Political Factor Analysis with Respect to the Stockport Shopping Centre - Term Paper Example

Supervisor Task You are required to carry out a PEST (Political, Environmental, Social, Technological) analysisas it relates to the 'out of town' shopping environment. You may choose your own shopping location. Task 2 Upon completion of the PEST analysis you then are required to choose a business in the 'traditional' local environment, a retailer, service provider, and manufacturer and carry out a SWOT (Strengths, Weaknesses, Opportunities, Threats) analysis on that business November, 2008 TABLE OF CONTENTS 1.0 Introduction 1.1 The PESTLE Framework and the Stockport Shopping Centre 1.2 Political Factor Analysis with Respect to the Stockport Shopping Centre 1.3 Economic Factor Analysis with Respect to the Stockport Shopping Centre 1.4 Socio Cultural Factor Analysis with Respect to the Stockport Shopping Centre 1.5 Technological Factor Analysis with Respect to the Stockport Shopping Centre 1.6 Legal Factors Analysis with Respect to the Stockport Shopping Centre 1.7 Environmental Factors Analysis with Respect to the Stockport Shopping Cent. 2.0Introduction 2.1 Tesco and the SWOT Analysis 2.2 Strengths of Tesco 2.3 Weaknesses of Tesco 2.4 Opportunities Available to Tesco 2.5 Threats Tesco faces with Respect to the Environment 3.0 Conclusion 1.0 Introduction Today, business environment has increasingly become more turbulent, chaotic and challenging than ever before. To survive, it is vital that a firm can do something better than its competitors (Wonglimpiyarat 2004:1). Globalisation has not only altered the nature and the intensity of competition but has had to dictate and shape organisations in terms of what consumers wants, how and when they want it and what they are prepared to pay for it (Hagan 1996:1). Kanter (1995:71) on his work of "Mastering Change" argues that success in the present day business is not for those companies that re-engineer the way they do things, or for those fixing the past. According to Kanter (1995) such an action will not constitute an adequate response. This is so because success is based on an organization's ability to create, rather than predict the future by developing those products that will literally transform the way the world thinks and view it self and the needs (Kanter 1995:71). Through an environmental analysis will understand how a firm's competitive position is affected by different forces. More and more companies are engaging in corporate social responsibility reporting, which helps major stakeholders to better understand how the company interacts with its society. (Sacconi, 2004). This essay uses the PESTLE framework to analyse the impact of an out of town shopping centre to the general population, the transport system and the traditional shopping environment. There after, attention is shifted to a normal shopping environment where, using the SWOT matrix one service organisation (TESCO) is analysed. 1.1 The PESTLE Framework and the Stockport Shopping Centre LAYOUT OF THE PESTEL FRAMEWORK According to Johnson et al (2005), the PESTEL framework can only be used to look at the future impact of environmental factors and how this impact might be different from the past. Thus an understanding of how the factors in the above framework may drive change is only a starting point (Johnson et al 2005).There is also the need for an understanding of the key change drivers. 1.2 Political Factor Analysis with Respect to the Stockport Shopping Centre Politically, the Manchester out of town shopping centre has been used by politicians as a way to push out and solve the growing congestions within the Manchester city area. The creation of these shopping centers has thus reduced congestion to an extent. Alternative out of city routes are now put into effective use. Though, the political situation of the UK is a stable and unique one, it over dependence through the support of the United States egoistic policies under the pretext of democracy, the war on terror, the tit for tat with Iran makes the country looks unstable;, current faith of world politics depends on the US and the United Kingdom (UK) with these out of town shopping centers are likely to be targets of terrorism attack. Government taxation policies, social welfare policies are tilted to encourage local population to make use of the out of town shopping centers. 1.3 Economic Factor Analysis with Respect to the Stockport Shopping Centre The creation of series of out of town shopping centres in Manchester and Stockport have not only increased on the number of employed, but has taken development closer to residential areas. The population of Manchester now can easily avoid congestion during rush hour, by shopping out of town. Alternative transportation route previously underutilized are now put into full use. Auxiliary and ancillary activities have also been created. To the local population, out of town shopping centres offer better prices, better credit options and an opportunity for site seeing. All the economic factors can be regarded to have an impact on the local population. For example, high unemployment rate, high inflation rates, low GNP trends and slumps in the business cycle will imply low disposable income, more dependence by the citizens on credit facilities, borrowed funds and thus alternative sources of finance to make use of the shopping centre. 