An Analysis of the External Environment of Billabong International Limited Based on financial Year 2002-2003.
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An Analysis of the External Environment of Billabong International Limited Based on financial Year 2002-2003. Presented to the Senior Management of Billabong International Limited On Friday, 29 November 2002. Report researched and prepared by Ergin Senses. EXECUTIVE SUMMARY This report analyses the external environmental situation of Billabong International Ltd., whose general profile, sectoral and current details need to be provided to demonstrate reliance on management processes. In this report, a detailed analysis on company needs to see why analysis of the organisation's external environment is important and needs to be monitored. This report also analyses the external environment's elements from the company's point of view. Based on this analysis it seems that Billabong Int. Ltd. may increase its profits by using detailed knowledge of external environmental elements. Thus made up of all the conditions and factors external to the company that may increase company's productivity, activity, and compete in its trade markets effectively. Ergin Senses TABLE OF CONTENTS Title page Executive Summary Table of Contents Pg. 1. Introduction 1 2. Methodology 1 3. Discussion 2 3.1.Short View of the Company's History 2 3.2.Discussion of External Environment 2 3.2.1.Mega Environment 2 220.127.116.11.Technological Element 3 18.104.22.168. Economic Element 3 22.214.171.124. Legal - Political Element 4 126.96.36.199. Socio-Cultural Element 5 188.8.131.52. International Element 5 3.2.2. Task Environment 6 184.108.40.206.Customers and Clients 6 220.127.116.11. Competitors 6 18.104.22.168. Suppliers 7 22.214.171.124. Labour Supply and the Importance of Managing Diversity 8 126.96.36.199. Government Agencies 8 4.Conclusion 8 5. Recommendations 9 5.1. Recommendations of Mega Environment 9 5.2. Recommendations of Task Environment 9 6. References 10 Ergin Senses 1. Introduction This report analyses the external environment of Billabong International Limited. An analysis of the external environment must include several thorough investigations probing the various factors that influence Billabong International Limited through its industry and external environment. A look at the mega-environment will analyse the technological, economic, socio-cultural, legal-political, and international elements.
This obviously would pull up profits for Billabong. In the situation of this not occurring, low consumer spending would mean that non-essential items like high priced fashion products, could see less demand and as a consequence lower profits for Billabong. Economic volatility can also have adverse effects on Billabong, by providing unfavourable investment conditions. Yet this could also serve as an entry barrier to possible competitors, meaning that Billabong is protected by the external economic factors. Its market share under such circumstances could be sustained, provided Billabongs strategic management. Ergin Senses 3 Fig 188.8.131.52. Elements of the mega environment of the Billabong International Limited (Bartol et al. 2001, p, 67) 184.108.40.206. Legal - Political Element The legal - political element refers to legal and governmental systems within which an organisation functions. Trends in legislation, court decisions and politics and government regulation are important legal-political environment aspects. (Bartol et al.2001, p.67) In this case we can say that Billabong International Limited operates within the general legal framework of over 60 countries in which they do business. Many laws specifically addressing their functioning govern them. Simultaneously, organisations are subject to growing numbers of lawsuits filed by interest groups, ranging from employees to clients. Juries awarding large sums of money, particularly in product liability cases, have motivated these. Ergin Senses 4 220.127.116.11. Socio-Cultural Element The socio-cultural element involves attitudes, values, norms, beliefs, behaviours and associated demographic trends typical of a region. Socio-cultural variables are often raised when considering different countries. (Bartol et al.2001, p.68) The clothing industry is a good example of an industry where external environment factors play a critical role in competition. Especially the socio-cultural environment is of prime importance. Since the firms in this industry primarily must bring out new designs they must keep good track of fashion developments. Fashion is a cultural and societal issue that varies from culture to culture and from country to country.
That information shows that Billabong has been affected by market fluctuations, which means regulations are making differences between different markets. 4.Conclusion In conclusion, it seems clear that any organisation needs to analyse their companies because every sector or industry has its own distinct environment which changes on a regular basis. The organisation's external environment context is thus made up of all the conditions and factors external to the organisations that can positively or negatively affect the life, orientations, structures, development and the future of the organisation. This report analysed Billabong International Limited's external environmental elements, which are mega environmental elements and task environmental elements, and tried to identify the most important elements for the company. These elements include: socio-cultural, economic, international, legal-political and technological elements. For the company, the most important three points are: socio-cultural, economic and international elements. Thus, by using these elements the company could reach high level of productivity and sales, and give their clients a better service and warranties. Ergin Senses 8 5. Recommendations Based on the discussions and conclusions of this report the following recommendations are made as mega and task environment separately. (Strategic Planning, Section 4, 1997) 5.1. Recommendations of Mega-Environment The Billabong Int. Ltd. should: * Identify the principal phenomena that have an impact on the Billabong; * Determine the trend for each phenomenon identified; * Classify the observed phenomena as opportunities or threats; * Evaluate the importance of the opportunities and threats; * On the basis of the opportunities and threats that have priority for the company, identify its strategic targets. 5.2. Recommendations of Task Environment The Billabong Int. Ltd. should: * Identify the key players for Billabong; * Assess the potential influence of each key player on organisation; * Classify each key player in terms of opportunities or threats for organisation. It is possible that a phenomenon associated with a key player will be classified both as an opportunity and a threat; * Evaluate the importance of the opportunities and threats; * On the basis of the opportunities and threats that have priority for organisation, identify its strategic targets. Ergin Senses 9 6.
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