Over the decades, China’s economy has been on the rise, due to an increase in its market forces and modernising the policy frameworks (World Economic Forum, 2018). As a result, the country creates opportunities for diverse business to invest, influenced by the market scales of the Chinese markets. This paper examines the PESTLE table, negative and positive impacts that the macro environment has on the Children’s Shoe Company located in China. More so, having an overlook at how the strengths and weakness interrelate with the external macro factors appropriately.
Pestle Analysis of the Company
It involves a framework used to identify the macro influences that may impact positively or negatively on the Children’s Shoe Company.
The pestle chart summarising the findings of the Children’s Shoe Company
Political
Economic
Socio-cultural
1
The rise in political instability
Potential urban growth
Children’s becoming more brand conscious
2
Intellectual property rights
High inflation rate
Population growth
3
Government concerns on Foreign Direct Investment (F.D.I)
Growing huge consumption market
Increase in female kids consumers
4
Increase in tariffs
High skilled workforce
Age distribution fluctuation
5
Trade regulations
Low cost of labour
Communist beliefs
Technological
Legal
Environmental
1
Development of new footwear products
F.D.I. liberalisation
A reliable supply of raw materials
2
New production technologies
Availability of counterfeit footwear products in the market
Pollution concerns in China
3
Advanced distribution and payment methods
Legal battles with other companies on footwear designs
Global warming concerns
4
Introduction of mobile applications
Legislation laws in China
The decrease in greenhouse emission
Positive and Negative Impact of the Macro Environment on the Company
It encompasses the strategic planning technique that scrutinises on the positive and negative factors that the macro environment impacts on the Children Shoe Company. The decisive factors influencing the external environment include; first, the product innovation. Through technological advancements, the firm develops new footwear designs which enthral the country. The technological innovation helps the company to maintain its competitive advantage over rival firms. For instance, through the supply chain management, the firm can make effective changes on certain brands depending on their consumers’ tastes and preferences. Secondly, the company’s presence and influence are taken into consideration. The firm is expanding its retail stores in China; thus, their products will be famous among the children. Moreover, the company’s shoe wear is of high quality. Lastly, the firm uses low cost in manufacturing. The children’s footwear company has followed effective marketing strategies that have impacted significantly towards reducing the cost of production.
Moreover, the manufacturing plants are located in China which has emerging economies; thus, the production cost is low (O'Brien, 2016). Additionally, the firm utilises its opportunities, therefore, contributing immensely to its business operations. First, the rise of e-commerce trade has impacted the increase in the company's revenue. Consequently, the e-commerce sector allows the firm to reach more consumers through the mobile phone application. For instance, consumers can make their orders, and receive the reserved products at their doorstep at any given time. Secondly, there’s availability of skilled and cheap labour in China. The firm utilises the available competitive workforce to adjust to different economic times in the country. For instance, when the demand for the children's wear rises, the firm uses its workforce to increase production. Lastly, the firm had developed initiatives to enhance the better environment, due to the growing demand for eco-friendly products.
On the other hand, the children’s footwear company experiences some negative factors that have contributed to its weaknesses and threats. The vulnerability affecting the firm include; excessive dependence on the kid's footwear, high expenditure on advertising, and high prices of its products. On the other side, the firm’s threats involve; first, the company experiences intense competition from other rival companies. Secondly, there is the rise in counterfeit footwear products. Lastly, the firm experiences fluctuating market prices caused by inflation.
Notably, the company’s strengths and weaknesses have interrelated with the macro factors inappropriate manner. The forces contribute immensely to its competitive advantage over other rival companies. First, through product innovation the company developed different children footwear design to meet the kid's taste and preference. Secondly, the company's presence and influence have contributed immensely towards an increase in revenue, since the firm has more of its retail stores located in China. As a result, their footwear brand has become popular among the children, since they are of high quality and durable. Lastly, the firm has embarked on lowering its manufacturing cost, which has impacted significantly to its profitability. Additionally, the company's location (China) will influence its low cost of production, since the country has emerging economies (O'Brien, 2016).
On the other hand, the firm’s weaknesses have impacted on its slow growth. First, the company is dependent on children’s footwear. The company has not diversified its range of products; thus, if the kid’s footwear segment experiences some hitches, then the whole company would be affected adversely. Secondly, the company uses a lot of resources to advertise its products through various mediums such as television, radios and social media among others. As a result, the firm’s expenses increases, thus, lowering its revenue. Lastly, its children’s footwear cost is relatively high. Consequently, the majority of the consumers might opt for cheap children shoes, hence, lowering the purchase rate.
The chart summarises the positive and negative factors affecting the children shoe company
Strengths
Opportunities
Product innovation
Company’s presence and influence
Low manufacturing cost
High quality and durable products
The rise of e-commerce trade
Availability of skilled workforce
Presence of cheap labour
Better environment initiatives
Weaknesses
Threats
Excessive dependence on children’s footwear
High expenditure on advertising
High prices of its products
Intense competition
The rise in counterfeit footwear products
Fluctuating market prices
References
O'Brien, M., 2016. China is the only emerging market that matters. [Online]
Available at: https://www.washingtonpost.com/news/wonk/wp/2016/03/29/china-is-the-only-emerging-market-that-matters/?utm_term=.ff0351812f9f
[Accessed October 17, 2018].
World Economic Forum, 2018. This is what China's economy looks like in 2018 - in 6 charts. [Online]
Available at: https://www.weforum.org/agenda/2018/08/china-s-economic-outlook-in-six-charts
[Accessed October 17, 2018].
