Business Environment Analysis and Risk Management for Pret a Manger

This report provides an internal and external environment analysis of Pret a Manger, a UK-based sandwich shop franchise. It includes SWOT and VRIO analysis for internal environment analysis and PESTEL and Porter's 5 forces model for external environment analysis. The report also identifies the risks associated with the food and beverage industry and provides an action plan for mitigation of risks.

Business Environment
Analysis and Risk
Management

Table of Contents
INTRODUCTION...........................................................................................................................3
TASK...............................................................................................................................................3
Internal Environment Analysis of Pret a Manger........................................................................3
External Environment Analysis of Pret a Manger.......................................................................6
Risk assessment of Pret a Manger...............................................................................................8
Action Plan for mitigation of risks..............................................................................................9
CONCLUSION................................................................................................................................9
REFERENCES..............................................................................................................................10

INTRODUCTION
The internal environment analysis refers to the analysis of organization's internal
strengths and weaknesses in terms of its competencies, resources and competitive advantages.
The management of the company must be clear about the areas that organizations are excelling at
and areas that they need to improve. The external environment analysis refers to the analysis of
macro environmental impact on the performance of business and to identify the opportunities
and threats from the external environment (Wang and et.al., 2022). It also includes competitive
analysis to help the company in getting competitive advantage in the market. The report will
discuss about the internal and external environment analysis of a UK based company i.e. Pret a
Manger by using different models and business frameworks. It is an international sandwich shop
franchise and a private company headquartered in London, England. It deals in the products like
sandwiches, coffees, snacks, salads, etc. This report will also discuss the risk assessment of Pret
a Manger and an action plan to mitigate those risks.
TASK
Internal Environment Analysis of Pret a Manger
Internal environment analysis helps the companies in understanding the potential of their
businesses and weaknesses to take corrective measures to improve its performance. It facilitates
in providing competitive advantage to the businesses by analysing their competencies
(Wiagustini and Wistawan, 2021). The internal environment analysis of Pret a Manger is
provided by way of SWOT Analysis and VRIO Analysis.
SWOT Analysis
It is a strategic planning tool for businesses that help them in identifying the strengths,
weaknesses, opportunities and threats related to the competition of business in the market. It is
also called situational analysis (Djellabi and et.al., 2021). The SWOT analysis of Pret a Manger
is explained below –
Strengths
 Geographic locations – Pret a Manger
has geographic presence in different
locations such as its food stores are
located in the markets of UK, US,
Weaknesses
 Poor waste management practices –
The poor waste management practices
of food restaurant Pret a manger can
lead the brand to low brand image in

China, Singapore , Hong Kong,
Switzerland, Ireland etc. It helps the
company in reaching its target market.
 Online Presence - The company has a
strong online presence on different
social networking sites that attract
customers to its restaurants and it ha its
own website i.e. www.pret.co.uk that
also demonstrate the food menu of the
company. it helps the company in
developing the customer base by
interacting with the customers through
social media.
the fast casual restaurant industry. It
can also lead to increase in the
operational costs due to daily
preparation of fresh food.
 Customer loyalty programs – The
competitors of Pret a Manger such as
Costa Coffee, Starbucks Coffee etc. are
continuously organising customer
loyalty programs to increase the
customer base but this company has
weak customer loyalty programs that
are lowering its customer base.
Opportunities
 Technology - Pret a Manger can take
the advantage of technology such as it
can develop its own app to diversify the
portfolio of its food supplements. It will
develop the customer base of company
and also facilitate it increasing the
market share by outperforming the
competitors.
 Cooperation with Celebrity chefs – The
company has an opportunity to
cooperate with the celebrity chef so as
to promote its brand among the target
market and target customers.
Threats
 Competition – One of the major
competitors of Pret a Manger include
Starbucks coffee, costa coffee, White
Castle, Krispy Kreme etc. that the
company has a strong competition with.
It must include freshness and
healthiness in its menu to face the
competition in the food restaurant
industry.
 Changes in customers tastes and
preferences – The tastes and
preferences of the customers keep
changing due to their health
consciousness and fitness trends in the
market. It may create switching of the
customers to another company’s
healthy food products.

