Situational Analysis of the Child Care Industry in Canberra - Case Study Example

Name Professor Course Date Chosen topic: This situational analysis is about Child care business- Topic 3 1. Introduction The purpose of this paper is to offer a situational analysis of the child care industry in Canberra. Canberra has a large number of day care centers that exceeds one hundred. In Canberra the day care centre will be subject to competition from other day care centers such as Weston Creek Children Centre, Noah’s Ark Children Resource Centre and St. Jude Early Learning Centre. The market segment that Safe Toddler childcare will focus on will be those who are within a 10 mile radius of Canberra. There will be a consideration for parents who wants their children to stay at the day either on a part-time or full-time basis. 1.1 Full time working parents Safe Toddler child care will aim at establishing a large customer base in this segment so as to institute healthy and consistent revenue for the centre so as to enhance the stability of the day care now and in the future. 1.2 Drop-ins/part-time workers This market segment will comprise of a small percentage of the total revenue. Though this segment is not the primary focus segment it will be essential in supplement revenues of the child care centre. 2. Industry overview It has been noted that Australia is set to experience a mini baby boom in the next 5 years to come and the childcare industry among others will set to surge as the birth rates in Australia rises by about 6.4% (Sadauskas). The industry generates revenue that amounts to $11 billion and has an annual growth rate of 11.7% and employees around 165, 500 people (IBIS World); additionally it is rated among the five top occupations. In relation to employee turnover there are high rates of turnover in the industry and it s seen as an industry wide issue that needs to be addressed with urgency. Some of the critical factors to success of childcare centers are: A competitive price Educated and knowledgeable instructors to enhance safety High quality of child care services Meeting the needs of target market such as the working parents 3. Factors of the uncontrollable environment 3.1 PESTLE Analysis PESTLE analysis also referred to as the PEST analysis is a concept that is applied so as to tract the environment that be business is operating in or plans to operate in. 3.1.1 Political factors The political factors are termed as the factors that tend to determine the degree to which a country government may influence the economy or at the same time in a certain industry. The day care centers are not different from other players in different industry and they are affected by a number of political factors though they are minimal as compared to other industries (Aaker & McLoughlin 54). The political situation in Australia can be termed as a peaceful one and this is likely to have a positive impact on the business. Based on these, the daycare has favorable conditions in relation to the political environment and thus Safe Toddler day care will operate effectively without any kind of political interferences. A major positive impact is there has been a reduction in the standard mileage rate since in 2015 the rate stood at $.575 per every business mile but the 2016 rate stands at $.54, thus day care centers will benefit from the slight reduction (Copeland). 3.1.2 Economic factors The economic factors are those aspects that act as essential determinants of the performance of an economy and also have a direct impact on a company and business (Aaker & McLoughlin 55). In relation to the economic factors Canberra economic situation is an enviable one and it has been performing consistently over a number of years. Canberra has a very strong job market and also low levels of employment rates and this makes the employees on the area to have a higher level of disposable income. Through the high levels of disposable incomes the parents are able to afford and place their children in day care centers as they work either on a part-time or full time basis (Canberra). 3.1.3 Social-cultural factors This group of factors scrutinizes the social environment and also gauge determinants related to demographics trends as well as population analytics (Aaker & McLoughlin 55). In this regard, the socio-cultural factors that is likely to have an effect on the operations of Safe Toddler day care. Research shows that a great number of couples are both working with some working full time or on a part time basis. Therefore, this translates to the need for someone or a place to take ones child during the working hours. Additionally, families had strong bonds in that there were looked at by other family members, with time this has changed as those close family members have moved to other locations to work or study, thus making parents to look for alternatives and the day care centers seems to be the best alternative. 