Free «Macro Environmental Changes» UK Essay Paper

Free «Macro Environmental Changes» UK Essay Paper

1. Macro Environmental Changes: PESTLE

The marketing environment comprises of multiple external factors that affect business decisions. Moreover, these factors can be divided into macro and micro level determinants. Each of them has its own opportunities and threats. Besides, the distinction between the two is useful for their correct application in retail markets. The macro environment consists of larger societal forces that affect the whole market. They include political, economic, social, cultural, technological, demographic, and ethical powers. Foer instance, the development of electronic retail sphere has been the greatest recent change in the macro environment. Thus, the changes in the macro environment create both opportunities and threats when it comes to the use of new technology.

The most common way of considering the macro environment is examining major components. These factors include political, legal, economic, social, cultural, and technological factors (Sullivan & Adcock, 2002). This group makes up the PEST analytical tool. There is a number of equally good and widely used tools such as STEP, SPELT and SLEPT. However, not all of them identify the issues and evaluate the impact they might have, which is critical for the future success of the analyzed organization (Sullivan & Adcock, 2002). These factors may cause headache if the organizations fail to identify them well, since they are likely to have a significant effect on the future of the business. More importantly, it is critical for the management of Legoland to understand that the major revolutionary change requires significant shifts for the firm to remain competitive (Sullivan & Adcock, 2002). As an organization, the Legoland Company will need to monitor its macro environment and continually assess the potential effects of the changes in that environment. In the case of Legoland, the changes will affect its environment in Malaysia. Thus, the administration should endeavor to identify major issues and forecast the impact of each particular factor so that relevant actions can be undertaken (Sullivan & Adcock, 2002). One widely used technique is building different scenarios that describe the future, including the most likely or worst-case options. In such a way, the strategy is evaluated against different predictions of the future. Such analysis is particularly critical with respect to all macro environmental factors.

The political and legal environment includes all the actions of government that impact the business. It can be demonstrated in the form of formal legislation, such as the Sale of Goods Act, competition policy, and planning regulations (Sullivan & Adcock, 2002). Besides, recent influences, such as initiatives regarding food safety and the marketing of genetically modified products, can influence or limit the operations of a particular organization. It is equally important for the administration of Legoland to understand the role that the Malaysian government will play in the marketplace. In this way, the company will comprehend which of the vast array of legislative procedures impact their marketing activities (Ghuman & Aswathappa, 2010). Essentially, the impact of political and legal factors is not the same for all types of business ventures.  It is equally important to realize that many governmental regulations are introduced in order to protect consumers. Therefore, those organizations that are sensitive to the political climate can anticipate changes and implement appropriate actions. It is inevitable to realize that in the long run the government has the power over business (Ghuman & Aswathappa, 2010). The recent example is the legislation on minimum wage, which has increased employment, and is, therefore, a factor within the changes occurring in business environments.

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Secondly, economic factors affect the business in two primarily ways. The impact of disposable income and inflation on consumer spending is profound. Moreover, the effect of taxes, rents, employee costs and other expenses that are involved in the running of the business activities should be considered (Ghuman & Aswathappa, 2010).  Economic factors are not restricted solely to the local economy of operations. The globalization of retailing via the internet means that international competition, much of which is based on prices, is now a reality in many markets. In addition, there has been a great deal of publicity regarding the opportunities for consumers to purchase goods and services. The impact of changes in the major European currencies also has a definite impact on the local businesses (Ghuman & Aswathappa, 2010). Moreover, globalization is an issue that affects business costs with no certain trend in retail industry. Currently, many companies such as Legoland are expanding internationally. However, as shown by the withdrawal of Marks & Spencer from Germany, there can be problems, especially if the brand is unknown or has little value in the new market (Sullivan & Adcock, 2002). For example, the dramatic growth of discounts on similar goods and services can challenge the market entry for a new brand. Therefore, the key challenge that remains for the Legoland administration is deriving significant economic benefits offered by globalization.

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On the contrary, the sociological and cultural environment is probably the most difficult to understand and predict, as it involves people and their behaviors. There is a number of issues that impact business activities (Nieuwenhuizen, Badenhorst-Weiss, Rossouw, Brevis, & Cant, 2008). Illustratively, ageing of the population and demographic shift are creating new opportunities for some retailers, and threats - for others. Therefore, business executives that fails to anticipate changes in tastes and demand will be left behind. The Legoland Company should follow the scenario of fashion designing. Designers make extreme efforts to predict trends in colors, styles as well as trying to lead rather than follow the needs of their customers (Nieuwenhuizen et al., 2008). Notably, sociological and political factors have overlapping effects. For instance, the current concerns about the quality of food are prompting governmental action. The 1998 Euro Barometer survey covering 15 EU countries shows that only 39% of respondent consider pre-cooked meals to be safe to buy (Sullivan & Adcock, 2002). Hence, it shows that the attitude of the customers that might drive both governmental action and marketing activities.

