Godiva's PESTLE analysis

Added on - 06 Jun 2020

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ANALYSIS ON GODIVA
TABLE OF CONTENTSPESTLE ANALYSIS......................................................................................................................1PORTER'S 5 FORCES MODEL.....................................................................................................2MICHAEL PORTER’S VALUE CHAIN ANALYSIS.........................................................3Strategic recommendation to Godiva UK..............................................................................5REFERENCES................................................................................................................................8
PESTLE ANALYSISPESTLE analysis is a tool used by companies to evaluate its working in contrast to theenvironment. Is is used to keep a check on the company's operations. Godiva's PESTLE analysiswill provide an insight into the company's working and how its strategies and procedures areaffected by the changes in the environment. It takes in to consideration various Political,Economical, Social, Technological, and Environmental issues which have an impact on thecompany's overall working(Godiva PESTLE Analysis - Political, Economic, Social,Technological, Legal, Environmental factors of Godiva, 2017).Political:These factors determine the degree to which a government may influence theeconomy or a certain industry. Godiva being a small producer is affected by the politicalimbalances.The major effect on Godiva is the Britain's exit from European union whichhas closed many doors for the company to procure raw materials. The other changesincludes modification in tax policies, political instability and restrictions on trade.Recently, as the Britain exit from EU therefore, it raise political uncertainty. It drivesboth the opportunities as well as threats for the Godiva. Now, trading with the otherEuropean nations necessitates for the Godiva to pay import tariffs which will increasecost burden. However, the opportunities is business can expand their operations in othernations too and succeed growth.Economical:The various economic factors affecting the Godiva industry are increase inexpenditures, increase in rate of inflation and government rules and policies. The Godivahas seen a backdrop in the industry as many of its suppliers refused to supply rawmaterials due to Brexit which had ultimately increased the cost of the product. Thecompany now need toimport raw materials from other suppliers which will increase therelated cost and as such the cost of final product (Srdjevic Bajcetic and Srdjevic, 2012).The effect of inflation rate has forced companies to bargain with suppliers and reset newdiscounted prices.Social:The education level of society and cultural barriers impacts the working of anenterprise. Godiva being a food industry has many restrictions from the society toproduce gluten free chocolates or high fiber products for a segment of society. Thebarriers from community has brought a downturn in the Godiva industry.1
Technological:These changes could be the degradation of machinery, implementation ofnew technology, regulations of government, risk of operating and the increase in cost(Crain and Abraham, 2008). The Godiva as compared to Cadbury uses high techmachines and plants for manufacturing chocolates. The company uses digital technologywhich helps in production of quality product. It also uses robots for producing goodswhich has saved a lot of cost of labor for Godiva.Legal:The Brexit has enforced government regulations, changes in law, changes inimport and export policies on the Godiva industry (Team, 2013). Godiva has now need topay customs for importing raw materials and exporting its products from other countries.Godiva has shut down many plants due to the Brexit.Environmental:Godiva is engaged in producing Eco-friendly products.The company isresponsible for managing its waste and reusing and recycling the things as much aspossible. It has not only reduced the cost for the company rather has enhanced its imagein the community. The changes in macro and micro environment affects working ofGodiva industry by posing restrictions on manufacturing environment friendly packaging,Eco friendly operations, waste disposal and proper management.PORTER'S 5 FORCES MODELEvery industry operates in an environment full of external and internal factors. ThePorter's five forces model shows how each external factor affects the internal working of anorganization. The five steps designed by Porter is evaluated in context with Godiva.Bargaining power of Suppliers:Suppliers usually enjoy such rights when their groupsare small and manufacturers look for quality materials. The main raw materials used byGodiva includes milk, cocoa, sugar and emulsifiers which are procured from differentsuppliers. Some raw materials are imported by Godiva from other countries who chargedprices according to their. Every confectionery industry somehow have same suppliers ofcocoa who charges a price different from other suppliers. Any change in the price ofthese goods will affect directly the overall cost of the product and the profitability of theGodiva (Team, 2013).Bargaining power of buyers:Where buyers have variety of choices for a particularproduct enjoys a bargaining power over the manufacturer. It implies the buyers are notthat price sensitive and can switch to other producers making identical products. Godiva2
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