3.1.4 Technological factors The technological factors relates to any innovations that may have an effect of a business either in a favorable or unfavorable manner (Aaker & McLoughlin 56). In relation to the day care centers in Canberra there have been the innovation of new and advanced toys. Safe toddler need to take note of this technological advancement and make use and purchase state of art toys for the children and any other day care elated equipments. 3.1.5 Environmental factors This includes factors that may have an influence or that which are determined by the surrounding environment (Aaker & McLoughlin 56). In relation to these, the day care centre need to adhere to the right standards when making disposable of items from the day care, for instance, the torn out toys as well as water drainage so as not to cause any environmental damage. 3.1.6 Legal factors The factors relates to the laws that are likely to affect an industry. In this regard, Safe toddler will be affected by such laws in that they will be expected to follow them and if not they may face some legal charges. For instance, they will be required to comply with the acts related to education, for example, staffing qualifications, health and safety and educator and child ratio (ACT Government). 4. Competitor Analysis There are a wide range of competitors in the childcare sectors in Canberra. The safe Toddler will mainly focus on those competitors that are directly connected to them and will do away with the countless of other providers offering some sort of the broader child care option. Thus the direct competitors to be focused on are the i. The already established childcare centers: this will entail the larger facilities that provide care to a larger group. In this kind of facilities the number of children that are in the centre are many and since Safe Toddler aims at increasing their number over time it will seem appropriate to focus on these kind of child care centers. Some good example of daycare centers in this category is the Weston Creek Children Centre, Noah’s Ark Children Resource Centre and St. Jude Early Learning Centre. ii. Home based day cares: these group of competitors will entail those individuals with child care facilities that are based out of their own homes iii. Medium sized companies: this will entail those child care centers that are owned independently and this group will offer fierce competition since they are in the same category with Safe Toddler day care centre. 4. Customer Analysis Market segmentation entails the dividing of a large target market into small subsets of consumers (Kotler and Kevin 30). In relation to the day care centre I will make use of geographic and demographic segmentation. I will apply geographic segmentation by focusing on a specific area in Canberra. In relation to the demographic segmentation and based on these I will be targeting those parents with children who need to be cared for as they work or as they undertake other activities. Based on Australian Bureau of statistics as of June 2011, there was estimated that about 65,000 children and this number since to be on the rise with time. This shows that the day care centers in the area have a large customer base to cater for (ABS) 6. SWOT Analysis The table below shows that SWOT analysis of Safe Toddler day care Strengths Weaknesses Well equipped and sophisticated system with state of art facilities Centrally located thus able to attract a great number of customers who in this case are the parents of toddlers. Ample space to enhance the care given to the children Poor visibility based on the fact that the company is new in the industry Lack of the ability to attract and at the same time retain employees Inability to flawlessly determine the demand of the services in relation to employee that are available within a given time Lack of support from government since the centre is won by an individual Opportunities Threats A growing market that needs to be addressed adequately Expansion New market niche Increase in company revenues since a great number of people are working thus necessitating the needs of child care services Spreading of the fixed cost as the number of children increase Fierce competition from the already established day care centers. Retention of employees over a long period of time Inadequate funding and Legal liabilities issues Work Cited Aaker, David, and McLoughlin, Damien. Strategic Market Management – Global Perspectives. West Sussex: John Wiley & Sons Ltd. 2010. Print. ACT Government. Legislation and Regulations. 2015. Web 15 April 2016. . Australian Bureau of Statistics. Australian Capital Territory 2013. Australian Bureau of Statistics. Web 15 April 2016. . Canberra. Canberra Create your future. N.D. Web 15 April 2016. . Care for Kids. How Do We Stop the Churn and Burn in Child Care Centers? Care for Kids, 2012. Web 15 April 2016. . Copeland Tom. 2016 Standard mileage rate announced. 17 Dec. 2015. Web 15 April 2016. . IBIS World. Child Care Services in Australia: Market Research Report. IBIS World. 2016 Web 15 April 2016. Kotler, Philip, and Kevin Lane Keller. Marketing Management. Upper Saddle River: Prentice Hall, 2006. Print. Sadauskas, Andrew. Childcare Industry set to surge 34.2% over five years as Australia birth rate rises. 14 May 2015. Web 15 April 2016. . Read More