Dragos Dinu

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University of West London *

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MISC

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Business

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Nov 24, 2024

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docx

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MODULE: INTRODUCTION TO BUSINESS Student: Dinu Dragos EXECUTIVE SUMMARY

In my report, I will analyze the microeconomic environment and the macroeconomic environment through Pestle and Porter's model. There are many factors that affect the functionality of a business and I will present some of them, related to the business I have chosen. The main purpose is to determine those factors that affect profitability and to obtain information about competitors and the threats that a director faces when deciding to start a business. I will also make an analysis of the most important information from an internal and external point of view, which are the basis for decision making and effective control of the activities of a company. INTRODUCTION The business idea that we want to implement refers to the opening of a store, which deals with the sale of clothes of all kinds. Our location will be in central London, which is a very popular tourist destination. Our main goal is to open this store and to be able to expand to other cities. The structure of our business is that of partnership because it characterizes us the best because we are a team of four people and we are sure that together we will evolve faster. In order for the business to be successful, we will try to get as much information as possible so that we can make the right decisions. UK consumers spend about £45 billion on apparel and textiles, a figure that has consistently increased over the last decade. Although the epidemic reduced this amount by about £10 billion in 2020, it is anticipated to rise further in the years ahead. In 2020, online retail sales of textiles, clothes, and footwear reached an all-time high of 31%. (Contributor, 2015) In England, Wales, and Scotland, the fashion and textile business employs 500,000 people, with 88,000 working in manufacturing, 62,000 in wholesale, and 413,000 in retail. BODY The business idea I chose was to open a store that would sell the clothes that we are going to produce. We want to come up with something in addition to the competition in the market and we want to approach the best strategies to attract potential customers. In order to achieve everything we set out to do, we need to get some internal and external information that will help us plan, make the right decisions, and control the different types of activities in our company as effectively as possible. . As a start-up business, the first thing we need to be interested in is the market in which we will operate. A manager needs information about the size of the market, about the clothing industry and also perhaps the most important thing is to get information about the two players in the market, namely potential customers and potential competitors. (Kotler et al., 2009) Once all this information has been written down, the business owner can establish some strategies, because he will know the needs of the customers, but also the services and products offered by the competition and will be able to decide the methods that will bring him success. With the help of market information, he can perform a SWOT analysis to highlight his strengths, in relation to the competition, but also the development opportunities and to decide what are the objectives and how he will control the company's activities to achieve these objectives. (Joy, 2016)

As the owner of the company, he has to decide how to finance his business. To do this, it needs internal information about the costs of entering the market, the necessary budget, but also the possibilities of expanding the capital. Once he has managed to complete all these aspects, he will be able to plan his activity and will be able to decide how he can get more money for the initial investment, but also what are the necessary accounting operations. Because we are a business that will deal with the production of clothes, we will need quite a lot of capital, because we will need equipment for making articles and most importantly the raw material, which we will get from different suppliers. . Finally, once things start to take shape, the director should also have access to information on the best business promotion strategies. It is very easy for us to promote ourselves online, because we can create a website or an application where customers can see the clothes we sell. We will need information about the implementation costs and the impact they have on customers. From this point, we can decide how much to invest in promotion and what methods to choose. MICROENVIRONMENTAL ANALYSIS POLITICAL FACTORS The government is encouraging companies to buy fabrics, as taxes on imports from other countries increase. There are a lot of people who buy clothes from companies, as opposed to those who ship fabrics to be made abroad. ECONOMIC FACTORS The economy is constantly changing and there are certain factors that can influence the clothing industry, such as the income of the population of people living in an area with a high unemployment rate. The population is the main factor that influences us because they are the customers we can work with, and if they do not have at least an average income, they will not be able to afford to spend money on shopping and will use the income for survival products, such as be it bills or food. When the Government decides to increase the minimum wage in the economy, people will be willing to spend and then our profit will increase. (Fielding and Bleane, 2000) TECHNOLOGICAL FACTORS Video ads have a big impact on clothes, in which companies show the clothes that people should buy as soon as possible. The lifestyle of the population is an important factor that can affect our business because each person has a different style of clothing and it is important to be guided by their needs and try to satisfy as wide an area as possible. (PESTLE - Macro Environmental Analysis, 2016) Also, when participating in certain events, clothes are very important, because people decide to wear outfits depending on the occasion. Online shopping is an ace up its sleeve for most people. Most customers, instead of visiting crowded stores and looking for clothes, prefer to browse an online catalogue to see up close the item of clothing they want to buy. Technology is the main way of marketing that attracts the most customers because we can use both mobile applications, social media ads or TV commercials, which have a great impact on customers. Technology helps customers get the

