Global Macro Environmental Variables - Assignment Example

Global Marketing Assignment Table of Contents A Critical Analysis and Evaluation of the Global Macro Environmental Variables 3 2. Development of aMarketing Information System 7 3 (a) Identifying the Market Potential of Ireland for RIM 9 References 12 Appendix 17 1.1 PESTLE Analysis of Ireland Business Environment 17 1.2 Marketing Information System 21 1.3 GDP Forecasts of Ireland: 2010-2015 21 1.4 Poverty Statistics in Ireland: 1994-2009 22 1. A Critical Analysis and Evaluation of the Global Macro Environmental Variables Blackberry is recognised to be one of the leading brands in the technology sector. The product is manufactured by RIM (Research in Motion), a Canadian company. Blackberry offers a wide range of products to its potential customers from smartphones and software to playbooks and professional tablets (Research In Motion Limited, 2011). It is quite apparent that RIM relates to the global information technology industry. Thereby, it depends on the structure of information technology industry in the international market for its expansion to other nations. In this case RIM intends to expand its operations in Ireland which is recognised to be one of the developing economies among the OECD countries (OECD, n.d.). It is in this context that the expansion strategies of the company are most likely to get influenced by the changes taking place in the business environment of that economy comprising both the macro-economic and micro-economic factors. It is worth mentioning that macro-economic factors tend to direct the impact of micro-economic factors which signifies the macro-economic environment of a business to be quite vital to secure its overall growth and success (Samuelson & Marks, 2009). In this regard a PESTLE analysis had been implemented in the study. The findings obtained from the PESTLE analysis depicts that the economy is currently witnessing significant fluctuations in its business environment which directly or indirectly shall hamper the interest of RIM in relation to its expansion. For instance, the Irish economy has been recorded to witness considerable fluctuation with the rise of Fianna Gael (Bureau of Public Affairs, 2011). Few major political changes that are likely to cause fluctuations in the business environment of the information technology industry in the economy are the growing emphasis on the unity of Ireland and governmental collaboration with the UK and the US economies (Ohalloran, 2011). In relation to the organisational expansion of RIM in Ireland, it can be stated that energised collaboration between the US and the economy shall be highly beneficial for the company. Special benefits are likely to be enjoyed by the company as a Canadian multinational which in turn shall boost up its overall growth. Moreover, the political measures adopted with due consideration towards unity is also likely to bring peace in the political environment of the country supporting its future growth prospects as well as the growth of the company in the national market. The economic fluctuations arising in Ireland also possesses a substantial impact on the information technology industry which in turn is likely to hamper the interests of RIM in the expansion process. It is worth mentioning that the Irish economy is currently witnessing significant down fall in terms of GDP growth, employment and other crucial economic features such as deflation and credit (Bureau of Public Affairs, 2011; Finfacts Team, 2011). With the increasing deflationary rate, the budget deficit in the economy is also recorded to widen significantly causing tax rates to increase. It is due to this reason that the economy is witnessing fluctuations in import-export transactions along with cost cuts in various sectors (Finfacts Team, 2011). The instability in the economic environment of Ireland is likely to have a strong impact on the international expansion of RIM as a marketer of mobile phones, media players and other information technology products (Research In Motion Limited, 2011). On the similar context, the social changes of the economy state that demand for technology products is likely to be hampered in the current market scenario of Ireland with diminishing income parity. It is for the reason that products manufactured by RIM, such as Blackberry playbook, smartphones, tablets and others are offered at a high price to the ultimate customers (Research In Motion Limited, 2011). With increasing poverty in the economy it is quite apparent that consumer buying behaviour shall favour low cost products. From an in-depth perspective it can be further stated that economic fluctuations contribute to the social changes with falling GDP rates and major cuts in governmental supports to the lower class of the economy (Social Justice Ireland, 2011). Therefore, it is quite apparent that the economic changes create a stronger impact on the expansion strategies of the company in comparison to the social fluctuations. Being a technology based company the technological factors of the business environment are likely to have the most substantial and apparent effect on the organisational strategies adopted by the company. For instance, a significant transformation in the consumer buying behaviour of the information technology is witnessed in the economy that is