Global Business Environment Analysis

Theoretical Approaches in Evaluating a Company’s Global Environment

Different theories have been used to explain the external and consequently the global environment of a company. Two of these include PESTEL and Porter’s five models. PESTEL is an acronym that discusses the political, environmental, social, technological, ecological, and legal environments of a business (Bowhill, 2008). Within the global business, Porter’s five forces model defines the competitive factors as the bargaining power of suppliers, bargaining power of buyers, threats of new entrants in the market, threats of substitutes, and finally the intensity of rivalry among the established firms within the market (Hill and Jones, 2009).

Environmental Factors Influencing the Global operations of a business

The global environment brings a larger and more complex business arena through which international business transactions can be conducted (Cherunilam, 2010). Like the domestic national environment, the global environment is also subject to many factors that affect the operationalisation of organisational policies.

First, the global environment is profoundly affected by political factors (Aswathappa, 2010). The political environment is characterised by the legal provisions within a nation regarding business both locally and international. On a positive note, the rules and regulations may allow incentives for foreign investment, therefore, encouraging the development of global business trends. On the other hand, governments may use legislation to shield internal markets from foreign competition, therefore, restricting the operations and expansion of major international corporations (Harrison, 2013).

Secondly, international economic factors also affect the operations of an international organisation (Aswathappa, 2010). The global environment deals with the ability to work within different economic environments across national boundaries. As such, the difference in economic stability and growth are factors that affect the operations and prospects of a business. Thirdly, technology is a significant factor affecting the survival and growth of a business in the contemporary global environment (Harrison, 2013). The availability of current and innovative technology enables companies to assess better and quickly adapt to market changes. Technology is one of the best competition factors within the business environment (Aswathappa, 2010). On the downside, Harrison (2013) asserts that operating with obsolete technology could limit the adaptability and growth potential of an organisation.
Fourth, the cultural differences between nations could also interfere with the operations of a business (Aswathappa, 2010). The reason behind this is the differing personal, national, and organisational cultures, which could lead to incompatible business approaches and, therefore, limit the functions of a business organisation or its policies.

Burberry in Kenya

Burberry has made significant strides in foreign markets through new market penetration and product diversification into beauty accessories above the fashion empire (Moore & Birtwistle, 2004).

A venture into the Kenyan market would require a careful analysis of the country’s political environment. The government of Kenya supported a highly open economy with incentives for foreign investment. Therefore, Burberry would have no problem with market protectionism policies from the government and the political environment (Omanwa, 2013). However, the country has often been characterised by weak political and economic management, which can be illustrated efficiently through the failure of the implementation of anti-corruption and anti-fraud laws (Kemoni and Ngulube, 2008). Part of this is because of increased budget cuts that have translated to delayed implementation of government projects and policies.

The economic environment is also significantly affected by the political environment. Where the political governance is challenged economic governance also suffers the same blow. Political instability only translates to economic insecurity. However, Kenya also poses one of the fastest developing economies in East Africa (Kemoni and Ngulube, 2008). The emerging market also provides a highly untapped market in designer and luxury products, which is the speciality of Burberry. The industry is also characterised by healthy competition from other international and local companies (Kemoni and Ngulube, 2008).

Kenya is well connected to the rest of the world through increased global communication technology such as the Internet (Omanwa, 2013). The country is also highly supported by the government in technological development. Though still a developing country, there is significantly proper infrastructure such as supply chain networks and distribution channels for a new organisation to enter the market (Kemoni and Ngulube, 2008).

Cultural factors also significantly affect the functions of a business. Being a UK based company; the organisational and national culture of the Burberry is different from that of Kenya as a country, as well as, local organisational culture. As such, the diversity in culture may provide increased opportunity for fashion trends within the Kenyan market. However, this may be negative as it could also result in alteration of product culture of the organisation to better fit the needs of the local population.

Proposed Marketing Strategy Product strategy

The product strategy for Burberry is divided into two major seasons named Spring/summer and autumn/ winter seasons (Moore & Birtwistle, 2004). Investment in Africa would suggest an alteration of these seasons, as they do not all happen in the markets therein. Perhaps the company could decide on culturally based seasons that celebrate the cultural orientation of the market.

However, in the maintenance of the organisational culture, the company could maintain their accessory products, which include handbags, Fragrances, ear-wear, and Childrenswear.
Pricing Strategy: Being a luxury-oriented organisation, the price of the products is aimed at high-end customers. However, consideration in venturing into Kenya would require price diversification to provide for the middle class and lower end customers who make up most of the market population. This can be done by producing high-quality products, which are of less value to attract a wider market audience.

Promotion strategy: Earlier evaluation of the Kenyan market indicates that it is conversant in modern technology. Burberry should consider investing in technological promotion tools for large coverage such as digital marketing (Doole and Lowe, 2012), as well as, time effectiveness. The first would include media, which refers to television commercials and radio commercials as well. The other is the use of the Internet, which would include the use of official company websites and the social media such as Facebook, Twitter and Google+. To complement these methods, the company could also use billboards and fashion shows, which characterise the glamour of the industry.
Place Strategy: It would be necessary for the organisation to uphold a high-end stand in the outlets for their products. This would require them to be placed in high-end shopping malls that would attract the high-class customers. However, the above-discussed lower priced products may be placed in lower-end locations that would draw middle class and lower class customers. Further, the company may also consider implementing online stores where customers can easily order for products without having to visit a Burberry store.

References

Aswathappa, K 2010, International Business 4E, Tata McGraw-Hill Education: New Delhi. Bowhill, B 2008, Business Planning and Control: Integrating Accounting, Strategy, and People, John Wiley & Sons: West Sussex.

Burberry 2014, Group Overview, viewed 27 August 2014,

<http://www.burberryplc.com/about_burberry/group-overview>

Cherunilam, F 2010, International Business: Text And Cases. PHI Learning Pvt. Ltd: New Delhi.

Doole, I & Lowe, R 2008, International Marketing Strategy: Analysis, Development and Implementation, 5th edn, Thomson Learning: London.

Harrison, A 2013, Business environment in global a global context, Oxford University Press: Oxford.

Hill, C & Jones, G 2009, Strategic Management Theory: An Integrated Approach. Cengage Learning: Mason.

Kemoni, H & Ngulube, P 2008, ‘Relationship between Records Management, Public Service Delivery and the Attainment of the United Nations Millennium Development Goals in Kenya’, Information Development vol. 24, no. 4, pp. 296-306.

Moore, CM & Birtwistle, G 2004, ‘The Burberry business model: creating an international luxury fashion brand. International’, Journal of Retail & Distribution Management, vol. 32, no. 8, pp. 412-422.

Omanwa, S 2013, ‘Determinants of FDI in Kenya: An Empirical Study’, Vilakshan: The XIMB Journal of Management, vol. 10, no. 1, pp. 47-66.

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