Scooter Industry

Topics: Marketing, Strategic management, PEST analysis Pages: 6 (1857 words) Published: February 8, 2012
International Marketing

Introduction In modern business it is extremely important for companies to have wide variety of tools, which enable them to analyse their environment and their markets. Most commonly used tools are PEST analysis, SWOT analysis and Porter’s Five Forces. In this case the most appropriate tool is PEST analysis which can be further extended to PESTEL. Other variations such as SLEPT, PESTLE, STEEPLE and STEEPLED are also possible. SWOT analysis and Porter’s Five Forces require more specific information about the actual company and its market, but in this case this information is not available. Brooks et al. (2004), say that PEST acronym stands for Political, Economic, Legal, Social and Technological environmental factors that influence the companies day-to-day activities. Further extending it to PESTEL adds Legal and Ecological factors. PEST analysis is therefore useful tool which is used for analysing market environment. It is also very useful for business and strategic planing, marketing planing, product development and research reports. Doing PEST analysis prior to doing SWOT analysis can be beneficial, as all of the PEST factors are essentially external, wheres factors in SWOT analysis are both external and internal. SWOT analysis focuses more on business unit itself, but PEST analysis gives information about market attractiveness, business potential and information about market in general. Kotler (1998) says, that PEST analysis is a useful strategic tool for understanding the market growth or decline, business position, potential and direction for operations. Scooter industry analysis will be carried out with the help of PEST analysis, due to the word limit constrains some environmental issues will be added to other sections. Some factors have greater impact on the global demand for this product than others and will therefore be covered more in detail. Political Political factors include laws, tax policies, trade barriers, regulations, political stability, intellectual property protection and other factors which are tightly connected with the political system and governments policy. Jeannet and Hennessey (2004) even say, that international companies operate at the discretion of host governments, which can with various measures encourage or discourage foreign business. Degree of intervention by the government in the economy is very important as political decisions can impact education of the workforce, health of the nation and quality of the infrastructure. Great example is given by Hill (2005), which explains how can changes in governments policy improve the overall state of the economy. India started economic reform program in 1991,

International Marketing

which involved reducing tariffs and privatisation of state-owned business. After these changes economy expanded at the rate of 6.1% annually. Scooter manufacturer should therefore analyse conditions of the market he is trying to enter as political factors can have a great impact on demand for this product. Governments sometimes try to favour local manufacturers, which can represent a barrier for entering specific market. There is no evidence for something like this in scooter industry. Government can enforce so called non-trade barriers, which disrupt free flow of products between countries. Very specific taxes vary from country to country but in general taxes such as road tax will be lower for scooters than for cars, which will increase the demand. Stricter environmental laws will also increase demand for four stroke engine scooters and electric scooters. There are no trade barriers or import restrictions for scooters, but ACEM (2007), acknowledges that there are some restrictions and additional taxes in Korea for more powerful motorcycles. Furthermore subsidies are very rare in this industry and will not have any major impact on a demand. Doing business in countries with low political stability is always risky, as this will decrease the...
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