1.4 Socio Cultural Factor Analysis with Respect to the Stockport Shopping Centre Under socio cultural factors the out of town shopping centres are affected by both taxation and social welfare policies. Given the fact that consumer's income is dependent on government taxation policies, it is evident that take home income might either increase or reduce depending on the taxation policies adopted by the government at anyone time. On the local population, the out of town shopping centres have created a new population demographic, income distribution as most people are now employed. Out of town shopping centres have redefined social mobility with respect to traditional shopping centres. These have also created some sort of consumerism, lifestyle changes to the local population and a new definition to attitude to work and leisure. In all, congestion with traditional shopping centres is reduced. 1.5Technological Factor Analysis with Respect to the Stockport Shopping Centre The creation of out of town shopping centres is an opportunity to increase the demand of technological items needed to run the centres. Control and security functions in shopping centres are often coordinated through technological equipments; the creation of these centres thus means an increase in the demand of these items. 1.6 Legal Factors Analysis with Respect to the Stockport Shopping Centre Shopping centres like any other businesses are governed and controlled within governmental policies and regulation. Thus, through their activities they affect local environment, population, customs and values. Shopping centres must abide to government minimum wage definition, their activities must be legally binding and defined within the laws. Under the legal factors I identify employment law, health and safety and product safety laws as having potential impacts on the shopping centres. This is so because, stores operating in shopping centres products must be certified, and must abide at anyone time to all these laws. This should not be neglected at any onetime. Thus, the local population are sure of a socially responsible organisation. 1.7 Environmental Factors Analysis with Respect to the Stockport Shopping Cent Today with increasing call and consumer's preference for green marketing, stores operating in shopping centres must develop environmental friendly products, products that are environmentally certified. Facilities and provision to collect old electronics must be put in place to scrap off old items and encourage recycling. In the absence of these options, out of town shopping centres will be considered socially irresponsible. Under environmental factors I consider waste disposal, energy consumption and environmental protection laws with respect to shopping centres to have a great impact on the UK mobile telephone industry. In a situation where a company failed to abide to government protection laws, the company faces sanctions, and penalties from the state. Thus, by creating out of town shopping centres, pollution in the local population is reduced and congestion is avoided. An organisation does not exist in isolation. Under the resource based view, it is thanks to the environment that new resources are sourced out; stakeholders interactions are facilitated, new partnership develop and created. Through and understanding of the external environment, firms take advantage of the resources available in its environment; define the nature and structure of its activities. In order to maintain service, quality and logistic standards, companies periodically audit their environment and compared to overall corporate performance through benchmarking. Companies that, fail to take advantage of its environment will lag behind. 2.0 Introduction According to wikipedia, SWOT Analysis, or sometimes known as the TOWS Matrix, is a strategic planning tool used to evaluate the strengths, weaknesses, opportunities, and threats involved in a project or in a business venture or in other situation of an organisation or individual requiring a decision (www.wikipedia.com). Market analysis of competitors, suppliers, customers and potential opportunities has long been a competitive preparation of the staple firm (Johnson, Scholes & Whittington 2005). This also serves in understanding the resources and capabilities underpinning a company's success 2 .1 TESCO PLC and SWOT Analysis 2.2 Strengths of Tesco Premium location, centre of primary target market catchments. High exposure to foot and vehicular traffic. Fresher merchandise Unique service offering to this market in Manchester City area highly recognized in UK. Better Value, in the form of lower prices High level of qualified resources and their professional capabilities to provide quality service to customers and business and marketing management. Exclusive club environment with all services for customers under one roof. Strong investment capital. Physical environment is high quality, contemporary and safe designed. A cool environment that customers can be proud