recorded to drive in favourable condition for clean technologies. In other words, the significance of environmental changes have significantly increased in the Irish information technology market which in turn is promoting the strategies targeted to low CO2 emissions and effective waste management (Anderson & Et. Al., 2011). Other characteristics of the current industry scenario related to the information technology market reveal that most of the industry players are focussing on the innovation of efficient environment friendly products to keep pace with the changing customer preferences. They are also recorded to concentrate on the cloud computing aspect. Major attributes that are likely to be beneficial for the company are the favourable marketing conditions of radio communication devices and remote telemetry (SCFI, 2011). The Irish government is also observed to focus on the strengthening of the environmental laws as well as laws related to the import and export of products (Jermyn, 2011). The government is also considering overseas employment laws to secure the benefits of the local labours taking account of the increasing unemployment and income disparity (Prentice, 2011; Social Justice Ireland, 2011). Therefore, the expansion of the company is likely to witness obstructive legal barriers in case it intends to export its products to the targeted market. However, the Irish legal environment is forecasted to be concentrate on the strengthening of copyright laws which in turn shall prove to be highly beneficial for the company (BBC News, 2011). The expansion of RIM in Ireland is also subject to a few environmental barriers. To be mentioned, the information technology industry in Ireland is most likely to face obstructions in terms of increased tax rates and strengthened environmental regulations. It is with the purpose of reducing the impact caused by manufacturing units of the industry on the environmental resources of the economy (EPA, 2011). From a critical point of view, it can be stated that environmental regulations are being strengthened in almost every country all around the world. This in turn is significantly influencing the operations of global technology industries and is evidently affecting the operations of multinational companies such as RIM. It is in this context that environmental changes in the global perspective are emerging as inevitable having a strong impact on the company’s operations and thus the factor can be observed as vital in this case. The technological changes can also be termed crucial as it inherently relates to the organisational operations of RIM. Another factor that has been recognised to have a strong impact on the success of the organisation in Ireland is the economic changes as it tends to influence the political, social, and legal environmental fluctuations of the economy. 2. Development of a Marketing Information System In the modern day phenomenon, the significance of marketing information system (MIS) is quite apparent and inevitable. An effective MIS not only supports the record keeping in an organisation, but also assists the management of that organisation to re-evaluate its past performance and forecast as well as frame its future planning. In the current day context, large multinational organisations intend to implement an effective MIS in their organisational framework in order to gain efficacy in synchronising its diversified operations (ref. to Appendix 1.2) (Harmon, 2003). RIM is also recognised as a large multinational company and operates in a diversified field of action related to the technology industries (Research In Motion Limited, 2011). This certain phenomenon develops the concept to be quite significant for RIM in the modern day phenomenon. With the implication of MIS, the organisation would be able to gain efficiency in its operations and thus enhance its performance in the international platform as well as in the targeted market, i.e. Ireland. With this purpose, the company can focus on the identification of the various characteristics of the target market. The 12C’s framework shall be quite beneficial in this context. 12C framework signifies the attributes of country, consumption, concentration, channels, capacity to pay, currency, contractual agreement, choices, communication, commitment, culture, and caveats. These factors are termed to be crucial in accelerating the growth of a company and thus should be considered with significance (Lomax & Raman, 2007). The country chosen for the expansion of RIM is Ireland which is recognised as a developing country and includes itself in the OECD nations (OECD, n.d.). The country is witnessed to face significant fluctuations in the business environment related to the information technology sector. For instance, the political environment of the country is apparently unstable and is facing several changes in terms of economic, social as well as technological reforms. Even the economic growth of the country is stated to be in a challenging position that in turn obstructs the consumption of products rendered by RIM in the market. However, the economy tends to provide with significant opportunities in terms of green innovations. Thus, the company can concentrate on innovating fresh products with due consideration to the aspect of changing consumer buying behaviour. The channels