External Environment Analysis for Eataly

The assignment content is an external environment analysis of Eataly, a company that sells Italian food products. The analysis covers the general environment, including political, economic, sociocultural, technological, and natural factors that affect the company. It also examines the industry environment using Porter's 5 forces model, identifying threats from new entrants, substitutes, and competitors like Walmart and Tesco. Additionally, the assignment performs a VRIN (Valuable, Rare, Inimitable, Non-substitutable) analysis to evaluate Eataly's capabilities and identify potential sources of competitive advantage. Finally, it conducts a value chain analysis to understand the company's operations, logistics, marketing, services, and technology development.

EXTERNAL ENVIRONMENT ANALYSIS
General Environment:
What forces in the general
environment are most
relevant for Eataly?
Consider factors that might
be present in the political,
legal, economic,
sociocultural,
technological,
natural/physical
environmental, etc.
Political: The factors like high level of consumer protection,
political instability due to terrorist attacks, international pressure
groups.
Economic: the factors like level of taxation, inflation rate,
exchange rate, weather and seasonality issues etc.
Sociocultural: Activities of vegetarian and vegan groups,
Consumer attitudes and opinions, Healthy eating trends etc.
Technological: Development in catering industry, technologies
associated, innovation in this industry.
Legal: Taxation, Catering charges, employment laws etc.
Industry Environment:
What industry is Eataly in
and how attractive is that
industry? Consider
Porter’s 5 forces: Potential
new entrants, Bargaining
power of suppliers,
Bargaining power of
buyers, Threat of substitute
products, Intensity of
rivalry among competitor,
 Bargaining power of suppliers: The prime objective of
Eataly is to uphold a system of ecologically-sustainable
and responsible production, distribution as well as
commercialization. That is why Eataly has purchased
share in their suppliers.
 Potential new entrants: There is a massive threat from
other ventures and companies. Therefore, Eataly needs to
increase their store size and non-Italian Eataly should
focus on the food which are exported from Italy and to
make them look like a specialty store.
 Bargaining power of buyers: The product price is higher
than the regular supermarkets. High price can be justified
on artisanal food products but buyers do not like to pay
more in regular products like meats, vegetable etc.
 Threat of substitutes: Various products like pasta, cheese
pizza are highly common and Eataly aims to differentiate
itself from artisanal slogan. All the upcoming and small
companies needs to change their structure in order to
challenge Eataly.
Competitor
Environment: Who are
Eataly’s direct
competitors? What is each
competitor’s objectives,
strategies, assumptions and
Walmart and Tesco are the biggest rivals of Eataly.
Walmart
Objectives: Providing everything to their customers at an
affordable value.

capabilities? Strategies: Cost leadership and differentiation.
Tesco
Objectives: The prime objective of Tesco is to keep their clients
happy and further to motivate their employee so as to gain high
profits and be friendly towards the environment.
Strategies: Cost leadership and differentiation.

VRIN ANALYSIS
Description of Capability
(What resources and
capabilities does Eataly
have? Test Eataly’s
capabilities by evaluating
them against the VRIN
criteria to assess whether
they are core competencies
and potential sources of
competitive advantage)
Is it Valuable?
(Will the
capability help
neutralise
threats or
exploit
opportunities?)
Is it Rare? (Is
the capability
possessed by
only a small
number of
other firms?)
Costly to imitate?
(Is capability the
result of unique
historical
conditions?
AND/OR Does it
have an
ambiguous cause?
AND/OR Is the
capability the
outcome of social
complexity?)
Non‐ substitutable?
(Is there no
strategically
equivalent
capability? NB:
There must no
strategically
equivalent valuable
resources that are
themselves either
not rare or imitable).
Variegated menu YES NO YES NO
Original Italian Food YES YES YES YES
Renowned Chef YES NO NO NO
Expaonsion in foreign
markets
YES YES MAY BE YES
Consumer Marketing Skills YES YEA YES YES