Pestel Analysis Clothing Company

Topics: Cost, Cost-benefit analysis, Inflation Pages: 5 (1830 words) Published: December 17, 2010
Political Factors
Taxes – business taxes and any other taxes that Velocity clothing must pay are mandatory and must be paid, affecting the amount of outgoings they have, variation in this may cause more or less outgoings but any changes could be quite significant. •Wars & Conflict – Velocity Clothing use materials imported from various countries. The production of some of these materials may be in areas of instability or conflict. Such activities could affect the accessibility of these materials and the reliability of the suppliers, which in turn could affect the price of the good. •Trading Policies – any new trading policies formed between countries could make it easier or harder for countries to trade with each other, which could be a potential issue for the accessibility of goods for Velocity Clothing. For example countries joining the EU and members of the EU can trade almost freely and very easily with eachother. See quote in Appendix point 1.1 to further back this up. •Country Relationships/ Attitudes – Countries that have long lasting feuds or discrepancies that have not entirely been solved which could have occurred from past wars or conflicts could affect the willingness of foreign companies to trade with Velocity Clothing. •Terrorism – This is a very real threat which exists for Velocity Clothing and can affect the price consumers pay when paying for goods or items, one way this can occur is by the increased levels of security at ports when importing and exporting goods, due to the increased risk of terrorism in recent years, this has in turn affected the price of goods. This can be explained further in the Appendix. See quote in Appendix point 1.2. Economical Factors

Recession - any recessions including the current one will be a contributing factor as to how well Velocity Clothing’s sales do. As people will have less disposable income or will perhaps be being slightly more vigilant with their money. A luxury good such as what Velocity Clothing supply will be lower on the agenda for people who have been made redundant or have much less money available due to the recession. This can be supported in Appendix point 1.3. •Raw material prices – the prices of raw materials changing will affect the amount of money Velocity Clothing has to spend on buying the materials necessary for making the products. In turn any changes in these prices could affect the price of the product when being bought off the shelf by the consumer. Suppliers of Velocity Clothing may also increase their prices if they are also affected by the price of raw materials going up. •Inflation – over time commodity prices go up and Velocity Clothing’s prices may go up alongside inflation to cater for the price increases in other areas. •Labour costs / minimum wages rising – will affect the amount of capital needed to pay the staff for the production of the products. Suppliers who also are affected by this may put up their prices to cater for the increase in labour costs, which would affect the amount Velocity has to pay. Paying the staff to sell the clothing in store will also be another outgoing affected by any changes in this. Please see Appendix point 1.4 for a graph to support the change in minimum wage prices. •Exchange Rates – exchange rates vary on an almost day to day basis, but can change large amounts over time. The day to day price changes which Velocity Clothing will encounter may be quite small, but still are noticeable. The larger changes that may occur overtime are much more significant and can impact Velocity Clothing greatly. So much that drastic changes may consider Velocity Clothing to purchase from other suppliers in other countries as to be more economical. See Appendix point 1.5 to back this up further of the noticeable effects it can have. Also see Appendix point 1.6 to see a graph of how the Pound to the Euro has declined over a six month period during 2009. Social

Demographics – Age, sex, level of...
Continue Reading

Please join StudyMode to read the full document

You May Also Find These Documents Helpful

  • Pestel Analysis Essay
  • PESTEL Analysis Essay
  • PESTEL Analysis Essay
  • PESTEL analysis Essay
  • pestel analysis Essay
  • Essay on Pestel: Pest Analysis and Factors
  • Company Analysis Essay
  • pestel Essay

Become a StudyMode Member

Sign Up - It's Free