used in distributing the products shall also be concerned regarding the environmental impact of the industry as well as the social features of the country. The factors of cost should also be considered as the capacity to pay the price of the customers in the targeted market is recorded to be low due to the downfall of the economy. Considering the multinational business transactions between the two nations, i.e. Canada and Ireland, currency fluctuations should also be considered with significance. In order to eradicate the currency fluctuation risks, the company can consider contractual agreement with a public or a private company operating in the Ireland information technology industry. The choices that are available for the company in this case is the export of the products in the target market area or the manufacturing units of the products can be shifted to the market which shall certainly be quite costly. It is also important for the organisation to be committed to its aim and communicate its functions ethically to the potential customers considering both culture and caveats. 3 (a) Identifying the Market Potential of Ireland for RIM The concept of market potential is used to describe the opportunities and threats existing in the current market scenario possessing a potentiality to affect organisational operations of a particular industry or a company in that region (Menipaz & Menipaz, 2011). As stated by Kotler (1972), “total market potential is the amount of sales that might be available to all the firms in an industry during a given period, under a given level of industry marketing effort and environmental conditions” (pp. 109). There are various techniques that are used to quantify the market potential for a company or an industry. For instance, time series analysis is stated to be quite effective in revealing the sales and demand potential of a target market. The techniques accounts on the historic trend of sales and demand in order to identify the future potential to generate profit on a long-term perspective. However, the process possesses a significant limitation for using historic data rather than updated information (Dekimpe & Hanssens, 2000). Another technique that is considered to be quite beneficial is the market potential index. In this case the marketer tends to identify the characteristics having a strong impact on its organisational performance and quantify the variables hypothetically based on the market trends and the learning of the researcher(s). Although the technique considers various crucial facts regarding the potential of the market, it is largely based on the skills of the researcher(s) that causes few limitations to the context (Craig & Douglas, 2005). Therefore, in order to manipulate the market potential of Ireland with the purpose of providing an insight to the long-term success of RIM in the country, the chain-ratio technique shall be implemented. The technique was introduced by Philip Kotler and the common method to calculate the market potential taking into account various attributes of the targeted market such as population of the target customers in the market, income level of the group, spending power of the group, and others (Kotler, 1972). Based on these assumptions, the market potential of Ireland for RIM is being demonstrated below. = 1430624 x $46,592 x $4,659 x $2,330 x $3,000 Here, the data regarding urban population and income per capita is gathered from Bureau of Public Affairs (2011), while the figures of spending amounts has been hypothetical assumed based on the understanding of the current market scenario. The ratio obtained in this context shall be quite beneficial to identify the current market potential of Ireland for Blackberry products which can be further used to obtain a trend line or time series of the sales and demand with the purpose of forecasting the long-term potential of the market. This in turn shall benefit the company in planning its long-term marketing strategies in the targeted market. References Anderson, B. & Et. Al., 2011. Technological Change and the EU ETS: The Case of Ireland. Working Paper Series. BBC News, 2011. Hargreaves Review Gives Copyright Law Digital Makeover. Technology. [Online] Available at: http://www.bbc.co.uk/news/technology-13429217 [Accessed June 24, 2011]. Bureau of Public Affairs, 2011. Background Note: Ireland. Bureau of European and Eurasian Affairs. Craig, C. S. & Douglas, S. P., 2005. International Marketing Research. John Wiley and Sons. Crown, 2011. Agriculture and Rural Development Minister Michelle Gildernew MP, MLA has welcomed the positive response to Tranche 2 of the Manure Efficiency Technology Scheme. Department of Agriculture and Rural Development. Dekimpe, M. G. & Hanssens, D. M., 2000. Time-Series Models in Marketing: Past, Present and Future. International Journal of Research in Marketing, Vol: 17, pp. 183–193. EPA, 2011. Environment in Focus. Environmental Protection Agency. [Online] Available at: http://www.epa.ie/environmentinfocus/ [Accessed June 24, 2011]. Finfacts Team, 2011. Ireland Cuts 2011 Economic Growth Forecast By Half. Irish Economy. [Online] Available at: http://www.finfacts.ie/irishfinancenews/Irish_Economy/article_1022192_printer.shtml [Accessed June 24, 2011]. Harmon, R. R., 2003. Marketing Information Systems. Encyclopedia of Information Systems, Vol. 