Competitive Business Environment - Essay Example

Competitive Business Environment Competitive Business Environment As shown by the PEST (political, economic, social and technological) political and economic factors are among the key external aspects that affect a business. These factors are commonly assessed by managers for the sake of making better business decisions with the awareness that political factors are less predictable than economic ones although both are equally significant. Political and economic factors are interrelated from the perspective of business because changes in government or government policy will influence the profit making capacity yet business must make profit and consider customers’ preferences to exist. With that understanding, this report will analyse the future of Brewers Fayre restaurants after the government’s intention to reduce obesity and the spending of the National Health Service. With acknowledgement that future menus will change to suit the government initiative, the report will explain and analyse the effects of economic and political changes on the business and its future strategy and recommend how to minimise the impacts. The Effects of Economic and Political Changes on Brewers Fayre Political and economic factors are part of the PEST analysis because while political factors determine the extent to which the government intervenes in the economy, economic factors are determined by inflation rates, exchange rates, economic growth and interest rates. The PEST analysis will commonly be used by businesses to plan and inform the development of long-term strategies. Political decisions will affect business by impacting on the economic environment, the sociocultural environment, the rate at which new technologies and products emerge and the acceptance of new policies as well as the technologies and products. Many aspects of government policies affect businesses since they are required to adhere to law and it will be imperative for managers to understand how future legislations will impact on their activities. With this understanding, many aspects of what restaurants serve that influence public health are created, run and maintained by local and national governments, which in turn affect the ethical, demographical, legal and environmental aspects of the restaurants. Essentially, the political aspect will imply policy and regulatory changes occasioned by the government. Therefore, local incentives and policies will affect the absence and presence of some items on the menu or the ingredients used in their preparation. This means Brewers Fayre will remove some of the customers’ favorite items on the menu and add or change others in order to adhere to the initiative to fight obesity, with the most immediate change occurring in branding and marketing. The government published a regulation in 2011 that aims to cut down the nation’s daily intake of calories by up to five billion calories (Boorman, 19). Therefore, if action is taken by the Brewers Fayre management, specific legal strategies will have to be undertaken such as limiting the marketing of certain foods, addressing the addictive properties of some foods, regulating conduct and increasing government speech. The company will be forced to regulate persuasive marketing as a means of protecting consumers against foods high in calories and poor in nutrients. This will have economic impacts since some of the best-selling foods will be affected as the government will require the restaurants to provide consumers with certain nutritional information. The organisation must be aware of possible economic impacts that may arise from lawsuits due to noncompliance of the changes. There is a possibility of long-term risks to its revenues. Further, the restaurants will be affected by the policy changes that may compel them to disclose factual commercial information meant to ensure the consumer population stays informed. Further economic impacts can arise from the fact that the government can tax restaurants to pass the information to both consumers and the restaurants. Therefore, the political situation will affect the economic setting and the economic setting will affect the business performance of Brewers Fayre. Other factors that may affect the business in future include social ones that are related to changes in social structures such as the population and consumers’ buying patterns, behaviour and lifestyle. In order to reduce drunken driving, the government also intends to reduce the amount of alcohol a person can consume and drive. With the fact that most of Brewer Fayre’s restaurants are not in residential areas, this will result in significant economic changes arising from reduced revenues from the sales of alcohol. The effects of such a move by the government will further be compounded by the fact that even increased marketing will not change the situation because it depends on the amount drivers are legally permitted to consume (NOO) 2009, p. 101). This will greatly change the economic activities associated with the entire alcohol supply chain, and the possibility of the business retrenching some employees directly involved with the alcohol department cannot be overlooked. Analysis of How the Political and Economic Facts will Impact the Organisation’s Future Strategy Two of the changes that will mostly impact on the future strategy of the organisation are the Public Health Responsibility Deal and Change4Life Programme. Any strategic planning the organisation may consider will have to be based on and informed by the changes brought about by the initiative. Most importantly, the planning of the organisation’s future strategy will have to be in consideration of who may be held accountable for the consequences of obesity on public health and the economy. Analysing and comparing this situation to smoking in which legal and public opinion has placed all responsibility for harms related to smoking to the tobacco industry, it is possible to predict the future of the hospitality industry and obesity. Compliance will mean an initial reduction in sales as some items will no longer be offered and at the same time, consumers will be more informed and conscious of their health implications. However, lack of compliance to the changes will most likely result in litigation. Therefore, the organisation will have to change its promotions, sales and advertising and produce food that is considered by regulation and policy to be reasonably safe. Any strategy that will be put in place must be aimed at mitigating obesity and its health implications. The political and economic environments are powerful tools in addressing factors that impact on obesity. The factors are also strategic components of the organisations marketing and are influenced by the overabundance of highly accessible yet non-nutritious foods (Schlosser 2011, p. 69). It will therefore be the responsibility of the organisation, as per the obesity policy, to provide information to consumers and address the issue of the use of addictive ingredients in food production. Hence, the organisation must also consider innovative legal strategies in future in order to fill the regulatory gaps that compromise customers’ rights to nontoxic food. It will be worth considering, for example, that recognising health as a right and applying the nuisance law may set up circumstances for litigation. Another possible way that future strategy may be affected is through the need of harnessing performance-based regulation by including strategies that address health problems arising from consuming the organisation’s products. It is more important for the organisation to acknowledge that economics and politics are inextricably intertwined and that may be demonstrated by the Thai Baht collapse of 1997. Looking at the business and industry at large, the concept of preemption will considerably impact on the organisation’s ability to implement the policy changes and efficiently deal with its implications. Even with individual efforts by the organisation, preemption as an external factor will rarely promote the goals of public health. For example, since the regulation requiring the changes was published, not much has actually been enacted. Therefore, the management of the organisation must plan their strategy with the recognition that preemption at the national level can potentially impede their public health goals. They must also recognise that issues related to public health are not distributed evenly among the populations and different restaurants in different localities will need customised strategies to respond to their specific circumstances and new regulations. However, the management will also be up against a challenge in the sense that national preemption will prevent localities from implementing stronger public health policies than the weaker ones provided by national law. Recommendations for Brewers Fayre to Remain the Brand of Choice and Expand Customer Base The organisation must first accept that changes are inevitable and will determine its future and, therefore, put I place measures to protect itself. For example, unexpected resignations, currency collapses and acts of terrorism can transform both economic and political landscapes of the business. Brewers Fayre not only operates in an environment that requires consideration of business competition but also economic, political, social and legal influences. Innovative ideas such as creating exercising space in the restaurants will be crucial. References Boorman, S 2011, NHS health and well-being, DH, London. National Obesity Observatory (NOO) 2009, Standard evaluation framework for weight management interventions Author, Oxford. Schlosser, P 2011, Fast food nation, University of California Press, California. Read More