Business Environment Assignment
The PESTEL analysis shown in the appendix portrays some of the issues in the external environment that a firm manufacturing and supplying luxury men’s clothing may experience. In all six sections; political, economic, social, technological, environmental and legal there are issues that the firm would face. However, some have more significance to others. Although political, technological and environmental factors would have a big affect on the firm, when looking at the three most important issues facing the firm; social, economic and legal come out on top. Firstly, social factors play a massive part in the external environment of the firm. For-fronting the part it plays could be, as brought up in the PESTEL analysis, the men’s clothing market is very dynamic. Fashion has its own cycle, but it very hard to understand, with items coming in and out of fashion quickly. With retailers changing stock usually at least 4 times a year (seasonal clothes) it can be very hard for a manufacturer to keep up with. Along with this rapid change, there has been seen a raise in men’s fashion consciousness, with more and more premium priced men’s clothing appearing. This portraying the difficulty the firm may have at keeping up with its competitors who have somewhat consolidated themselves in the market. However, with low barriers to entry, thus low initial capital costs to start the business, they may catch up quickly. This along with the a thorough PESTEL analysis may see the firm compete well. Changing fashion has often been led by national social change. A recent form of social change has seen consumers become more ethically driven, with products such as the Fairtrade brand seeing a steep increase in sales, according to their website around £300m of sales annually (2007 figure). This rise in what is known as the ethical consumer has meant that attention on this front has to be sharply increased. Some companies such as the bath shop have turned focussed solely on a ethical approach. The manufacturing of the firm will not go unnoticed with pressure groups being very much present. Businesses such as Primark and GAP have felt a full force lobby from these interest groups. Primark, who were outsourcing the manufacture of their goods to India, were uncovered by a BBC report. The program showed children working for the outsourced manufacturer and bad working conditions. If the firm was to have bad press too, say from PETA and animal rights activists, who look very closely at fur farming (for luxury clothing), this may have detrimental affects on factors such as their reputation and finances. This shows issues the firm may experience from pressure groups, so work will be needed to keep these people happy and too shareholders with similar views. Demographics mentioned in the PESTEL may too conjure up issues for the firm in the current environment. Demographics include age, race and gender. When looking at the age of the population, the firm will need to address the issue to which age group (target market) to supply this luxury clothing too. According to a recent census males aged 15-64 years old make up 33% of the population, thus a age group within this seems appropriate. However, the lower of the group having lower disposable income and other factors will need to be considered. Race and culture will also bring about some issues to the firm. They will have to consider clothing that will be appealing to all races and not offend any culture. This being a small issue but will need to be watched. Secondly, moving on to economic factors that may affect and bring up issues in the external environment for the firm. Recession comes out as the biggest threat to the firm at the moment, with many businesses falling into liquidation and great times of uncertainty for workers. With Recession comes many problems that the firm will experience. One being unemployment, which according to BBC figures has rose to around 8-8.9%,...
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