Pest Analysis of Gucci in Malaysia

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External Environmental Analysis on PEST, PORTER’S FIVE ANALYSIS & SWOT

Introduction
The purpose of this report is to examine the external environment in Malaysia that affected Gucci, one of the Italian high fashion luxury brand. PEST analysis, competitive analysis and SWOT have been used by investigators to achieve the target.

Gucci- Company Overview
Gucci is among the sophisticated international fashion company which produces high quality of clothing, fragrances, accessories, handbags and shoes. Guccio Gucci founded Gucci in Florence in 1921. It has now become one of the biggest Italian brand which operates about 278 operated stores worldwide, and also franchisee its product worldwide by selling them in the department store. According to Business Week magazine, Gucci generated $4.2 billion in revenue worldwide in 2008 and climbed to 41st position in the magazine’s annual 2009 as the “Top Global 100 Brands” chart created by Interbrand. Gucci also provides an online store worldwide through their website Gucci.com. (REFERENCES: WIKI, URBAN DICTIONARY)

PEST ANALYSIS

The PEST framework will analyze the impact of the unpredictable issues that will rise when Gucci operates in Malaysia by identifying the influential factors that have a strong effect on the business.

Political
* Association of Southeast Asian Nations (ASEANS) represents the Malaysia’s main free trade removing all barriers reassuring western companies, including Gucci to make way into starting business in Malaysia. Treaty of Amity and Cooperation in Southeast Asia (TAC) in July 2009 was signed by Secretary Clinton to enhance the US political relations with ASEAN. President Obama held a meeting between the ASEAN leaders, which then tightened up the relation between U.S and East Asia region. This is important because U.S makes up to 10.9% of the exports and 11.2% of imports out of all Malaysia’s trading partners. The growth of Gucci’s international business section is predicted to be profitable.

* As Malaysia declares Islam as the country’s state religion, the government is strict with the material of Gucci before it is being manufactured.

Economics

* The Malaysian economy has been elastic over the year. Its GDP growth speeded up to 5.4% from 4.9% compared to the previous months. The growth was goaded by the investment disbursement and astonishing private and public consumption.

Fig 1: Malaysia GDP Growth Rate from 2008-2012
(Adapted from http://www.tradingeconomics.com/malaysia/gdp-growth)

* It is stated that the Malaysian economy has continued to grow as the income per capita increased to more than RM 28,000 annually at the end of the year compared to RM 1,159 in 1970. The economy relies on buying behavior of the consumers. As a result, the spending power of customers is on the rise, and they are positive of their financial situation. They tend to spend more.

Social

Fig 2: Malaysia Population from Jan 2002-Jan 2012
(Adapted from: http://www.tradingeconomics.com/malaysia/population)

* According to Malaysia’s population analysis graph, Malaysia’s population increases as years passed by. More population simply means more spending among the society. Moreover, Malaysia is also one of the famous Tourist Attraction in Asia making it suitable to have a factory for Gucci. * Consumers’ attitude towards fashion is instantly changing as they have became conscious of the latest trend. An increase in demand for latest fashion has been accommodated by Gucci to improve their sales to reflect the change in demand. Customers will also be satisfied with the customer service that Gucci has to offer. * Gucci is made to target the upper and middle class, as the price is expensive since it is mostly hand-made limited items. Gucci’s main objective is to reach the attention of young to adult men and women.

Technology
* Usually Gucci uses more labor forces than machinery because of the luxury items and that is...
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