Global Business In Context

This study explores the impact of business environment on Alpha Manufacturing's operations and performance in Germany. It analyzes the political, economic, social, technological, legal, and environmental factors affecting the company. The study also discusses how Alpha Manufacturing can take competitive advantages and attract customers in Germany.

Global Business In Context
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Table of Contents
INTRODUCTION.......................................................................................................................................3
Background of Alpha Manufacturer........................................................................................................3
Overview of German manufacturing industry.........................................................................................4
Business environment of Germany that can affect …..operations and performance................................4
CONCLUSION...........................................................................................................................................9
REFERENCES..........................................................................................................................................11
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INTRODUCTION
Business environment is a marketing term which refers several internal and external
factors and forces that affects an organization’s ability to maintain and well as build successful
customer experience (Bah and Fang, 2015). It is made up of several factors which may be
internal and external such as: political, social, environmental, strengths and weaknesses of the
company etc. This study is based on Alpha manufacturing which is a UK based custom metal
fabrication company which offers cost effective, qualitative fabrication services. This study is
going to show several external environmental factors and their critical impacts on the
performance and growth of the company. With the help of PESTLE analysis model, alpha
manufacturing analyze all external factors and their impacts for taking competitive advantages
and becoming success in Germany market by expanding its business. Further, it will also show
some strengths and weaknesses of the company which helps it out in reducing negative impacts
of external factors and make them in its favor. There is a strong interrelationship between
internal factors and external factors and by improving internal factors, company take advantages
of external environment.
Background of Alpha Manufacturer
Selected company for this study is Alpha manufacturing who is a small manufacturer and
a member of the Bri-stor group, fabricating sheet metal in the UK. It designs as well as produces
sheet metal components and assemblies. It is established in the year of 1989 and give
employment opportunities to approximate of 100 people. It is stated that it utilizes and makes an
effective use of leading technology. It manufactures variety and diverse range of products with
the main aim of satisfying customers by producing sheet metal fabrication. It has a great
experience which made it able to grow and it is the reason it now wants to expand its business
internationally and Germany (Alpha Manufacturing, 2019). For accomplishing its goal and
taking competitive advantages irt is now focusing in increasing and strengthening skills of its
employees and wants to make them more compatible to others. By doing so, it can bring
innovation and creativity in its products and services which can help it out in making success in
Germany and in the heart of people. There are several departments in this company who are
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specialize in their work and due to increasing demand of its products it wants to expand its
existing weld department and that is why it is looking for the right candidate.
Overview of German manufacturing industry
In the context of Germany it is stated that this country has approximate of 2.6% of world
production in steel and metal. Steel industry in Germany is mainly responsible for about 30% of
the value creation that is being achieved by the European steel industry. Most of the customers
come from automotive and construction industry. This country runs mainly 4 groups that run
different sites of the country. Annual production of steel in Germany is accounted about 43
Million tones of crude steel in the year of 2014. It is considered as the world’s 7 largest steel
producer and the largest in the European. This is the main reason of Alpha manufacturing to
expand its business and attract customers of their to the great extent by providing them variety of
innovative and creative products. In addition, it is also stated that about 2/3 of steel in Germany
in produced in integrated steel mills and rest of the steel is produced through the electric steel
route (Steel manufacturing industry in Germany, 2018). Most of its products are flat. Stainless
and alloyed steel make up to 50% of total production. This data shows that Germany has a great
manufacturer and also the best place to expand company.
