Business Organisations and Environments on Dior Assignment

Added on - 21 Feb 2021

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Business Organisations andEnvironmentsTABLE OF CONTENTS
INTRODUCTION...........................................................................................................................3TASK...............................................................................................................................................33 Analysis of Business environment...........................................................................................34 Assessing business scenario.....................................................................................................6CONCLUSION..............................................................................................................................10REFERENCES..............................................................................................................................11
INTRODUCTIONChristian Dior SE is one of the leading company in the world of luxury and fashion,located in the heart of France and established in year 1946 by popular designer Christian Dior. Ithas mainly two divisions, Christian Dior couture and LVMH. Latter deals in wines, Watches,Jewelry, Cosmetics, Perfumes, Leather goods etc. It has its stores and branches in more than 100countries and is now planning to diversify its business in South Korea. The objective of report isto assess the feasibility of the expansion. The report looks through the analysis of PESTLE andPorter's five force model in context with Dior company.TASK3 Analysis of Business environmentPESTLE analysisPolitical factorsPolitical factors have a major impact on the organization operating in dynamicenvironment. These generally includes political stability, foreign trade policy, tax policy,government policy etc. Being a french company, Dior operates in the country where they legaland tax system are not complex. Moreover, French has signed a trading agreement with EUwhich eventually enables Dior to trade their products on international platform. This could be anopportunity for Dior who is panning to expand its business in south Korea where the politicalstability has been a major issue for most of the businesses. Federal laws and the corrupt practicesin Korea could be a challenge restricting Dior to operate in south Korea. Besides this, Scandalsremains a major part of politics in south Korea. Park's scandal in Korea has led to a substantialchange in the reforms and has weakened its corporate governance which would hinder Dior'sentry.Economic factorsEconomic factors encompasses inflation rate, GDP, exchange rate, unemployment leveletc which can either be beneficial or harmful for the company. South Korea is well known tomaintain its economic stability even during the period of high crisis. GDP of south Koreaincreased in 2017 to 3.1% and in 2018 to 2.8% because of development of real estate industryand growth of fiscal and monetary measures thus this becomes a golden opportunity for Dior toestablish its stores in Korea. Apart form this, the inflation rate in South Korea is highly stable
and is expected to increase to 2% in upcoming years. Fiscal surplus was made powerful in 2018and now constitute 2.4% of GDP. These all factors will go a long way in helping the Dior toserve Korean customers. But the major challenge which Dior may face in south Korea areweakening exports and static investment which would alleviate its economic growth to 2.8% in2019 as well as in 2020. Unemployment rate might reduce from 3.7 to 3.2 which would make itdifficult for Dior to employ skilled staff for future development(Vinichenko and et.al., 2016).Social factorsThe major social factors which the organization should consider while operatinginternationally are population size, growth rate, lifestyle, attitudes, cultural beliefs etc. Thepopulation size of South Korea has been doubled from past few years and has undergone a rapidtransformation. Mortality rates has now declined and and life expectancy has increased from5.1 % to 7.2%. Besides this, the poverty level as reported in 2016 was 17.9% which has lowereddown to 15% in 2019. This has indirectly increased the spending power of Koreans on goods andservices. In addition to this, the evolution of makeup culture has made Koreans fashion-centricand consumers are now purchasing more fashion product. These all factors will affect Dior in apositive way who wants to establish its business in South Korea. But the emergence of othercompetitors to entice the Koreans would be a challenge for Dior(McHale, 2019).Technological factorsWith the advent of digital technology, It has become essential for all the organization toincorporate technology in each and every bit of the business. They should consider level ofinnovation, automation, growth of R & D activities etc. South Korea is well known for itsinnovative technologies and has inculcated development in every sector. It has transformed itselfinto high tech and skilled workers(Mežinska, Lapiņa and Mazais, 2015). South Korea isspending a huge amount on research and development and has invested 4.29% of the GDP in2018 Thus this will be a great opportunity for Dior who is technology oriented and bringsinnovation in each and every sector. Dior will have to focus on latest equipments and machinesto attract the Koreans and will have to have to update its SEO. Moreover, they will need toemphasize on automating its operations and support activities. The utmost challenge which Diormay encounter while expanding its business will be cost of acquiring these high tech equipmentsand apparatus and fulfilling the high demand of online marketing among consumers as Dior tillnow has not widen its online presence to great extent.
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