3, pp. 137-151. Heaney, M., 2011. The Blurred Future of Irelands Digital Plans. The Irish Times. [Online] Available at: http://www.irishtimes.com/newspaper/features/2011/0315/1224292152903.html [Accessed June 24, 2011]. Jermyn, R. D., 2011. The International Comparative Legal Guide to: Environment & Climate Change Law 2011. Global Legal Group. Kotler, P., 1972. Marketing – Management. Pearson Education India. pp. 109. Lomax, W. & Raman, A., 2007. CIM Coursebook 07/08 Analysis and Evaluation: 07/08 Edition. Butterworth-Heinemann. Menipaz, E. & Menipaz, A., 2011. International Business: Theory and Practice. SAGE Publications Ltd. OECD, No Date. Current Membership. Members and Partners. [Online] Available at: http://www.oecd.org/pages/0,3417,en_36734052_36761800_1_1_1_1_1,00.html [Accessed June 24, 2011]. Ohalloran, M., 2011. United Ireland Front and Centre of SF Agenda. The Irish Times. [Online] Available at: http://www.irishtimes.com/newspaper/ireland/2011/0620/1224299225002.html [Accessed June 24, 2011]. Prentice, M. O., 2011. The International Comparative Legal Guide to: Employment & Labour Law 2011. Global Legal Group. Research in Motion Limited, 2011. Products. Leading innovation. [Online] Available at: http://www.rim.com/products/ [Accessed June 23, 2011]. Samuelson, W. F. & Marks, S. G., 2009. Managerial Economics. John Wiley & Sons. SCFI, 2011. The Blue Challenge. Technology Ireland. Silicon Republic, 2011. Renewables and the Environment – Irish Trends. Green Tech. [Online] Available at: http://www.irishtimes.com/newspaper/finance/2011/0125/1224288247747.html [Accessed June 24, 2011]. Social Justice Ireland, 2011. Poverty & Income Distribution. Policy Briefing, ISSN: 1649-4954. The Irish Times, 2011. Cloud Computing: Microsoft Praise for Ireland. Newspaper. [Online] Available at: http://www.irishtimes.com/newspaper/finance/2011/0125/1224288247747.html [Accessed June 24, 2011]. Appendix 1.1 PESTLE Analysis of Ireland Business Environment Political Factors The rise of Fianna Gael and Labour Party with historic result in general elections is further intended towards a coalition government and thus is most likely to introduce significant reforms in social, environment as well as in business sectors (Bureau of Public Affairs, 2011) Emphasis on developing ‘United Ireland’ that is expected to cause major social, economic and environmental changes (Ohalloran, 2011) Strong political and economic relationship with the UK and the US governments (Ohalloran, 2011) Economic Factors Economy witnessed double digit fall in terms of employment, deflation, and credit availability that was followed by increased budget deficit (Bureau of Public Affairs, 2011) Negative GDP growth led to spending cuts affecting the investment in business sector (ref. to appendix 1.3) (Finfacts Team, 2011) Increasing debt is likely to force the government to increase tax rates (Finfacts Team, 2011) Decreased import and increased export growth is highly expected in the economy due to the falling income per capita (Finfacts Team, 2011) Social Factors Poverty rate is increasing along with the disparity in income distribution in the economy (ref. to appendix 1.4) (Social Justice Ireland, 2011) Along with the income disparity the literacy rate is also forecasted to diminish affecting the labour force of the economy (Social Justice Ireland, 2011) Majority of the population is employed in the service sector (Bureau of Public Affairs, 2011) Technological Factors The digital or technological environment in Ireland is changing in terms of customer buying behaviour especially in the broadband as well as entertainment sector of Information technology industry (Heaney, 2011) Significant emphasis is provided to the green technology innovations in order to reduce CO2 emissions and harmful wastes (Anderson & Et. Al., 2011) Environmental taxes are likely to be increased with extra effort to control the environmental impact caused by technology industry, especially the manufacturing units in Northern Ireland (Crown, 2011) Ireland is rising as a prospective market for automated metering as well as radio communication devices and remote telemetry (SCFI, 2011) Cloud computing is likely to have a significant impact on the technology sector of Ireland (The Irish Times, 2011) Legal Factors The government of Ireland is witnessed to be concentrated on the aspect of copyright infringements due to which the copyright laws are being strengthened in the economy (BBC News, 2011) Along with the copyright laws, the environment protection laws are also likely to be strengthened in the near future targeting the reduction of CO2 emissions and waste of natural resources (Jermyn, 2011) Employment and labour laws has also been re-considered by the Irish government, especially concentrating on the cross-border employment (Prentice, 2011) Environmental Factors Significant consideration is being provided to the aspect of environmental hazards by promoting the renewable energy production and consumption in the economy (Silicon Republic, 2011) Along with the environmental protection laws, the tax rates are also likely to be increased (EPA, 2011) 1.2 Marketing Information System Source: (Harmon, 2003). 1.3 GDP Forecasts of Ireland: 2010-2015 Source: (Finfacts Team, 2011) 1.4 Poverty Statistics in Ireland: 1994-2009 Source: (Social Justice Ireland, 2011) Read More