Competitive Business Environment - Essay Example

Competitive Business Environment The success of any business depends mainly on the political and economic environment in the country. With the increasing levels of globalization resulting from liberalization of markets, efficient flow of information, and integration of economies, Brewer’s Fayre is already crumpling with the increased levels of competition. This results from the entry of multinational companies which have a huge financial base to segment the market, position their products strategically in the market, and attract customer loyalty towards their products. Therefore, the current changes in government policy will affect the competitive advantage of the company. For years, the company has enjoyed a serene environment. Therefore, it was using the country as a base to produce its products some of which were being exported in other countries. However, the current changes in the political environment will have a major impact on the overall sales (Prasad 2010). This is because the number of people who consume the product will reduce drastically, an aspect that will make it hard for the firm to sustain its operations in the market. The political changes will force the loyal customers to look for cheaper substitutes. With the number of the customers consuming the product likely to reduce drastically, the company will be forced to increase the prices of the products in order to sustain its operations in the market. However, there are a number of substitutes in the market. Some of these are from multinational companies which have been able to outsource their operations to different countries in the world (Worthington & Britton 2006). These are countries with cheap labor and raw materials. As a result, they can be able to produce the products at very low costs. The entry of such products will force the customers to look away from Brewer’s Fayre products. This will have a major implication on the overall position of the company in the market. In case stern measures are not taken before the suggestions become a law, then the company might be forced out of business. The changes being proposed by the government will have a major impact on the reputation of the business in the market. Over the years, Whitbread plc has been advertising its brand in the market, an aspect that has made it to perform very well. A strong brand name has acted as a barrier of entry for any interested investor. Therefore, the changes will change the position of the company in the market. This will force the business to re-strategize in order to remain competitive and relevant to the loyal customers. On the other hand, the move will provide an opportunity to competitors to penetrate the market. With the current levels of liberalization of markets, such a move by the government might change the competitive platform in the country. Therefore, the company will have to invest heavily once again in order to rebuild its reputation. The government policy on reducing the number of people who drinks and drive will give a competitive edge to competitors who have located their businesses near the residential areas. Such policies have a major effect on the consumption trends of the customers. For instance, many beer lovers will change their location despite being loyal to the services by the restaurants. This is to comply with the new regulations in order to avoid being arrested. A shift towards the competitors’ products will have a major impact on the financial base of the company. Moreover, it will affect the future plans for the business (Prasad 2010). This is through forcing the top-level managers to strategize on how to increase the competitiveness of the business in the local market. Once the loss of the clients has been incurred, the company will have to use a larger budget in order to market the company once again in the market. The political changes will have a major impact on overall revenues of the company. Over the years, the company has been using the local market as a base to support the company as it expands in other different markets across the world. Therefore, money generated in the local market was being used to stage a strong campaign in external markets. This has been significant in reducing the risks and uncertainties associated with concentrating in a single market. Therefore, reduced revenues will thwart the company’s effort to enter the global market. This will increase the risks and uncertainties associated with focusing on a single market. On the other hand, it will be very hard for the business to support its current workforce. Therefore, it will be forced to use the retrenchment strategy in order to reduce the cost of production. Mainly, the government is likely to use the tax to reduce the number of people who drink and drive. This is through increasing taxes on all alcoholic substances. This will have a major impact on the consumption behavior of the target market (Worthington & Britton 2006). For instance, many of the consumers will not be able to afford the product. This is because the restaurants will have to hike the prices of the commodities in order to cater for the taxes. This is likely to put off the interests of the target market towards the products. The government might put up stern measures to discourage alcohol production in the country. For instance, it might hike the prices of the licenses. This will play a significant role in reducing the profit margins of the company. Therefore, it will be hard for the company to rely on this product for survival. In addition, this will force the customers to shift their attention to other products in the market that are cheap. This might give an upper hand to the competitors who have diversified their products through developing product lines that deal with non-alcoholic drinks. Besides the current proposals by the government, the integration of the economies has exposed the country to external shocks. For instance, in case one country suffers economically, the local economy is also likely to feel the effect. In such a case, there would be an economic slowdown. The product being produced by this company is luxurious. Therefore, economic slowdown would have a major effect on the consumer behavior of the target of the target market. For instance, many customers would change their tastes and preferences in order to cut down on the level of consumption. In addition, consumers would become more concerned about their job security, an aspect that would make them to be more cautious in their expenditures. This would lead to decreased revenues by the business. Consequently, the