Kuehne Nagel PESTLE and Porter's Five Forces

This report examines the external environment of Kuehne Nagel, a global logistics company, using PESTLE analysis and Porter's Five Forces model. It analyzes the political, economic, social, technological, legal, and environmental factors influencing the company's operations and strategic decisions, particularly in the context of expanding its business into Belgium.

Business Organisations and
Environments in a Global Context

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................1
MAIN BODY...................................................................................................................................1
Background information about the Kuehne Nagel and environment condition in Belgium for
this organisation......................................................................................................................1
PESTLE analysis about Kuehne nagel...................................................................................3
Business Scenario through Porter five forces for Kuehne nagel............................................5
CONCLUSION................................................................................................................................7
REFERENCES................................................................................................................................8

INTRODUCTION
Global environment consists of international interactions within different countries and
for a company, it refers to different environmental conditions in several nations across the globe.
The business organisation is a group of people that are working in a unit to achieve a special
target (Barak, 2016). This report will include information about Kuehne + Nagel that is situated
at Schindellegi, Feusisberg, Switzerland. The management of this organisation wants to expand
its business in Belgium. So, for this reason, the report will cover macro environmental factors by
using PESTLE analysis. It will also include Porter’s Five Forces model in this organisational
context.
MAIN BODY
Background information about the Kuehne Nagel and environment condition in Belgium for this
organisation
Business environment contains all external and internal elements that may affect business
in positive and negative view as well as influence the organisational work place abilities. The
Kuehne + Nagel is a global logistics and transport organisation that is established in 1890 in
Bremen, Germany and currently, it’s headquarter is situated at Schindellegi, Switzerland. It was
established by two German residents, August Kuehne and Friedrich Nagel and it has raises in to
one of the most leading logistic providers. It offers several types of vehicle services in sea sight
and transport to the whole world (Clegg, Kornberger and Pitsis, 2015). Its chief executive officer
is Detlef Trefzger, chief financial officer Markus Blanka Graff and the human resource manager
is Lothar A. Harings. In this organisation, there are more than 76000 employees and its total
revenue is 22225 million dollar in Swiss franc currency in 2017.
It has evolved from a traditional international consignment forwarder to the leading
global provider of fully integrated and innovative supply chain solutions. The company is
financially strong, independent and stable its brand image in its target market. Its market position
and main activities are created on the basis of organisation that have world class abilities. Its
management team focuses on their mission that is clear on high value-added segments such as
Information Technology based integrated logistics, operational excellence and supply chain
solutions (Crane and Matten, 2016). The core business philosophy is dedicated to innovate ideas
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to sustain in its hearts of its potential customers. In this context, it provides different kinds of
services that are described as below:
 Sea freight – It is the number one service provider in sea freight forwarder. It also
creates a solid partnership with an extensive range of preferred big ocean or high seas
carriers. Management team of this organisation sustains year by year its double digit
growth and manage all sea freight.
 Overland – In this sector, the company stands at number two in global contract logistics
service provider. The management maintains its global network of distribution and
warehouse facilities (Kirton and Trebilcock, 2017). It also creates and maintain the
number one worldwide leading logistics service provider. Its ranking comes in top five
European company and in top fifteen service providers in central and North America as
well as South East Asia. It also has close and own fleet partnerships with best-in-class
carriers.
 Air freight – It keeps and hold the number two position in air cargo forwarder and leads
to innovate new cargo management concepts.
The management department says that their global logistics network, cutting edge IT
systems, excellent customer service, in-house expertise is proof of its faithfulness to be main
market leader. These dimension have placed for its growth and development at the forefront of
related industry (Lasserre, 2017). It maintains its position for continuously increasing the scope
of their target customer solutions and outputs. This company is situated at Switzerland and their
environmental condition is in favour of this organisation and it is beneficial for achieving the
desired goals and objectives. In this context, there are discussions about different factors that
relates to the organisations:
 Current international operations – It is an organisation that provides its basic services
all over the globe to its potential clients and conduct all international operations. The
Kuehne + Nagel has specialist in complex services of all supply chain solutions, that are
managed in the global network of logistics control towers and performed in cooperation
with all business units. Its integrated logistics solutions not only increase efficiency and
transparency in the supply chain but it also optimises all information flows in between the
participating member, employees and customers.
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 Financial performance – Its management team continuously perform better and gain
competitive advantage in the target market (Mangan, Lalwani and Lalwani, 2016). In
2017, the world economy grew by estimated 3 % because a recovery in industrial activity
and it can pick up in global trade. In this context, there are various countries such as
United States, China, Japan and especially for whole European Union, significantly
impart to the built global growth, with projections for 2018 collateral a solid growth.
According to its financial data of 2017, the management achieves international logistics
industry experienced world trade volume growth that is conjugated from low levels in
2016. The expected world trade mass growth is increased to 4.7 % in 2017 comparing
with its financial performance that is 2.5 % in 2016.
PESTLE analysis about Kuehne nagel
Kuehne+Nagel is a Switzerland based logistics and transport operator. The organisational
activities is engaged in the air freight, sea freight, overland road & rail and also contract logistics