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fashion they want and we, as their suppliers, encourage us to have as many offers as possible so that they have a choice. LEGAL FACTORS Like any new business on the market, we must follow similar legal rules and regulations for any business. To do that, we need to follow the tax restrictions and make sure that we respect workers' rights. MACRO ENVIRONMENTAL ANALYSIS The purpose of Porter's analysis is to determine how competitive the market we are about to enter is and through it, we can realize how profitable our business can be. In the following, I will analyze the five factors related to my business. (Patel, 2018) BARGAINING POWER OF BUYERS The first important force is the bargaining power of buyers, who may choose to lower prices, not to buy our products or to turn to other traders. In the case of our clothing store, the power of the buyer is very high, because there are a lot of stores that sell similar products at better prices. BARGAINING POWER OF THE SUPPLIER The bargaining power of the supplier in our industry is quite small and I consider it very insignificant for our store, because most of the clothing companies, as well as us, supply products from manufacturers all over the world. If we want to change from one supplier to another, this will not affect us, but on the contrary, we should find suppliers who sell us the raw material at the best price for us. RIVALRY Competitive rivalry is quite high for our clothing store, as there are other retailers that sell products that are very similar to ours, but we can differentiate ourselves if we can create a brand that customers can wear, such as those from Nike or Adidas. Nowadays, there are not many innovations in terms of clothing, so the market is quite saturated with almost identical products, so this industry is very difficult when it comes to starting a business. THE THREAT OF NEW ENTRANTS The threat of new entrants to this industry for us is quite small, as it is quite difficult to enter this world of clothing sales. But at any time it can be a disadvantage for us, because there may be owners who find unique ways to customize their products and have the ability to build new brands. THE THREAT OF SUBSTIUIBLE The threat of replacement products fortunately for us is quite small because there are few products to replace clothes because any replacement in the clothing industry is in fact a simple competition.

This analysis has led us to understand that there are few threats and low bargaining power of suppliers, but buyers have large amounts of bargaining power, a lot of options, and big-name competitors in the market make it difficult for us to maintain a good position. CONCLUSION In conclusion, all these aspects mentioned above have highlighted the importance of all the information that must be analyzed before making a decision and also the factors that can influence the functionality of the business. It is quite difficult to maintain a healthy position in the market because the competition is quite high and you need a lot of techniques to be able to do this. As a start-up business, you may encounter a lot of difficulties, but if you are competitive enough you can meet the challenges. Pestel's and Porter's analysis is paramount in the start-up business, as it helps employers understand their market position and future level of success. REFERENCE LIST Contributor, P., 2015. PESTLE Analysis: Business Environmental Analysis. [online] PESTLE Analysis. Available at: <http://pestleanalysis.com/pestle-analysis-business-environmental- analysis/> [Accessed 10 June 2016]. Fielding, D. and Bleane, M., 2000. Monetary discipline and inflation in developing countries: the role of the exchange rate regime. Oxford Economic Papers, 52(3), pp.521-538. Joy, D., 2016. Internal Factors that May Affect the Business Organization. [online] linkedin. Available at: <https://www.linkedin.com/pulse/internal-factors-may-affect-business- organization-dr-turner-joy> [Accessed 8 April 2016]. Kotler, P., Keller, K., Brady, M., Goodman, M. and Hansen, T., 2009. Marketing management. Harlow, England: Prentice Hall. Oxlearn.com. 2016. PESTLE - Macro Environmental Analysis. [online] Available at: <http://www.oxlearn.com/arg_Marketing-Resources-PESTLE---Macro-Environmental- Analysis_11_31> [Accessed 10 June 2016]. Patel, P., 2018. Zara uncovered: Inside the brand that changed fashion. [online] BBC News. Available at: <https://www.bbc.co.uk/news/business-49268965> [Accessed 23 March 2021].

Dragos Dinu

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