VRIO Analysis
This framework is an internal analysis that facilitates the businesses in identifying the
advantages and resources that provide competitive advantage to the businesses. It is used for the
various measurements of success that are associated with the business. VRIO stands for Value,
Rarity, Imitability and organization(Madsen, 2022). In context with Pret a Manger, the VRIO
analysis is explained below –
 Value – It refers to the valuable resources of the company whether the company is able to
offer the resource that adds value for its customers. The analysis of value of the resources
is done to check whether the resource is easily obtain in the market. If the resource is not
valuable, it should be outsourced as it brings no value to the business. In context with
Pret a Manger, its valuable resources include financial resources, human resources,
management of operations and professionals in marketing. It provides competitive
advantage to the company in improving its business performance because of valuable
resources.
 Rarity – It refers to the rareness of valuable resources of the company. With the
valuability, the resources mut not be common i.e. they should have rarity. The company
must ensure competitive advantage by having the rare resources as compared to its
competitors. In context with Pret a manger, the resources that are rare include human
resources and management of operations and professionals in marketing, patent,
distribution network etc.
 Imitability – It is similar a bit to rarity but states to keep the internal valuable and rare
resources inimitable for the competitors. The businesses must consider the cost of
duplication for their rare resources(van Dam, 2021). Such as financial resources of pret a
manger are costly to imitate because of their acquirement through prolonged profits.
Moreover , its employees are imitable, but patents and distribution network is very hard
to imitate for its competitors due to the legal; protection to the patent and development of
the distribution network over the years respectively.
 Organization – It is the final step where the organizational factors are considered to ensure
whether the valuable, rare and inimitable resources are organised or not and whether they
contribute to competitive advantage or not. In context with Pret a Manger, its financial

resources are organised and provide sustained competitive advantage to the company.
Patents are not well organised as company cannot use the patent with their full potential
that cause unused competitive advantage to the company. Moreover, the distribution
network is also well organised and provide sustained competitive advantage to the
company.
External Environment Analysis of Pret a Manger
PESTEL Analysis
Pestle analysis is a strategic tool which is used by the marketers to examine and observe the
macro environmental factors that have a great impact on the environment. In relation to the Pret
a manger, the pestle analysis has been done below:
 Political: This is a factor which is influenced by the involvement of government that
have a great impact on the business of an organization (Eierle and et.al., 2021). The
factor includes the tax policies, environmental regulations, trade restrictions, tariffs,
political stability and so on. With reference to Pret a manger, it is supported by the
government because it follow the guidelines and standards that are applied by the
government. But it can be impacted when there is requirement of change of food and
beverages or change in government.
 Economical: This is the factor which have a great impact on the performance of na
economy. It consists of interest rates, tax rates, exchange rates, inflation, wages, cost of
living and many more. As regard with Pret a manger, the economy is growing because it
has a variety of products that are offered to the customers. But it can be affected by the
inflation rates because the purchasing power of the customers gets reduced.
 Social: This is a factor which assist the company in knowing the behavior of the
customers. This includes the cultural norms, expectations, health consciousness, age,
health and safety etc. In relation with Pret a manger, the needs of the customers get
changed according to the changing environment so it always try to provide pleasant and
scrumptious food to their customers.
 Technological: This factor involves the innovation and development by using the
technology to match up with the trend (Agyekum and et.al., 2021). In context to the Pret
a manger, it invest in the technologies for research and development so that it can make
its products healthier and organic which provide nutrients to them.

