PESTLE Analysis for the National Center of Performing Arts - Case Study Example

National Center of Performing Arts Name: National Center of Performing Arts Institution: Date: Abstract The National Center for Performing Arts (NCPA) is an institution that operates in the tourism industry, an industry that over the past couple of years has gained momentum as one of the prime gross domestic product contributors for most countries. However, in order to be effective in this industry NCPA needs to consider a number of factors such as the PESTLE analysis, which evaluates the political, economic, social, technological, legal and environmental factors that have potential to influence the performance of a firm. This paper focuses on these factors in relation to NCPA. The PESTLE analysis has focused on the mentioned factors and their effect on the performance of NCPA. The resources and capabilities analysis is the other business model and helps a firm such as NCPA establish whether its capabilities matches the resources it have in order to be effective. SWOT analysis focused on the strengths, weakness, opportunities and threats; which make up the internal and external factors that influence the performance of NCPA. Value chain analysis and the five forces of competition focused on ways NCPA can add value in its operations and gain competitive advantage in the market. Lastly, the blue ocean strategy canvas focused on cost-effectiveness and value addition to buyers. Appendices Appendix 1: PESTLE Analysis for the National Centre of Performing Arts Political Factors -Political stability is likely to influence the performance of the National Centre for Performing Arts (NCPA). -Hefty taxation is another factor that affects the performance of the NCPA, especially because it is partially viewed as a tourism entity. -Government expenditure in the tourism industry is another political factor that needs consideration as it assists in creating awareness of the existence of businesses such as the NCPA. Economic Factors -Business cycle; that is recession and boom period determine the performance of NCPA due to their effect on disposable income. -The potential growth of the economic, China is listed among emerging markets, meaning NCPA is better positioned. -Demand elasticity in the market, China has a huge population of middle class individuals, which means that NCPA is likely to reap the benefits associated with the same. Social Factors -Cultural orientation and language barriers are some of the social factors likely to influence the performance of NCPA. -The literacy levels of the target market determine whether they are aware of the existence of the business or not. -The recreational strategy applied by the target market also affect the performance of NCPA. Technological Factors -The use of internet marketing to create awareness among the target market can highly influence the performance of NCPA. -The ability of customers to book and place reservations online is another factor that NCPA needs to consider. -Maintenance of an uptrend of technology will help NCPA align to the changes taking place in the society. Legal Factors -Regulations and changes in government policy regarding the performance of business in the tourism industry can influence the performance of NCPA. -NCPA needs to adhere to all legal stipulations concerning its operations. Environmental Factors -Environmental conservation and sustainability should among the priority factors in NCPA. -NCPA needs to have a positive impact to the environmental by adhering to the environmental regulations regarding business operations. (Tenev, Chunlin and Loup, 2002; Feng, 2008; Flew, 2013) Appendix 2: Porter’s Five-Forces of Competitive Analysis (Corrocher and Guerzoni, 2009) Appendix 3: SWOT Analysis Strengths -Strong brand image is one of the strengths that NCPA enjoys as it has been in the market for a couple of years -A strong reputation for cultural and societal training and development in the Chinese market -Established partnerships and alliances with the organization to enhance training of respective members and facilitators. -Enhanced global reach and profitability margins -NCPA has a successful license relationship as it is partly owned by the Chinese government -Strong financial position, which offers the firm a chance to conduct its operations normally. High knowledge of the market Weaknesses -Transforming Chinese cultural integration -Increased internal costs reduce the firm’s revenues -Decreasing market share as a result of increased competition domestically and internationally -Lose of principal employees to firms that offer huge employee benefits and are technology based. Opportunities -Government policy towards foreign direct investment is likely to limit level of foreign competition -The adoption of new technology in order to improve efficiency and performance of NCPA -Availability of cheap labor can allow the firm to limits internal costs and focus on the formulation of strategies that will improve its performance. -NCPA is ISO certified as it offers quality services and products,; this can attract foreign investors and customers. -NCPA has a green label, meaning it is concerned about the environment, thus, it is likely to attract more customers. Threats -Long-term threat of irrelevance following the adoption of integrated cultures by the society. -Technology assimilation into arts increases the operational costs of the firm; thus, reduce its profits. -High competition locally and internationally. -Government policies and the seasonal tourism industry limit the profitability of the industry. -Cultural and language differences amid tourist and the locals, limit the number of tourists visiting the country; thus, reduces the revenues of NCPA. (Grant, 2007; Bergsten, 2008; Janssen, Kuipers and Verboord, 2008) Appendix 4: Resources and Capability Analysis RESOURCES (OliveiraJ. E., 2003) (Oliveira, 