Business environment of Germany that can affect …..operations and performance
Business environment is made of 2 environments such as internal and external. Internal
or within business environment includes all those factors which are in the control and in the hand
of businessman such s its company’s strengths, weaknesses, opportunities and threats. Some of
its factors have linked with external factors. On the other hand, external factors include those
factors that are not in the hand of business man to control but their some activities can make all
factors in their favor. Examples of external factors includes: Political stability/instability,
economic conditions, social factors like market trends, changes in needs and demands of
customers etc. technological factors like using of advanced technology by same industry of
companies and people (Omsa, Ridwan and Jayadi, 2018). All these factors have great positive
and negative impacts but people’s activities and performance can change the current situations of
all factors For example: If there is a political instability and economic crisis but efforts of
companies and collaborations of companies can make all situations in their favor. As like this, by
focusing on improving quality of services and products it can satisfy social factors and
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environmental factors as well. Which can become their strengths. So, it can also be said that both
internal and external factors are different but have a strong interrelationship. In the context Alpha
manufacturing, it can be said that it requires to analyze external environment of Germany as it
wants to expand its business and operate in Germany. By identifying and analyzing each factor it
can take an interrelationship with its strengths and weaknesses and accordingly it can make
changes in its strategies and policies for taking competitive advantages and attracting wider
range of customers towards buying its products and services. It is a small manufacturing so, its
primary aim is to earn money for fostering ist family but now it wants to expand its business so,
it has shifted and changed its aim and now it wants to become compatible with large companies
and manufactures (Darama and et.al., 2018).
PESTLE analysis is the best model and tool which can help any type of company to
identify impacts of all external factors of the country in which it wants to operate. The main aim
of PESTLE analysis is to take competitive advantages by reducing negative impacts of factors
and increasing strengths according to positive impacts of Factors (Achinas and et.al., 2019). In
the context of Germany where this company wants to expand its business by the year of 2020, it
is stated that Germany has the 4th largest economy in the world. It is the 2nd largest exporter and
2nd largest importer and this ranking and position shows that it has strong economy and that is the
main reason of Alpha manufacturing to enter and expand business in this country. Some factors
of Germany manufacturing are discussed as below:
Political: Germany is a democratic republic and in this factor context it is stated that
Christian democratic union and social democratic party leads this political system since 1949.
This system affects critical impacts on the performance of all businesses and others. Political
factors vary from sudden changes and its have great impacts on the profitability as well as
survival of the company. Some factors in this context which can affect alpha manufacturing is
political stability of the country which is good since long. The integrity of politicians and their
likelihood to take a part in corruption, bribe and other illegal things and acts. All laws and
taxation policies that Germany enforces, especially with regards to businesses (Moon, 2019). For
example: there are several countries who do not allow alcohol and they are prohibited of alcohol.
In addition, it is also important for Alpha manufacturer to see whether its intellectual
property is protected or not. If this country has no policy for protection that it can have negative
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impacts on its operations. Trade barrier and taxation, minimum wage policy can also affect. It is
stated that Germany has political stability in the context of steel businesses which is beneficial
for Alpha manufacturing.
Economic: Germany has low raw materials as compare to others. It is good manufacturer
in only few products and it imports about 2/3 of its energy by from other countries. Some
economical factors which can create barriers in the path of the success and expansion of business
of Alpha manufacturing is changes in inflation rates, foreign exchange rates, interest rates, GDP
etc. Some factors which need to be considered by Alpha manufacturing before thinking about
expanding business in Germany includes: economic system of the company which is operational
and effective now (Kremer and Symmons, 2015). The rate of gross domestic product rate of the
country. Interest rates as it shows willingness of people of investment in companies and
businesses. Rate of unemployment. Due to higher unemployment rate of the country can be
beneficial for the company as this higher rate bind people to get job at lower prices or wages. So,
company can employ skilled workforce within its business at lower wages. But it is stated that
rate of unemployment is lower which is not beneficial for Alpha manufacturing company as it
will have to face problem in getting skilled workforce and if it gets then it will require paying
them higher than other companies, It can increase its overall cost of the company. So, it can be
said that economic factors and analysis can help out this company and plays an important role.
Social: German has about 82 Million residents so, it shows that it is the largest EU
country in the context of population. It is a modern multicultural country as societies of this
country has molded themselves as a variety of lifestyles which can affect the performance and
activities of Alpha manufacturer. Due to modern multicultural, this company will require to have
and produce variety of products as per the needs of different types of people and mainly focuses
on products which has unique features berceuse people as changed their lifestyle (Pan, Chen and
Zhan, 2018). They prefer attractive products so, it needs to invest more in technologies for
making its products innovative and satisfying needs of people. It is also stated that children and
young people are not dominating and they respect, take care of their parents which can have a
positive impacts on its performance. In addition, it is also stated that art, sports, music and
architecture reflects this socio-cultural.
