of high quality and differentiated bicycles. Moreover, several bicycle manufacturers are implementing push marketing strategy by integrating several advanced technological features into the bikes. It is actually enhancing the social demand of the people of UK. Moreover, significant governmental support is increasing social demand for these products (Gov, 2012, p.1). Most importantly, Bianchi can be considered as one of the leading and popular manufacturers of high quality and differentiated bicycles. This specific demand may help Bianchi to gain huge competitive advantages in the competitive and saturated UK market. Technological UK is technologically developed country. Business organizations and industries can get significant access to several advanced technological applications as the country is enriched with modern, high quality and advanced technological resources. It is true that manufacturing and distribution of high quality advanced and differentiated bicycles require high quality and modern technological resources (Henley, 2010, p.71). The manufacturers within the specific industry can avail those resources as UK is technologically developed and government is influencing several technological firms to enhance effective research and development department to enhance effective and profitable business environment. These aspects can help Bianchi in near future in the UK market. Impact on Business Opportunities It is clear from the above PEST analysis that there are several external environmental factors that can enhance effective business opportunities of Bianchi in UK. On the other hand, there are several aspects that can hamper the business performance of the organization in near future. Economic environment of UK is critically unfavorable and challenging for Bianchi. It is clear from the above analysis that the inadequate economic environment of United Kingdom has affected the business growth rate of the UK bicycle industry. First of all, it has affected the job market. Growing unemployment rate can be considered as one of the major consequences of this economic crunch. Short of effective and skilled employees has affected the manufacturing and distribution activities. On the other hand, high taxation on outsourcing of several resources also has affected the pricing strategy of the organization (Less-Marshment, 2014, p.42). It may force the management of Bianchi to sell differentiated bicycles at premium price level according to the industry standards. Limited purchasing power and low disposable income can be considered as another major consequence of this economic crunch. People are trying to purchase high quality and differentiated products at economic price level. But, poor and affected economic environment can make it difficult for the management of Bianchi to offer bicycles at economic price level. Therefore, it is clear that recent economic environment may pose serious threat to the management of Bianchi. Social, political and technological environment will help the management of Bianchi to gain potential business opportunities in UK market. In terms of technological resources, UK is technologically developed and full of several high quality technological resources. It is true that the management of Bianchi always tries to offer technologically advanced bicycles in order to meet market demand and needs of target customers. The management can get sufficient number of high quality technological resources to manufacture and distribute end-products. On the other hand, growing social demand for high quality and differentiated bicycles can help the management of Bianchi to get huge initial success in UK market. According to the socio-cultural traditions and passions, the high quality and differentiated bicycles will be highly accepted by the people of UK of all ages. Effective market segmentation and market position of the products will help the management of Bianchi to sell products according to the needs of the target customers. Last but not the least; favorable political environment will motivate and influence the management of Bianchi to develop and implement aggressive marketing strategies in UK market (Adcock, 2001, p.99). The government is trying to enhance environmental sustainability through the introduction of green vehicles. Therefore, effective social demand and favorable governmental influence will motivate the management of the organization to capitalize on the potential business operation opportunities in UK market. Section 3 This section of the assignment will provide a brief conclusion based on the findings of PEST analysis. Conclusion Bianchi is one of the leading manufacturers and distributors of bicycles in global market places. Recently the organization is facing challenges in its business productivity in several global market places. Therefore, the organization is trying to enter into the potential UK market. People of UK are socially attracted to the high quality and differentiated bicycles. Moreover, the government and several public agencies of UK are supporting the business operation activities of this industry. The organizations within the industry can access to required advanced technological resources for business operation activities as the country is technologically developed. Only concern for Bianchi in UK is unfavorable UK economic environment. Recent economic slowdown affected the purchasing power of common people. It is affecting the business performance of existing organizations. Moreover, it may affect the performance of Bianchi in near future. Following recommendation plans will help the management of the organization to overcome the issue. Recommendations First of all, it is important for the management of the organization to adopt and implement cost leadership strategy in business operation process. It will help the organization to reduce overall business operation cost and offer products at economic and competitive price level. Secondly, the management of the organization should try to develop own supply chain and distribution channel in UK (Ireland, 2008, p.98). External channel can increase supply chain cost. Moreover, existence of own distribution channel can increase the efficiency of overall business operation process. Last but not the least; it is important for organization to stop outsourcing activities of resources. Localized manufacturing and decentralized distribution will help the organization to reduce overall business operation cost (Rossouw, 2008, p.12). These strategies will help the management of the Bianchi to overcome the economic issue in UK market. References Adcock, D., 2001. Marketing: Principle and Practice. London: Penguin. Ferrell, O., 2012. Marketing principles. Stamford: Cengage Learning. Gopal, C., 2012. Business environment. London: Kogan Page. Gov., 2012. Policy: Improving local transport. [Online]. Available at: . [Accessed on November 26, 2014]. Henley, N., 2010. Principles and practice of social marketing. London: Routledge. Ireland, D., 2008. Understanding business strategy. Stamford: Cengage Learning. Jain, T., 2012. Business environment. London: Routledge. Less-Marshment, J., 2014. Political marketing. New York: Springer. London., 2014. Mayor’s vision for cycling. [Online]. Available at: . [Accessed on November 26, 2014]. Rossouw, D., 2008. Business management. New York: Springer. Shaikh, S., 2010. Business environment. London: Sage. Read More