Impact on Business Opportunity of Bianchi in the UK Market - Case Study Example

Business Environment Table of Contents Section 3 External environment 3 PEST analysis 3 Four dimensions 4 Section 2 5 PEST analysis of Bianchi on UK market 6 Impact on business opportunity of Bianchi in the UK market 9 Section 3 10 Conclusion 10 Recommendation 11 References 12 Section 1 External environment It is vital for every organization to convert their input in to profit. Business exists within the external environment which consists of events, entities, factors and conditions that affect its choices and activities. External environment are the events and factors that are harder to control and occurs outside the organization. Every manager must incessantly regulate approaches to keep them ahead of other competitors. The external environment plays a pivotal part to operate business effectively and shape the future of business. Every business has no or minimal control over external environment. Moreover, it is crucial for organization to adapt and constantly monitor their external changes (Wright, 2006, p.27). The emergence of any adverse external factors can affect the position of the company on the market. Therefore, organization must build up effective strategies and successful response to enhance the position of the company. PEST analysis Several issues and factors can affect and conclude the environment of an organization. PEST analysis is the macro-environment framework and widely used tool to recognize the impact of external factors towards the growth of the organization. It can help to analyze the political, economic, socio-cultural and technological factors that can affect the organization (pride and Ferrell, 2011, p.42). The originator of the analytical technique is Francis Aquilar. The implementation of PEST analysis by Bianchi can benefit to analyze the external environment. Furthermore, it can help Bianchi to examine the future and current state of the organization. Additionally, PEST analysis can help to create effective strategic plan to gain competitive advantage over other rivals. Various department of the organization can implement this framework to inspect current and future state. Further than examining the state of the organization, this technique signifies and exemplifies one of the vertebras of the strategic management. It not only accounts for goals and strategies for an organization, but also defines what is required to be done by a company. Four dimensions Four dimensions of PEST analysis are political, economic, social and technological factors. Political factors in the PEST analysis discuss the degree of intervention of government towards the growth of organization in economy. Some of the regulatory and legal factors of the government intervention include consumer protection laws, tax policies, employment laws, trade restrictions, labor laws and tariff limitations. The trade and tariff regulations can also be determined by the foreign rule of a country. Some of the examples are work week, anti-trust laws, political stability, pricing regulations, trading partners, intellectual property protection, military invasion, labeling of product, employee benefits, industry safety regulations and wage legislation (Moore, 2003, p.98). Economic factors that are faced by any businesses can have substantial impact on the application of future operation of a company.Some of the economic factors are exchange rate, inflation rate, unemployment rate and interest rate. Furthermore, it also includes other indicator of economic growth. The interest and exchange rates play pivotal role towards the growth and expansion of business. Likewise, it can also affect the exported goods and cost of imported products. This factor examines the impact of globalization on the economic environment, unemployment rate current situation of economy and level of disposable income of customers. Some of the examples of economic analysis are labor costs, infrastructure quality, level of workforce, exchange rates, discretionary income, economic growth rate, financial market efficiency, interest rate, government intervention and inflation rate. Socio-cultural factors include demographic and different cultural aspects of a society. It is vital for organization to determine and notify various demographic aspects of the society to bring changes. The application of new strategies requires help from analytical techniques and methods such PEST analysis. Social factors also include age distribution, career traits, growth rate, safety awareness, population and health realization. Evaluation of these factors a benefit organization to understand the dynamics of emerging and existing market. Things that can be analyzed by this technique are diversity, health, age piffle, departmental attitudes and education to career. The emergence of technology has forced organization to innovate and implement new strategies to keep up with the rapid pace of technological development. The rapid upsurge of technology has made older technology obsolete and outdated (Maylor and Blackmon, 2005, p.99). Some of the technological factors that can be faced by organization are Research and development activity, innovation, technological change and obsolescence rate. Organization must look after the technological changes to gain competitive advance over other competitors. Impact of value chain, technology development, technological diffusion and impact on cost structure are some of the examples. Section 2 This part of the section is based on findings of implementation of PEST analysis of UK market. Bianchi, bicycle business, has tried to enter in to the UK market to enhance their market share and grow their brand name. This part is based on providing detailed analysis on application of PEST analysis on UK market. PEST analysis of Bianchi on UK market Political Since the year 2000, the rate of cycling in UK has been doubled. Transport for London is aiming more than 5 percent of mode share. Several policies has been presented and established to augment the environmental sustainability. The prime reason of affecting the ecological sustainability is the rapid upsurge of number of fossil-fuel car. Furthermore, this escalation of vehicles can lead to carbon emission. The upsurge of bicycle can help to lessen carbon release. Major improvement that is initiated by government is by introduction of national cycle way. These can enhance the credibility of starting bicycle business on UK market (Kotler, 2001, p.71). Government also supported delivering separate junctions and cycling routes. Department of Transport wants to encourage people for greater use of bicycle in cities and towns. Economic Financial capitals that are available for company within the economy are severely affected by Euro crisis. Between the year 2008 and 2009, the productivity of UK has collapsed sharply due to financial crisis. The business performance of Bianchi can be affected by rise of interest rate, unemployment rate and inflation rate. According to national statistics, the unemployment rate of UK has fallen to more than 1.95 million. At the end of year 2011, it has been revealed that the unemployment has risen sharply to over 2.7 million (Hines, 2004, p.81). This estimation of rate of unemployment is regarded as maximum in 17 years. UK bicycle business has been heavily affected by global recession. The rapid upsurge of price level can create huge pressure on bicycle