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In addition, it can also be said that impacts of social factors not only important for
operational aspect of Alpha manufacturing but also important for marketing aspect. Lifestyle of
people, education, income status all factors has great impacts on the profitability and sales of the
company. It is stated that people of Germany prefer and seeking new and creative products and
continuous changes in their products. They also have strong bargaining power and if they do not
get products as per their requirements then they can switch shop. It is not good for the company
so, it is important for Alpha manufacturing to focus on continuous development and
improvement of products by implementing some approaches of operational management. By
doing so, it can make a strong position in German market and also can make a good image in the
eye of people of Germany.
Technological: This country is not that much good in technology as it houses
independent laboratories. On the other hand, it is also stated that it has good communication
sources and some different manufactures are now adopting modern and advanced technology
which can also give critic impacts. For example, due to advanced technology and adoption of
technology in manufacturing, it can increase competition which put pressure on Alpha
manufacturer company to invest in acquiring technological tools. It can help it out in being in the
market and in the competition. On the other hand, investment in technologies and some
manufacturing tools can increase its operational cost that can decrease its sales and profitability
and can make imbalance and drastic differences between expenses and profits.
In addition, it is stated that there are several companies who manufacture steel and
greatly investing in technologies which is increasing competition for its rivals and for Alpha
manufacturer. So, it is important for this company to encounter a new technology which is
gaining popularity in the industry, can take competitive advantages and can also make customers
influence to buy products from its company only. It is said that investment in technology nd
some tools can increase cost of the company but it can also help them out in increasing sells and
after having profit margin it can re invest and make more money.
Legal: Laws are laced to make sure a certain level of quality and put pressure on
companies to improve their quality for having a great positive impact on their brand image and
the society as well. These laws for improving quality keep people safe and also prevent them
from any diseases. In the context of Germany, it can be said that there are strong and effective
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laws has been placed of data protection. It protects ideas and patents of the company. If the
comoany do not follow law and there is a lack of legal stability than company can face the
problem of loss and theft of data which can snatch competitive opportunity. The main aim of this
company is to operate and expand business in Germany and make profit. Taking competitive
advantages, improving image is other objectives and for accomplishing all these goals, it is
important for this company to follow all laws and guidelines (Kivikangas, 2018).
Environmental: There are several industries which contribute and pollute environment
to the great extent. Steel industry is also one of them whose article and elements have great
negative impacts in environment. Sustainability is the main and hot topic. There are several
companies in Germany who are adopting and committing to reduce carbon footprint and help the
environment and the society in becoming more sustainable. For making the business sustainable
and having positive impacts on the society, it is important for Alpha manufacturing to focus on
reducing wastes by implementing some approaches and tools. By implementing six sigma
manufacturing approach of operation management it can take advantage of environmental factor
odf Germany. There are several people who want to buy their products from those companies
who are more sustainable and provide products that have durability and reliability.
There are several other factors which can affect its profitability and manufacturing
activity such as weather and climate changes. This change can affect the time of delivery of
products to customers which can have decrease image of the company. There are several laws in
Germany which put pressure on steel manufacturer to reduce wastes and follow environmental
laws. If the company do not follow all those laws than it has to face several problems and
challenges. So, it can be said that legal factors also plays an important role so, Alpha care should
consider this for protecting itself against any law suit.
So, from the above discussed external environmental factors, it can be said that some
factors of Germany can have positive impacts on the growth and profitability of Alpha
manufacturing (Kremer and Symmons, 2015). And some factors can have negative impacts due
to instability of them. So, by analyzing each element of factor, it can reduce all negative impacts
and can take growth. It can be said that Alpha manufacturing can expand its business in
Germany in an efficient manner as Germany is the best for Steel operations.