services (Marquis and Raynard, 2015). Its core business and operations of the company are
focused in Europe and Americas. It is headquartered in Schindellegi, Switzerland. To establish
its new branch at Belgium, there is a need to understand its external organisational environment
condition. In this context, PESTLE analysis is described as follows:
 Political Factors –Company operates its business in several countries so it is necessary
to understand all political factors that may affect the organisational business and
influence its work. It is a transport or logistics company (Zoogah, Peng and Woldu,
2015). So for this reason, management must know about several political rules and
regulations for example, implementation of tax reforms in different countries, variation in
commodity prices due to political reasons, random variable in the fuel prices, rates of oil
and petrol, governmental instabilities and inferences. In addition to this, there are several
political discussions about minimum salary and freight laws in the transport industry and
whether the company is abiding by such rules or not. The government needs mercantile
licenses for its different vehicles and transport services.
 Economic Factors –Company has grown up exponentially because all economic
elements are in the favour of organisation. So it gains every year a huge profit and
competitive advantages in its target market segment (Sassen, 2016). Its businesses
activities require make more money to continue to exist and sustain in the market. So for
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this reason, the management do several activities by listening to customer's preference
and make sure about their demand and new ones with good and services that accomplish
all consumer's want and need. In such factors, it includes:
 Social Factors – Every company lives in society and earns profits by sell its products and
services to its potential customers. In this context, the company can affects from several
social factors. These socio culture factors are growth rate of public, age of population,
health consciousness, hobbies of citizens, consumer services that provides after sale,
purchasing behaviour of several buyers, attitudes toward purchasing all domestic v/s
foreign made products and services (vom Brocke, Zelt and Schmiedel, 2016). These
factors may impacts to the organisational workings and influence its objectives and goals.
 Technological Factors – Technological advancement plays a significant role in affecting
the Kuehne Nagal. It is known as very fast interrupting with contains various factors
across the world. Over the recent 10 years, this organisation has been growing really fast
and has chance to establishes new branches in several countries. The management of this
company wants to open a new business in Belgium so that they must consider all such
factors that generates from recent technological evolution by this organisation's
competitors, effect on cost structure in transport sector, impact on value chain
construction in services sector, rate of technological diffusion, technology's impact on
services content (Wang and et.al., 2016). All such factors provide a huge impact on this
organisation's work ability so management must consider all such elements and earn
maximum profits.
 Legal Factors – Legal framework and regulations must be followed by every company
in order to sustain their business in competitive market. In this context, an organisation
faces different bans, criticism in the whole world so for this reason the management team
would apply several techniques and follow all rules, regulation, laws and acts in each
country and expand its business (Zoogah, Peng and Woldu, 2015). In the legal elements,
it includes patents & copyright act, intellectual property law, customer security &
protection act, e-commerce related activities, labour & workforce act, health & safety
issue and many more. All such factors may influence to an organisation and it can affect
to the company's strategies.
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 Environmental Factors – The environment consists several internal and external factors
that may influence in both positive and negative aspect. In such factors, it contains some
of these factors weather condition, climate change, air & water pollution, state of certain
biological taxonomic group, workplace skilfulness, several environment-related laws
accessibility of renewable & non-renewable goods and services and many more (Barak,
2016). Each company lives in society and it uses various types of resources so the
company is responsible for contribute as a part of their profits for welfare of society and
nation. In this context, management also considers the corporate social responsibility and
makes more profit in order to achieve all desired organisational goals and objectives.
Business Scenario through Porter five forces for Kuehne nagel.
Whole framework of Kuehne Nagal management is purely focuses on the degree of
competition in its sector and it can also assess a render strategic position of it in the Indo-Pacific
geographical area. In this context, the porter’s framework provides a brief view of the industry
from the vantage point. The Porter Five forces model is a systematic tool that is use for analysing
competition in target market for a particular business (Clegg, Kornberger and Pitsis, 2015). It is a
business model that helps to understand the strategic use in an industry to sustaining their market
environment and growth of organisation. This model is produced in 1980 by Michael Porter in
his research book “The competitive strategy: Techniques for analysing Competitors and
Industries”. It is widely uses and it can also understand the organisational culture of a business
and its corporate strategy.
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Mr. Porter defines five major forces that play a significant part in shaping the market and
industry in the whole world. This is often utilizes by its management team to measure
attractiveness of customers, competition in the market and growth opportunity for the
organisation. In this context, the Porter’s five forces are described as follows:
 Competition or rivalry in the existing competitors – It is a significant part of the
Porter’s five forces that understand the numbers of competitors in its target market of an
organisation. It is useful in demonstrating their capabilities to threaten an organisation
(Crane and Matten, 2016). In this context, management of Kuehne Nagel has less power
because there are numerous competitors who came into the market along with overall
products and services that are equivalent to this company's outputs. This organisation's
project provides logistics services for most capital investments businesses in all other
sectors.
 Threats of new entrants – In every industry, there are many new entrants that bring
innovations and new strategies. All such new ways of doing things provide value
propositions to the potential customers. The organisation can easily defeat from its
invulnerable players advantages if the new entrants may diverging out from their core
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Ill
ustration 1: Porter Five Forces
(Source - MARKETING THEORIES - EXPLAINING PORTERS FIVE FORCES,
2018)