2003) Appendix 5: Value Chain Analysis Inbound Logistics Operations Outbound Logistics Marketing & Sales Services -Booking reservations and making appointments -NCPA ensures timely booking and attendance customers inquiries. -Processing customer information within the stipulated time. -Requesting for clarification in situation where the firm has minimal access to a customer’s information - Collecting customer survey forms, which help enhance efficiency of the firm. -Evaluation of customer specifications - Working closely with suppliers to ensure timely delivery of the ordered products -Liaising with the relevant government agencies in order to gain insight regarding the potential of the tourism industry in the country and in the international market. -Ensuring that quality products and services are delivered to customers -Timely ordering of suppliers -Enhancing timely customer order fulfillment -Inventory analysis to ensure that all required assets are in stock in order to enhance normal functioning of the firm. -The firm needs to reconcile its accounts in order to establish whether it is being cost-effective. -Product positioning and pricing are crucial factors that enhance the operations and value addition of the firm. -The firm needs to conduct marketing activities in order to create awareness of its existence to its customers -Persuading customers to purchase the products and services offered by the company in order to increase sales. -Conducting market research in order to establish the needs of customers. -NCPA has a customer call center, which handles all customer inquiry issues. -The call center also reminds customers of their appointments with the company and special offers that they would be interested. -The firm also advices the government on policies that it needs to adopt in relation to the prevailing characteristics of the tourism industry. (Kozami, 2005; Sheehan and Vaidyanathan, 2009) Appendix 6: Blues Ocean Strategy (BOS) Canvas Analysis Value Innovation -This is the core of BOS analysis, requires firms such as NCPA to focus on ways through which it can have value innovation, especially in relation to value addition to buyers. -Value innovation helps reduce costs of operation and raise value for the firm and the customers, a situation that helps the firm to remain competitive. Cost Saving -NCPA operates in a highly competitive industry, which means that it needs to formulate strategies to remain relevance. -These strategies can be attached with increased costs; however, through BOS analysis, NCPA will be in a position to eliminate competition elements in the industry, thereby reduce costs. Buyer Value -Buyer value is raised through establishment of factors that the industry does not provide, meaning NCPA will be better positioned in the industry. -Buyer value is a critical factor that most firms fail to consider in their growth process. However, as market leader in the tourism industry NCPA can optimize on this factor, by comprehending its value innovation process. Industry -The conditions in the industry determine the performance of the firm. -Level of rivalry among firms -Number of substitutes -Switching costs as in the case of seasonal markets, which NCPA operates -The brand of entities operating in the industry; NCPA has a well-established and reputable brand that it can utilize to maximize its market opportunities and gain competitive advantage. Resources -NCPA as the necessary resources to help break the value-cost trade-off. -Tangible resources- financial stability and physical location and assets. -Intangible resources- patent, copy right and trade market rights, strong brand and reputable in the market -Human resources- skilled, motivated and willing to collaborate employees. Organization -NCPA is aligned in a manner that all its systems and the operations that it engages pursuit low cost and differentiation. Market survey has helped the firm comprehend the nature of customers it deals with, a situation that has helped it be cost-effective in its operations. Strategy -NCPA comprehends that it can apply unique strategy that will make competition irrelevant and thereby gain competitive advantage. -The firm establishes alliances and partnership with other players in the industry in an attempt to reduce the level of competition, as well as benchmark and establish strategies applied by rivalries, which would be effective in its operations. Offering -NCPA is prepared to offer its customer the total value that transcends in the market in order to establish customer loyalty and confidence in its products and services. -Offering further creates a close relationship amid the firm and the target market. Market -NCPA intends to create and maintain market demand for its products and services. Through this the company will gain competitive advantage as the principal provider of art products and tourism services in the industry. (Kim and Mauborgne, 2005) References Bergsten, C. F. 2008, China's Rise: Challenges and Opportunities, Peterson Institute for International Economics, Washington, D.C. Corrocher, N. and Guerzoni, M. 2009, "Product variety and price strategy in the ski manufacturing industry", Journal of Evolutionary Economics, vol. 19, no. 4, pp. 471-486. Feng, X. 2008, "Who Benefits?: Tourism Development in Fenghuang County, China", Human organization, vol. 67, no. 2, pp. 207-220 Flew, T. 2013, Global creative industries, Cambridge, UK Polity. Grant, J.H. 2007, "Advances and Challenges in Strategic Management", International Journal of Business, vol. 12, no. 1, pp. 11-31. Janssen, S., Kuipers, G. and Verboord, M. 2008, "Cultural Globalization and Arts Journalism: The International Orientation of Arts and Culture Coverage in Dutch, French, German, and U.S. Newspapers, 1955 to 2005", American Sociological Review, vol. 73, no. 5, pp. 719-740. Kim, W. C., and Mauborgne, R., 2005. 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