Changes in Business Environment of the UK - Essay Example

?Introduction The business environment prevailing in UK shows a bright future for local business operators. This can be based on the fact that UnitedKingdom is listed in the top 10 economies of the world and is amongst top 10 recipients of direct foreign investment from the World. United Kingdom has managed to become the 4th largest nation in terms of trading and is now the business hub of Europe. By 2030 United Kingdom is predicted to have the largest organic sector whose worth is estimated to be around ?1.2 billion. Also the agriculture in UK is fully mechanised which produces more than half of the food requirement for the UK. Keeping all these facts in mind the business environment on a macro level looks prosperous for the young entrepreneurs. The location of the business is at Seaford road which is a populous suburb of east Sussex with a population of over 23000 people and is home to educational institutions. Hence the key USP aligns with the local community aswell. Condition of The Business: The current cash flows of the StudentPizza Ltd are lower than what was estimated initially. The business has yet to return a turnover which was expected even after 5 months. Although the key point which they had identified while opening the business was quite valid and relevant that Students love pizza and keeping this in mind opening a restaurant with the target market as students was quite relevant. Working on their USP by attracting students and making it exclusive for students they have been able to retain students as their loyalist but have only managed to attract few customers from the locality. Also they are running out of investment and capital to run the business as the business has not returned profits as expected for 5 months. SWOT ANALYSIS, RECOMMENDATIONS AND STRATEGIES A detailed analysis of the business and its environment, strategies pertaining to them along with recommendations for executing these strategies is mentioned in detail in this section. Strategy Assessment: In order to asses, whether a particular organizational strategy is suitable for an organization it is important to conduct a SWOT analysis. The SWOT analysis points out the strengths, weaknesses, opportunities and threats of the organization in question. To assess how effective an organizational strategy would be, it is very important to conduct a SWOT analysis. SWOT analysis is an overall strategic planning methodology. It is used to assess a strategy from the point of view of its strengths, weaknesses, opportunities and threats. It involves the business environment and the business objective of a particular project and how internal and external factors will help achieve those objectives. The technique was developed by Albert Humphrey. He led a convention during his stay at Stanford University in the 1960s and the 1970s. He incorporated data from some Fortune500 companies. A SWOT analysis usually begins with clearly defined state and objectives. Strengths: In strengths it is checked which attributes of the company will help in achieving the desired objectives. The strengths of the company are many. It targets the student population for junk food and they tend to be the most willing consumers for the same. The initial investment in the idea isn’t much. The timings of the outlet are very lucrative and so is the location of the chain a very ideal one. Weaknesses: In weaknesses it is checked which attributes of the company will be harmful in achieving the objectives. The outlet faces stiff competition from other more established outlets. The sales continue to suffer and the promotional strategy is weak at best. Opportunities: What opportunities will work in favor of the desired objectives? There are various opportunities that can capitalized on by the firm. Firstly, it needs to come up with a more aggressive promotional strategy and reach out to all students. Capitalize on social media, come up with flyers, posters, ad games and various other ways to promote and attract customers. Secondly, negotiation with the suppliers to bring down the prices is a must or set out to look for new suppliers otherwise net turn over will be effected. As suggested by customers, open the outlet during weekends. Hire new staff for weekends especially so that the current one doesn’t feel zoned out and over-exhausted. Threats: The single biggest threat that Student Pizza faces is from the new takeaway outlet that has emerged. It needs to be come up with a counter strategy to tackle sales from them. THE PESTEL MODEL It asserts the following factors: Political factors. Political factors are largely governed by government policies. These maybe the degree of government involvement with the economy. To what extent is the government facilitating in the provision of goods and services. Is it subsidizing any firms, is it offering any other incentives. Political decisions are very impactful on business environment. They impact different things, for e.g., the education and literacy of the employee work force, the medical state of the nation, the quality of the infra structure of the economy such as transportation facilities. On the plus side UK is relatively very stable politically compared to most other third world countries. So political stability should not be an issue for StudentsPizza Ltd Economic factors: Various economic factors should also be kept into account when assessing strategy. Economic factors such as interest rates, tax charges, and overall economic growth, exchange and inflation rates. Economic factors can have a huge impact on the overall behaviour of a firm. Recession had hard hit the world. For instance, In order to build employee confidence and assure them that recession won’t lead to lying off; the management in different organizations needs to secure their jobs as an organization’s success is largely dependent on a fast and motivating staff. Other factors also need to be checked upon. For example, high interest rates may obstruct investment as it costs more to borrow. A strong currency will create more problems of exporters as it will raise the price for exporters in terms of foreign currency. Inflation may lead to employees demanding more wages and eventually raise costs. If the nation’s income growth is high, it will trigger demand for a firm’s products. Social Factors: Changing social paradigm can also affect a firm’s products, its availability, and the willingness of individuals to work together. In UK, the employee base is aging. This has lead to heavy costs for firms who are engaged in pension payments to their work force, because their staffs are living longer. This also means that some firms, like Ads have started hiring older employees to capitalize on the labour pool. Customer trends, life style and demand keep changing. These changing paradigms help the customer to drift his attention from one focal point to the other. At Student Pizza, the employee base is already facing the toll of hard work and feel over-worked. Technological factors: New technology paves way for better and improved process and products. Today iPods, touch screens, computer games, mp3 games, online gambling and high definition TVs have all created their own market in technological advances. Online shopping, CAD, bar coding, are all big improvements which have given a new name to the way we conduct business. Technology can cut down on costs, give way for better quality and also pave way for innovation. Technological advancements have allowed people to travel to far off places with greater ease and cost efficiency and have proved to be a catalyst for fierce competition within this industry. Today orders can be booked online. The growing dynamics of the fast food industry ask for constant innovation and constant strategizing business. Technology has fast penetrated in the world. Its use has compelled competitors to give tourism services online which have shown much business the exit door. But Student Pizza has not yet capitalized on technological advancements round the globe in its fight with competitors. They are yet to go online in their business model. Environmental factors: Environmental factors include climatic conditions and weather related aspects. Today Global warming has taken over the climate and is being given a lot of importance. Firms are being compelled to consider environmental issues before taking any concrete steps. Student Pizza has not yet taken any concrete environment friendly steps. Maybe if it does in near future it will raise itself as a more worthy brand in the eyes of the customer. Legal factors: Legal factors have to do with the legal environment in which the organization is working. In the last couple of years, there have been various legal changes in UK which have affected the way organizations work and operate there. For instance the age discrimination barrier, disability discrimination law, increase in minimum wages are to name a few. Conclusion: StudentPizza is a good initiative. The idea has alot of potential and can be the next big thing in UK provided that its owners capitalize on the opportunities and strategies as suggested in the paper. On the fore-front, it is important to re-asses their promotional strategy and go out at an all-hitting one where students are concerned. Margins from supplier need to be squeezed and an active staffing force needs to be deployed. 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