operations and business. This threat may put a profitability limits inside the
organisational environment (Kirton and Trebilcock, 2017). In this, transport and logistic
industry, there are a lot of entry barriers. One of the significant barriers to entry for new
entrants in different sector of this industry is – elements of economies of scale. In
addition to this context, this is a capital intensive industry so if a firm is able to make
growth & development rapidly then it can produce cheap products compare to its
competitor by meet out of fixed cost over the large number of units produced.
 Threats of substitutes – In this force, the substitutes perform similar task of an industry's
products and services in its systematic technique. Most of the logistic organisations
operates its businesses by using the corporate documents safely (Lasserre, 2017). In this
context, many customers are either the project owners, their procurement, engineering &
technology, commercial enterprise and management contractors or its prime suppliers of
such assignment & projects. For this transport industry, the availability of substitute
products expand the chance of a special stage where an organisation will lose its clients
and lower its profitability. It has some essential factors that are relative price execution of
substitute, ease and availability of close substitute and many more. Such force only
threatening if purchasers can easily discover the substitute outputs with cheap rates and
better quality.
 Bargaining power of buyers – In an industry, the influential and powerful buyers can
also compress all product's margins for the organisation through demanding more worth
and make down all prices with extreme force. Buyers will ask for extra service and
become a perfect market player against the organisation (Mangan, Lalwani and Lalwani,
2016). In this context, the Kuehne Nagal faces more bargaining power from its potential
buyers. This force is known as internal factor and more pressure exert from customers
can impact to on company, the more bargaining power they have over that organisation.
It will generally increase profitability for that entity that exerts it and it depends on the
customers.
 Bargaining power of suppliers – It can be refered as the suppliers can increases their
prices of goods & services and become more profitable. This is affected by the number of
creditors for a particular output. It can decrease the profitability of firm if suppliers make
more margins. So for this reason the industry faces many problems related to their
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business and its growth also goes down (Marquis and Raynard, 2015). All suppliers can
be an expensive undertaking for the company and it may hurt the goodwill and brand
name in the long period. Their bargaining power normally increases overall profitability
for an organisation that exerts this force. Its major elements are impact of inputs on
production's expenses & differentiation, capability of several distribution channel,
existence of substitute inputs and many more. So for this reason the Kuehne Nagal must
aware about all these forces in order to expand their business in Belgium.
CONCLUSION
This presented report conclude the detailed information about Kuehne Nagal that is
situated at Switzerland. Its management team wants to expand its business and for this purpose it
open its new branch at Belgium so they need to understand about global environmental condition
that may influence to its business. In this context, the report included macro environmental
factors with PESTLE analysis. Further, manager requires to different scenarios in its target
market so this report also covered Porter's Five Forces Model to understand market condition.
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REFERENCES
Books and Journals
Barak, M.E.M., 2016. Managing diversity: Toward a globally inclusive workplace. Sage
Publications.
Clegg, S.R., Kornberger, M. and Pitsis, T., 2015. Managing and organizations: An introduction
to theory and practice. Sage.
Crane, A. and Matten, D., 2016. Business ethics: Managing corporate citizenship and
sustainability in the age of globalization. Oxford University Press.
Kirton, J.J. and Trebilcock, M.J., 2017. Hard choices, soft law: Voluntary standards in global
trade, environment and social governance. Routledge.
Lasserre, P., 2017. Global strategic management. Macmillan International Higher Education.
Mangan, J., Lalwani, C. and Lalwani, C.L., 2016. Global logistics and supply chain
management. John Wiley & Sons.
Marquis, C. and Raynard, M., 2015. Institutional strategies in emerging markets. The Academy
of Management Annals, 9(1), pp.291-335.
Sassen, S., 2016. The Global City: Strategic Site, New Frontier. In Managing Urban
Futures (pp. 89-104). Routledge.
vom Brocke, J., Zelt, S. and Schmiedel, T., 2016. On the role of context in business process
management. International Journal of Information Management, 36(3), pp.486-495.
Wang, Y.S and et.al., 2016. Factors affecting hotels' adoption of mobile reservation systems: A
technology-organization-environment framework. Tourism Management, 53, pp.163-172.
Zoogah, D.B., Peng, M.W. and Woldu, H., 2015. Institutions, resources, and organizational
effectiveness in Africa. Academy of Management Perspectives, 29(1), pp.7-31.
Online
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through <https://www.professionalacademy.com/blogs-and-advice/marketing-theories---
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