business on UK market Social The technological advancement of bicycle business plays can crucial role in social interactions. The emergence of social media has provided perfect opportunity for Bianchi business to market their introduction of technological advanced cycle. People who are enthusiasts with bicycle can post their happenings and images on social media websites. These can enhance the brand image of Bianchi on UK market. The introduction of new high quality and advanced technology of bicycle is heavily appreciated by people of UK. The demand of bicycle in UK has been on rise. People are becoming much more health conscious. This is reason which lead to the swift rise of bicycle. It is believes that bicycle can make people fit and healthy. Bianchi is an Italian based bicycle company (Jobber, 2012, p.107). The company is famous for production of developed and optimum quality products. UK market is the best possible solution to push business and sales of Bianchi. Moreover, the introduction of Congestion Charge in UK has declined the rate of cycling accidents. This resembles the fact that the market of cycling business in UK is huge. Technological Bicycle is healthy, environmental friendly and fun. Therefore, it is vital for organization to select country that is technologically advanced. According to US economists, United Kingdom is regarded as one of the most advanced countries. The country puts constant effort on enhancing overall progress in infrastructure and living standards of people. Researcher states that enhancement of bike technology can vehicles that are related to carbon emissions and cut transportation costs. Bianchi is one of the Bicycle businesseswhich solely focus on smart innovation in distribution and production. UK is the ideal market for Bianchi to make bicycle that are convenient and safe for people. Bianchi also focused on improving their selection towards production of bicycle that is lightweight. The manufacturers of bicycle require modern and high quality resources (Burrow, 2011, p.19). UK is technologically stable and developed country. These are the certain criteria which provide vivid information that Bianchi can introduce their bicycle in the UK market to enhance their market share and control decline of sales. Impact on business opportunity of Bianchi in the UK market Several campaigning organizations such as British Cycling and Sustrans have helped to upsurge the cycling industry. The pivotal aim of these organizations is to encourage people for cycling and improve road safety for cycling. This provides a vivid idea that UK government is trying best to book the market of cycling industry. It has been reported that more than 94 million pound is being invested to improve routes for cycling. PEST analysis of UK market provided several ideas that can help to enhance the business opportunity of Bianchi. Despite being several positive aspects, there are also some drawbacks which can hamper the business opportunity of Bianchi. Global recession and Euro crisis has created economic environment which is challenging and uncomplimentary for setting up new business. The rapid rise of unemployment has been one of the prime consequences of economic crisis. The manufacturing and distribution sector of any cycling industry is negatively influenced by lack of skilled workers. High rate of tax policy can be one of the drawbacks for any new business to grow their market. Moreover, this can create huge stress on organization to maintain their pricing strategy. According to researchers, these drawbacks can force Bianchi to sell bicycle at high price. In the year 2011, it has been calculated by the London School of Economics and British Cycling that total worth of cycling industry is past was around 2.9 billion pound (Aaker, 2004, p.52). This provided clear indication and information that cycling industry is UK has more opportunity. Since the year 2009, it is estimated that bike sales has increased to 28 percent. The London School of Economics also stated that there is an additional 12,000 miles of network for cycling. The number of environmental, political and social reasons provides clear explanation that cycling is on rise in UK market. There are also several opportunities for technicians in UK market. The rise of cycle workshops and hire cycles can help to reduce the rate of unemployment. The management of Bianchi can offer technologically advanced cycles to the customers to enhance their business opportunities. In UK market, initial success of any company is dependent upon the quality and innovation. Bianchi is one of the supreme cycle companies that aim to provide quality and innovative products to the customers. UK market provides favorable political environment for business to introduce new products. Bianchi can implement new aggressive marketing strategies. Hence, it can be stated that UK markets provides promising political environment and government benefits to provide opportunity for Bianchi. Section 3 Conclusion Bianchi is one of the leading international brands in cycling sector. The prime objective of the brand is to focus on commercial strategies, suitable production and effective communication. Some of the pivotal brand drivers of the company are passion, quality, exclusiveness and innovation. Recently, Italy is facing recession which has heavily affected sales of Bianchi. UK market is viewed as the opportunity for Bianchi to enhance their sales. PEST analysis on UK market provides explanation on prime opportunity of Bianchi. UK is technologically advanced country. Moreover, people fully appreciate introduction of innovative and quality products. These are certain attributes which is thrive by Bianchi. The business operation of Bianchi is supported by government and public agencies. There are also some negative drawbacks such as economic recession. This can create huge negative impact on business operations of Bianchi. Recommendation Planning and financing is vital for any organization to be successful in any market. It is also same in the UK market. The introduction of effective supply chain management can benefit the management of Bianchi. Additional measures should be taken by the business to improve their quality of products. The overall business operation of Bianchi can be enhanced by upsurge of distribution and supply chain channel. Business level strategy must be initiated to provide training to cyclists and increase safety. Cost leadership strategy should be implemented in the business operation (Cheverton, 2006, p.46). The implementation of cost leadership strategy can benefit Bianchi to reduce operating cost. This can benefit the management of Bianchi to maintain competitive price at the time of economic crisis. References Aaker, D. A., 2004. Brand Portfolio Strategy. New York: Free Press. Burrow, J., 2011. Marketing. Stamford: Cengage Learning. Cheverton, P., 2006. Understanding Brand. London: Kogan Page. Hines, A., 2004. Supply chain Strategies. Oxford: Oxford Press. Jobber, D., 2012. Principles and Practice of Marketing. New York: McGraw-Hill Education. Kotler, P., 2001. Marketing Management. London: Prentice Hall. Maylor, H., and Blackmon, K., 2005. Researching in Business and Management. London: Palgrave Macmillan Moore, E., 2003. Social Change. Prentice New Jersey: Hall Inc. Pride, W., and Ferrell, O., 2011. Marketing. Stamford: Cengage Learning. Wright, R., 2006. Consumer Behavior. Stamford: Cengage Learning. Read More