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Furthermore, the technological environment often leads to revolutionary discontinuities in the market. When new technologies invade the market, they tend to create new sectors instead of integrating the existing ones (Carroll & Buchholtz, 2014). Therefore, it is possible for technological factors to represent an opportunity for those in a position to capitalize on them, but they could also pose a significant threat, as shown by the expansion of e-commerce. Emphatically, it is not clear whether the new opportunities of the internet usage will threaten the bricks and mortar stores in all product categories. However, it is certain that technological factors are here to stay and will be significant players in a number of areas (Carroll & Buchholtz, 2014). As a result, the Legoland Stores can establish e-services alongside their existing operations. It is certain that technology is likely to change many of the traditional ways of doing businesses for good. For example, retailers who have invested heavily in fixed tangible assists are likely to review their relevance in the new environment of marketing hyperspace (Carroll & Buchholtz, 2014). Other technological developments have enabled more efficient performance. The use of article numbering, or barcodes, has changed stock control, re-ordering as well as has improved checkout operations. In addition, loyalty cards that utilize encoding technology can drive many new aspects of retail marketing strategies.

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2. SWOT and Customer Analysis

Macro environmental factors may push a company to certain critical situations. Therefore, such companies as Legoland need the tools to analyze their current situations and find the right strategies for their successful development (Aaker & McLoughlin, 2009). The SWOT analysis is pursued through an integrated approach with the consideration of environmental variables. The objective is to outline the company’s internal strengths and weaknesses as well as external opportunities and threats (Ferrell & Hartline, 2014). Such an analysis will assist the Legoland administration with the generation of possible strategic options in Malaysia. Besides, SWOT analysis provides a comprehensive instrument for delivering a significant added value to the company’s strategic development (Yang, 2008). On the basis of the SWOT analysis, the company can develop a strategy using the existing corporate strengths as well as avoiding potential weaknesses. Eventually, the organization will benefit from the future opportunities with the regard to expected risks.

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Within the SWOT analysis, broad information from the company, competitors, and marketing environment can be gathered effectively. This collected formation is then presented and compacted in the form of a SWOT analysis (Allen & American Society for Quality, 2004). Therefore, this method offers a combination of effective results by delivering helpful information that helps see the firm’s resources and capacities as compared to the background of the competitive environment. Consequently, on the grounds of the SWOT analysis, generic strategies can be deducted. However, before SWOT can be conveyed, it is necessary to gain desired information by analyzing potential competitors, markets and environment (Nijssen & Frambach, 2013). Such form of analysis investigates the company’s capabilities. Therefore, during the process, not only the company’s outstanding abilities are looked at, but also the fields in which the business has no capacity are touched upon. This analysis is used as a valuation method for realizing new projects and appraising the company’s present situation (Nijssen & Frambach, 2013). It also focuses on the dimensions where the company will invest its assets.

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On the other hand, conducting competitor analysis is important, since the customers usually assess a company in relation to its competitors. Basically, the reason for undertaking competitor analysis lies in the understanding of competitors and substitute producers (Shankar & Carpenter, 2012). In such a way, the Legoland management can formulate a straightforward framework to provide direction for developing viable marketing plans. Moreover, the company will be able to fulfill its role of structuring the assessment of fit between the strengths and weaknesses (Doole & Lowe, 2008). In addition, when performed correctly, SWOT analysis will help the company to uncover its competitive advantages that can be leveraged for the firm’s marketing strategy.

Customers have a direct relationship with the operations of the firm. They create a rich source of relevant operational opportunities, threats and uncertainties. Therefore, in its strategic marketing planning, the Legoland Company should analyze its customers (Ghazinoory, Zadeh, & Memariani, 2007). More importantly, customer analysis can be partitioned into understanding the market segment, customer motivations and exploration of the unmet needs. Segmentation is often the key to developing a sustainable competitive advantage (Fleisher & Bensoussan, 2003, p. 457). In a strategic context, it involves the identification of customer groups that respond to competitive offerings in different ways. The underlying concept of successful segmentation strategy is reduced market space (Pahl & Richter, 2009). As a result, while Legoland moves to Malaysia, its management has the possibility of establishing a dominant position which will not be attacked by competitors successfully. In addition, the most useful variable in market segmentation is applied when determining strategies of the business.

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In addition, the issues of price sensitivity should be considered during customer analysis. Usually, many groups of products have well-defined breakdowns between those customers concerned about the price and those willing to pay extra for higher quality and more features (Pahl & Richter, 2009). On the basis of this information, some companies operate along a well-defined hierarchy of discounters. Moreover, brand loyalty represents a strategic priority when conducting customer analysis. It represents a dimension for which adequate performance must be obtained (Snelling, 2012). For instance, if the prime attraction for buyers of juice drinks is healthy ingredients, a firm must be able to deliver at least minimal health benefits. On the other hand, consumer analysis involves the identification of motivations for a given segment (Ghazinoory et al., 2007). Although a group of managers can identify these motivations, for Legoland managers, it is critical to obtain a valid list by getting consumers to discuss goods and services in a systematic way.

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3. Recommendations

Conclusively, the formulation of an adaptive strategy in a dynamic market involves the analysis of the macro factors that can affect the business’s strategy. On the other hand, the internal analysis is useful for the understanding of the firm’s position in terms of its strengths, weaknesses, opportunities and constraints. In addition, successful external analysis should be conducted with the consideration of organizational purposes. On the contrary, there is always a danger that it will become an endless process resulting in an excessively descriptive report. Therefore, as the Legoland Company moves to Malaysia, it needs to exercise discipline and direction so that its management can easily generate relevant descriptive material. In essence, the process of external analysis should not be an end in itself. Rather, it should be motivated by the desire to affect business strategies. A comprehensive analysis of the macro factors is important, because it has a direct impact on the strategies and offers decision alternatives.

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