of. The Employees, 3,000 stores around the world 2,000 own-brand primary suppliers in 98 countries /Better and cheaper products Charitable giving and community-based education programmes Providing the highest quality shopping environment and services for customers: quality standards, passion for service Satisfying and delighting our customers through, relaxation, meaningful value, innovation of free time usage. Supporting team excellence and happiness Empowering Work Environments/ Good will, exclusive rights with some of their suppliers Sustainable Supply/ Wise Environmental Practices/ Community Citizenship 365/days business/ Celebrity endorsement 2.3 Weaknesses of Tesco Sole right to some products by competitors Drop and sold of some products Some customers are dissatisfied Reach is limited -limited in primary target market catchment. Highly dependent on partners/alliances rather than employees to deliver the services. Risk of reduced focus by third party The lack and absence of unique product with total differentiation from those of competitors. Danger of third party seeing alliance as incremental rather than core particularly in more popular services. 2.4 Opportunities of Tesco Falling cost of capital Extra Increase immigration to the UK Highest population growth in with auxiliary services Niche target market opportunities for affluent new and young families. Horizontal market Strategic alliances/business partners & associations. Ability to build strong membership base. Ongoing market research to database to innovate, refine, test. Greater differentiation to the target segment The heavy investment on Research and Development (R&D) by the US government Many small groceries stores are closing down. Growing pool of technology 2.5 Threats of Tesco New entrants and investors from Asia, threats of a buy out Global economy, The risks surrounding the world economy are creating uncertainty for the domestic outlook Current pressures on food and fuel prices, the recent interest rate fall, combined with the possible impact of increased credit market spreads on household borrowing costs, will have a moderating effect on consumption. Competition, local government and community services. Change in legislation Anti grocery campaign, loyalty of some consumers to old established merchant The likelihood of terror attack of some Tesco stores 3.0 Conclusion Prahalad & Hamel (1990) and Hamel & Prahalad (1994) argue that to successfully exploit company resources and factors underpinning its success, companies need to understand fully their core competences and capabilities. To the researchers, a detailed analysis of a firm's resources, capabilities and consequences will result to a better understanding of the success underpinning its competitive advantage (Prahalad & Hamel 1990:2). Figure 4 and figure 5 below are adapted from Javidan (1998:3-4). Today, the requirements of an organisation's stakeholders including, customers, employees, suppliers, shareholders, government, etc are on a continuous rise. It is only through an environmental assessment that companies understand and take advantage of this. In addition, , to providing an annual report to the company's shareholders organisations are expected to provide alongside a corporate social responsibility report that details how they interact with society and the environment in which they operate. Failure would be interpreted as irresponsibility. Environment analysis has become an important way and method in analyzing a firm position. Through an environmental analysis will understand how a firm's competitive position is affected by different forces. More and more companies are engaging in corporate social responsibility reporting, which helps major stakeholders to better understand how the company interacts with its society. (Sacconi, 2004). It is only through environmental scanning and analysis that we can portray this better. From the foregoing caption, the Manchester shopping centre is affected by all the factors outlined in the framework which indirectly affects the local population, and the transport system. References Hagan, M. C., (1996).The core competence organisation. Implication for Human Resource Practices. Human Resource Management Review Vol.6, No 2. 1996, Pp. 147-164 Johnson, G., Scholes, K., & Whittington (2007). Exploring Corporate Strategy, Prentice-Hall, Europe Kanter, R. M. 1995. "Mastering Change." Pp. 71-83 in Learning Organizations: Developing Cultures for Tomorrow's Workplace, edited by Chawla and Renesch.Portland, OR: Productivity Press Prahalad, C. K. & Hamel, G. (1990). "The Core Competence of the Corporation." Harvard Business Review 67(3): 79-91. Sacconi, L. (2004). A Social Account for CSR as Extended Model of Corporate Governance (Part II): Compliance, Reputation and Reciprocity. Journal of Business Ethics, No. 11, pages 77-96. Wonglimpiyarat, J. (2004). Amex's strategies for launching the smart card innovation. Technovation 24 (2004) 773-777 Wu, S. & Chien, F. C. (2006). Building Core competences through operational Excellence. International Journal of Production Economics special issue on ''Building Core-competence through Operational Excellence'' (www.wikipedia.com). Read More