 Legal: These are the factors which include the various law and policies and regulation
that are followed to protect the interest of the customers and the employees. Pret a
manger follow the laws and guidelines of the government that may impact the business.
 Environmental: This is mainly concerned with the surroundings and ecological aspects
which includes the scarcity of raw material, pollution target and so on (Gareeb and
Rwelamila, 2021). With reference to Pret a manger, it is making efforts to make the eco-
friendly environment so that it can preserve the nature and energy. It may face the
problem of the scarcity of the resources so it can use the recyclable resource.
Competitive analysis using Porter's 5 forces model
This is a model which help in identifying the competition prevailing in the industry so that the
corporate determine the best strategy in order to overcome the competitors. Therefore, porter’s
model is applied to make the competitive analysis in order to understand the level of competition
in an industry and assist the company in gaining the long term profitability (Choi, Jeong and
Kim, 2021). With reference to Pret a manger, the element of the model has been clarified below:
 Competition in the industry: This is first element of the forces which states the number
of the competitor present in the industry with their numerous products and services.
When there are many competitors present in the industry so the company have to face
tough competition and have less power. In relation to the Pret a manger, there are many
competitors of the company such as Starbucks, White castle, Krispy Kreme and many
more so it provide high competition to the company. Therefore, an organization need
offer better deal to their customers in order to increase their profits and sales.
 Threat of new entrants: An organization can be affected by the new entry in the
industry because it can come with the new and attractive products which may provide
good features to the customers. With reference to Pret a manger, the new entrant needs to
invest more money to provide an effective competition to a business concern as it is a
reputable brand know to the customers. It need time to make the customer aware about
their offerings therefore there is low hazard to the Pret a manger of the new entrant as it
creates many barriers for it.
 Power of suppliers: This is another element display information about the supplier of
who offers the raw material to the company. When there are more supplier so an
organization can search for the unique inputs and lower cost and switch for the other

supplier (Tanrıverdi and Lezki, 2021). But when there are few supplier so the company
have no other choice to get the raw material. With reference to the Pret a manger, when
the supplier have strong bargaining power so they will charge extra prices. The company
have the biggest market so it has number of supplier from which it get the inputs
therefore the bargaining power of supplier is low.
 Power of buyers: This is an element which present the power of the buyer where the
customers negotiate for the low prices. When they are more than the supplier so they
have high bargaining power and they can switch for the other company’s products. With
reference to Pret a manger, there are numbers of buyers so the company have to please to
customers in order to make them more loyal and attract the new one. This will provide
assistance the company in gaining the more profits and increase it sale.
 Threat of substitute products: This is the last element of the forces which explains that
the substitute products and services are used by the customers in place of the company
products when the customers are not satisfied with their products. The company which
produces goods and services for which no substitute is available in the market so they can
charge prices according to desire. In relation with Pret a manger, there are many
competitors who provide the substitute products against the company therefore the threat
is high.
Risk assessment of Pret a Manger
Risk assessment is the process of identification of risks that could negatively impact the
ability of the organization to conduct the activities of business in an efficient manner (Chen, and
et. al., 2021). In context with Pret a Manger, the following risks have been identified in the food
and beverage industry that the company is operating in –
 Increased product waste – The food and beverage industry has a risk of increased product
wastage due to which the brand image gets affected negatively. The food wastage cause
harm to wildlife as well and cause pollution in the environment that shows lack of
sustainability concerns on the part of company (Løvholt, Griffin and Salgado-Gálvez,
2022).
 Changes in customers’ tastes – Over the years, the consumers have become more health
conscious and their expectations have changed. Now they choose those companies that

provide the transparent ingredient lists and offer ideal prices. So, Pret a manger has to
face this risk of losing potential customers due to their changed preferences.
Action Plan for mitigation of risks
After the risk assessment and identification of potential risks of the company , the
company needs to prepare an appropriate action plan for the mitigation of identified risks. In
context with Pret a manger, the action plan for mitigation of risks is as follows –
 To mitigate the risks of increased product waste, the company needs to put emphasis on
use of natural ingredients and ensure the food waste to be sold to the charities. The
sandwiches of the company must be packed in paperboard rather than the sealed plastic.
 To mitigate the risks of change in customers’ preferences, the company must ensure
introduction of organic coffee and healthy food and beverages. It must use natural
ingredients to switch the health conscious customers to its products so as to ensure
competitive advantage in the fast casual food industry.
CONCLUSION
From the above discussion, it has been concluded that the business organizations must
analyse their internal as well as external environment to identify their capabilities and the
strengths and weaknesses to improve the performance of business in order to get competitive
advantage in the market. The macro environment must also be analysed to identify the
opportunities and threats in the market and reduce the negative impact of external
environmental factors. This could be done using different business frameworks such as SWOT
Analysis and VRIO analysis for internal evaluation and PESTEL analysis , Competitive
analysis for external environment evaluation. The risk assessment of Pret a Manager has been
done to identify the potential risks and action plan has also been provided in order to mitigate
those risks.

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