Page 3 - Appendix

Page 10 - Issues Currently Affecting the Business

Page 16 - Bibliography

Page 17 - End Notes

a) Appendix

        This paper will analyse the current issues and trends in the external business environment. An online business dictionary defines the business environment as:

                ", , , and  surrounding an  which  its activities and , and determine its opportunities and , also called operating environment." 

        In any organization, manager's decisions will be affected by the current issues and trends in the business environment.  It is crucial for manager's to consider these issues and trends in order to make successful choices for their organization.  The business environment of the United Kingdom can change in many instances. Change can take place in competition laws, global warming, taxation and inflation for example. These changes can be analysed and classified using the PESTEL framework which differentiate between political, environmental, social, technological and legal topics.  The external environment also includes possible competitors to the business.  (OUP, 2008).

         In order to produce a report that will analyse the current external business environment, the PESTEL framework shall be followed in order to visualise any issues that may affect the hypothetical firm of choice producing a luxury item within the baby clothes market.  PESTEL analysis will highlight all local and national issues affecting the firm and its operation in the United Kingdom.

         The global factor must also be considered. LoNGPESTEL analysis considers not only the local and national factors affecting an organization, but the global factors too. For example, global factors has to do with world trade agreements which facilitate further expansion of the EU, migration issues, international technological breakthroughs such as the internet, global warming and international consensus on human rights.  (OUP, 2008).

        Political issues refer to the level government involvement into the economic environment, by means of policy construction.  For example, according to the organization Mintel, who produced a report in March 2000, British Standards which stipulate the level at which an item is manufactured, number around 50.  They found that the British Standards mainly apply ". . . to 'hardware' such as pushchairs, car seats and so on; but some are specific to clothing items". Gradually, more and more European Standard numbers recognise items which are manufactured to a specification agreed by all European Union member states. With regard to certain elements of baby clothes manufacture, British Standards intervened to introduce compulsory fire resistant materials into the manufacturing process and to recommend certain types of fastenings which previously were considered a hazard. (Mintel, 2008).

        A problem noted by Trading Standards is that when babies' clothes are bought from certain low cost retail chains, or market traders, there is a high risk that they might not adhere to the strict rules and therefore pose a health and safety threat to the customer. Also, not all European Union goods adhere to the British Standard, so the legislation may appear to be an issue for those companies who import branded goods from those European countries.  (Mintel, 2008).

        Politics may affect funding from government agencies.  If the present government provide incentives or subsidies, the government may stipulate certain criteria for an organization to meet in order to qualify for a subsidy.  The governments' concern regarding business development and support needs to be understood because it may have an effect on key areas for business in terms of educating the workforce for example.  Changes in government policy can also result in changes in the nation's infrastructure and the well being of the nation in regards to healthcare and healthy living. (OUP, 2008).

         When studying the economic factors, exchange rates, Stock Market, inflation, unemployment, national minimum wage, national income and interest rates are just some of the topics to consider.  For example, a weak currency could help make exporting easier, as it will lower the cost of foreign currency to the organization.  Employees are more likely to expect an increase in their pay packet if inflation has occurred. Therefore the result will incur a raise in labour costs to the organization providing employment, which could contribute to high national incomes being achieved and thus a greater demand for the items sold by the organization.  (OUP, 2008)

        Retailers of baby clothes feel that over the last few years that the market has been good.  They suggest that "…their good performance is largely down to their own efforts in setting clear strategic direction and interpreting customer needs with a greater level of insight". Several key decisions have influenced the way the market has performed.  According to the retailers that Mintel researched, the most common action taken included, calculating a meticulous plan to reduce the cost of an item, and review the price configuration via the suppliers.   Expanding the range of stock, to appeal to more customers and offering environmentally friendly products such as re-useable nappies was a success as one independent retailer responding to Mintel research testifies "We've seen a big growth in the sales of washable nappies rather than disposable. Re-usable nappies are some of our best-selling products now".  Retailers, through schemes such as the Tesco Clubcard, are also beginning to use customer details in a much more advanced manner in order to record their shopping habits and thus gain information about trends and also so that they can target them through advertising. (Mintel, 2008).

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        When social trends transform, it can have a significant affect on the demand for a company's products and the availability and motivation of individuals to consider employment. One social trend to consider at the moment is that people are living longer. As the population ages, the costs for firms committed to pension payments, increase because their employees are living longer. Firms like Asda have started to recruit mature employees to tap into this increasing labour group. The aging population has also had an affect on demand for nursing homes, which has increased whereas the demand for children's toys is falling. ...

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