restaurants would be forced to downsize their workforce I order to survive such an economic slowdown. If no action is taken, the company will be pushed out of the market. Currently, the market has become very dynamic. Multinational companies are investing heavily in order to understand how changes will affect their position in the market. Moreover, they are using the results from the research to understand the tastes and preferences of the target. In addition, majority of them have created a platform whereby, they can communicate directly with the customers. This has been important in creating a strong customer relationship. Many of the customers want to be associated with a company that integrates their grievances in the production process (Worthington & Britton 2006). This ensures that companies produce products that meet the specific needs of the customers. Besides attracting the loyalty of the customers, it also increases the numbers of referrals thereby boosting the sales of the business. Therefore, in case the company does not take any action, the competitors are likely to use such information and move closer to the residential areas. This will reduce the overall market share of the firm in the market. The economic and political changes will influence the future decisions to be made by the company. For instance, the company will have to strategize on how to win back the loyalty of the customers. This is through giving offers and free samples to potential customers. In addition, the firm will be forced to stage strong campaigns that aim at popularizing the brands (Kew, Stredwick, & Chartered Institute of Personnel and Development 2005). This is in an attempt to reduce the influence of the competitors in the market. These factors will therefore, slower the growth of the business because a lot of revenue will be directed towards the promotional activities. The future strategies will have to be changed in order to incorporate the new directives by the government. For instance, in case the government introduces new taxes as a measure to reduce the number of people who drink and drive, the company will be forced to come up with new strategies to recover the new revenue lost through taxation. Therefore, the top-level managers’ attention will be diverted from growth through expansion to consolidation of the lost customer base (Worthington & Britton 2006). This is through creating a strong platform to improve the level of customer engagement with the aim of developing a strong customer relationship management. This is a costly intervention which requires a large number of subordinates who are experienced. However, it will be a noble strategy that will shape the future of the company despite the government policies. One of the major recommendations would be diversifying the operations and introduction of new product lines. The reliance on one product will have a major negative impact on the future of the company. In order to reduce these risks and uncertainties, the firm should introduce new products. Mainly, these products should be non-alcoholic. This will be significant in ensuring that the products support the struggling products in the market. However, in order for the products to penetrate the market, the company should stage a strong campaign which will aim at familiarizing the customers with the products, and persuading the potential customers to tests the new products (Worthington & Britton 2006). On the other hand, the company should expand into new and untapped markets. The laws will be implemented within the country’s boundaries. As a result, the firm should penetrate other markets in order to expand the sources of revenues. These are markets with business friendly regulations. The diversification process would enable the managers to make future decisions with absolute certainty. Whitbread plc should relocate nearer to the customers. With the new laws, the business needs to act very quickly through opening new subsidiaries near the residential areas. This is to tap the target market which will try and consume their favorite drinks near their homes in order to avoid being arrested for drunk-driving. Besides relocation, the company should create a platform whereby the customers can air their grievances directly to the employees (Fernando 2011). This would make it possible for the firm to understand the tastes and preferences of the target market and different aspects that make the clients to change their consumption behavior. This would enable the business to make the necessary changes which will ensure that it maintains its competitive edge. Whitbread plc should invest in modern technology. With the introduction of new laws and maybe the introduction of new taxes, the costs of production are likely to increase. In order to tackle this challenge, the company needs to invest in the modern technology which will increase the level of production and enhance the level of efficiency in the organization. This will lower the breakeven price, an aspect that will make it possible for the business to produce products at very costs (Worthington & Britton 2006). On the other hand, the firm should consider outsourcing some of the operations to countries with cheap labor and near the raw materials. This is in an attempt to reduce the costs of operation and production. Advertising consumes a large part of the company’s revenue. However, the company can shift towards the use of social media in order to reach the customers. The social media platform would enable the firm to conduct research on the consumption behavior of the customers and identify any possible change that might threaten the position of the business in the market. In addition, social media will provide a medium to communicate with the customers directly without the use of the intermediaries (Capon & Capon 2009). This would be significant in understanding the needs of the customers and integrating these needs in the production process. This would make it possible for the company to maintain its competitive advantage in the market. References Capon, C., & Capon, C. 2009. Understanding the business environment: Inside and outside the organisation. Harlow, England: Prentice Hall/Financial Times. Fernando, A. C. (2011). Business environment. Chennai: Pearson. Kew, J., Stredwick, J., & Chartered Institute of Personnel and Development. 2005. Business environment: Managing in a strategic context. London: Chartered Institute of Personnel and Development. Prasad, V. 2010. Business environment. Delhi, India: genNEXT. Worthington, I., & Britton, C. 2006. The business environment. Harlow: Financial Times Prentice Hall. Read More