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Rather, external factors, it is also important for this company to analyze its internal
factors like strengths and weaknesses. By identifying its own strengths it can link it with external
factors which can help it out in reducing negative impacts and attract customers for more
increasing skills and knowledge. Some strengths and weaknesses of Alpha manufacturing are
shown below:
Strengths: The main strength of this company which makes it able to grow and take
success in UK is its ability to continuous innovate and make an effective use of technology. This
strength helps it out in adapting changes and satisfy different types of customers’ needs. This
strength can also help it out in taking competitive advantages as there is an increasing
competition among existing rivals due to increasing use and investment in technology (Farhadi
and Mohammed, 2015). Other strength of this company is it has diverse and variety of products
which can help it out in expanding successfully in Germany and satisfy needs of their people,
People of Germany has become modern and improved their lifestyle and this strength of Alpha
manufacturing can be beneficial for it
Weaknesses: It has some weaknesses and one of the main weaknesses of this company
which can snatch opportunity from it of taking competitive advantages is lack of skilled
workforce. Due to lack of skilled workforce there is a lack of innovation in its working
environment. So, it can be said that this weakness can create several other barriers and problems
for it. Other weakness of this company which can become the reason of increasing and having
negative impacts of some external factors is it does not have effective suppliers and relationship
with them.
So, from the above it can be suggested to this company that it should focus on
recruitment strategy and employ skilled workforce and also provide them training to increase thir
skills and knowledge.
CONCLUSION
From the above study it has been summarized business environment and its analyze
played a vital role for taking competitive advantages and becoming the market leader. It has
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shows several factors of external environment which have both positive and negative impacts on
the growth and expansion of business such as political, technological, economic etc. rather these
external factors, it has also shown some internal factors which has a link with external
environmental factors such as weaknesses and strengths of the company. It has further shown
importance of PESTLE analysis model by which company analyzed all factors and their impacts.
By analyzing impacts of all factors of the particular country and business in which an
organization wants to operate, they made a growth and make its business successful. Lastly, it
has shown some strengths and weaknesses of the company which can helped it out in becoming
competitive in the external environment and attract wider range of customers.
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REFERENCES
Books and journal
Achinas, S. and et.al., 2019. A PESTLE Analysis of Biofuels Energy Industry in
Europe. Sustainability. 11(21). p.5981.
Bah, E.H. and Fang, L., 2015. Impact of the business environment on output and productivity in
Africa. Journal of Development Economics. 114. pp.159-171.
Darama, E. and et.al., 2018. Evaluation of 5th Grade English Curriculum According to
Stufflebeam’s Context, Input, Process, Product (CIPP) Model. International Journal of
Psycho-Educational Sciences, pp.73-86.
Farhadi, M. and Mohammed, O., 2015. Energy storage technologies for high-power
applications. IEEE Transactions on Industry Applications. 52(3). pp.1953-1961.
Kivikangas, M., 2018. Marketing plan for export operations in the German pet care supply
market: Case Karhia Pro.
Kremer, P.D. and Symmons, M.A., 2015. Mass timber construction as an alternative to concrete
and steel in the Australia building industry: a PESTEL evaluation of the
potential. International Wood Products Journal. 6(3). pp.138-147.
Kremer, P.D. and Symmons, M.A., 2015. Mass timber construction as an alternative to concrete
and steel in the Australia building industry: a PESTEL evaluation of the
potential. International Wood Products Journal. 6(3). pp.138-147.
Moon, I.J., 2019. Supply chain management practices of Bangladesh Steel Manufacturing
Industry-a study on BSRM.
Omsa, S., Ridwan, M. and Jayadi, M., 2018. The effect of strategic management practices on
SME performances in Makassar, Indonesia. American Journal of Theoretical and Applied
Business. 3(4). p.71.
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Pan, W., Chen, L. and Zhan, W., 2018. PESTEL analysis of construction productivity
enhancement strategies: A case study of three economies. Journal of Management in
Engineering. 35(1). p.05018013.
ONLINE:
Steel manufacturing industry in Germany. 2018. [ONLINE] Available through: <
https://en.stahl-online.de/index.php/topics/economics/steel-industry-in-germany/>.
Alpha Manufacturing. 2019. [ONLINE] Available through:
<https://www.alphamanufacturing.co.uk/contact/vacancies >.
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