External Business Environment Analysis
Transcript of External Business Environment Analysis
External business environment analysis
Layers of the business environment
Diagrama pag 98- Lili
The macro-environment
The P.E.S.T.E.L Framework
POLITICAL- Taxes applied by government
- In Romania 20% for foreign investment
- Governments try to support national company
- it offers credit and other incentives
Economic Factors
High interest rates
- Difficult access to credits- Difficult to give them back
Unemployment
-people prefer not to work
Inflation
Sociocultural Factors
H&M does not have any factories of its own
TECHNOLOGICAL
There are two types of technology that affect the business
1.media technology
-the website has to be updated
2. printing machines
special or more updated machine
Environmental Environmental protection laws
Environmental requirements for IT area
- All IT products IT Eco Declaration
Green transport
-Clean and efficient transport with limited influence on the climate
Legal
H&M follows the Swedish legislation
-it is originally from Sweden
H&M has to follow others country government system
- in country it operates
Porter’s five forces model
Bargaining power of suppliers
H&M does not have any factories of its own
-It works with 700 independent suppliers
Strong relationship with suppliers
- influence its profit margin
High switching costs of firm in the industry
Bargaining power of customers
Insignificant buyer switching costs
- products are standardized
Buyers are fragmented
- no buyer has any particular influence on product or price
Threat of new entrants
H&M, Inditex Group, Arcadia – posses 70% of market share
Strong barrier for new companies - Fixed costs are high
Economies of scale and differentiation
- affordable products
Threat of substitutes products
There are no substitutes
Rivalry
Main competitors: Inditex Group, Arcadia,Gap
Powerful competition
- it affect H&M profit margin- Refocusing on price and value- Became more innovative