Report on Business Organisations and Environments in a Global Context: Joma Sports in Switzerland

This report analyzes the business environment of Switzerland for Joma Sports, a Spanish sports clothing manufacturer seeking to expand its operations. It utilizes PESTEL and Porter's Five Forces frameworks to assess the political, economic, social, technological, environmental, and legal factors, as well as the competitive landscape. The report identifies key strengths, opportunities, and challenges for Joma in Switzerland, providing recommendations for overcoming these challenges and achieving success in the Swiss market.

Report on business organisations and
environments in a global context
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Contents
INTRODUCTION..........................................................................................................3
BACKGROUND INFORMATION ON JOMA SPORTS................................................4
BACKGROUND OF BUSINESS ENVIRONMENT AT SWITZERLAND......................5
ANALYSIS OF BUSINESS SCENARIO AT SWITZERLAND......................................6
PESTEL analysis......................................................................................................6
Porter’s five forces analysis....................................................................................11
Challenges for Joma of doing business in Switzerland..........................................13
Recommendations for Joma to overcome these challenges at Switzerland..........14
CONCLUSION............................................................................................................15
REFERENCES...........................................................................................................16
APPENDIX..................................................................................................................18
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INTRODUCTION
Switzerland is one of the most competitive economies of the World according to the
World Economic Forum’s (WEF) Global Competitiveness Index 2016. It has received
great economic benefits as it is blessed with highly skilled labour force and has
sophisticated financial markets and low taxation policies for the business ventures.
Switzerland forms a home for a variety of multinationals that forms significant
contributors to the GDP and thus it becomes trading partners with other
industrialised countries. For such similar reasons, Joma Sport is seeking to expand
its operations in Switzerland that will render it suitable business environment and
opportunities to prosper so that it can effectively take benefits of the expansion at
Switzerland. In this report, the analysis of the business scenario of Switzerland will
be conducted using analytical approaches like PESTEL framework and the Porters
five forces that will help in fairly analysing the business opportunities for Joma Sport
and will help to evaluate the major issues that may be faced in the expansion.
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BACKGROUND INFORMATION ON JOMA SPORTS
Joma is a Spanish sports clothing manufacturer that was founded in 1965 and is
headquartered at Portillo de Toledo in Spain. It is a textile industry and renders its
products such as clothing and footwear. The areas served by Joma Sport include
Asia, Africa, Latin America and Europe. It currently produces clothing for padel,
tennis, running, volleyball, basketball, football, futsal and fitness. It is present in
nearly 70 countries across the world and ranks amongst top ten sports brand in the
world. It is a Joint Stock company which has total employees ranging between 50 to
249 and its annual turnover results in more than 50 million euros. Joma Sports
Schweiz is in Switzerland that is since 2013 as Joma Sports brand that aims to find
new and interested partners that can support them in their work (E. Dobbs, 2014).
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BACKGROUND OF BUSINESS ENVIRONMENT AT SWITZERLAND
Conducting business operations in Switzerland will render great opportunity for many
entrepreneurs and companies as it will offer returns business ventures to the one
that is foreseeing to invest the money in a profitable and advantageous business.
Switzerland is blessed with the central European location that is located right at the
heart of Western Europe which plays the important role in the commercial activities.
Foreign companies look at it as a great business location as it has business-friendly
legislation, political stabilities, infrastructure and workforce that proves the asset for
any business venture seeking to expand or operate here. Switzerland also offers tax
benefits to the companies and business units that expand in Switzerland as from the
double taxation treaties companies can attain tax reductions and exceptions which
seem attractive for foreign investors. Another attractive feature of business
environment at Switzerland is the business customs and etiquettes that are similar to
other Western countries which render flexible attitudes towards the business
decision-making process (Iamsiraroj, 2016).
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ANALYSIS OF BUSINESS SCENARIO AT SWITZERLAND
Switzerland counts amongst the top positions in global competitiveness as it renders
most liberal and competitive economies and has strengths of the social stability and
political systems. It has moderate taxation systems that form one of the reasons for
attracting Joma Sport to expand its operations here. It is well located and has a
political and economic stability that renders exceptional quality of life. It is a leading
hub of leading technology and skilled workforce which protects its intellectual
property and also renders the first-class infrastructure. Some of the business aspects
of Switzerland will be analysed by applying analytical tools like PESTEL framework
and the porters five forces that will help Joma in discovering the major contributors to
its success when it seeks to expand at Switzerland (Harrison, 2013).
PESTEL analysis
Through PESTEL strategic analytical tool the Political, economic, social,
technological, environmental and legal factors present in the external business
environment of Switzerland will be laid light that will contribute to drawing out the
success factors for Joma Sports that is seeking to expand its business in
Switzerland.
Political analysis
 Switzerland parliament, government and courts are organised at three levels
which include, Federal, Cantonal and communal (Hamilton and Webster,
2015).
 The tariffs, VAT, communication to confederation and legislation on currency
is covered by the Federal constitutions.
 There is high political stability at Switzerland
 The federal administration and government exercise the executive powers at
Switzerland.
 The political situation at Switzerland is highly decentralised one
Social analysis
 At Switzerland, there is a well-developed social security system and the wage
levels are high (Ebert, et al. 2014)
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 The cost of living remains high here
 A Switzerland the elderly population birth rate accounts for 67.8%
 It is blessed with 100% literacy rate that leads to rendering skilled workforce
 There are laws relating to the Health Care systems and also renders social
insurance to its population
 It follows a culture where over-familiarity is avoided
 Gift giving do not form a part of the culture.
Economic analysis
 Switzerland has the world’s most suitable economy for the business ventures
 It has a GDP of $678.968 million in 2017 and with this value, it stands at a
ranking of 18 amongst 195 countries (Wang, et al. 2014)
 The unemployment rate prevalent at Switzerland unemployment rate at
Switzerland in 2017 accounts to 4.5%
 People at Switzerland have a high quality of life index and stands at a second
position.
 The total life expectancy at birth stands at 82.3 (Ebert, et al. 2014)
 It has a good infrastructure and has the low corporate tax rate
Technological analysis
 It has a well-developed telecom markets
 Switzerland has high research and development resources but lacks natural
resources
 E-banking and E-markets are most active markets for it
 There are dense rail networks in Europe (Johnson and Turner, 2015)
 There are many internet and computer users at Switzerland
 There are abundant research fields such as microtechnology, climate
research and biotechnology and renewable research.
Legal analysis
 At Switzerland, each canton has its own taxes and is referred to a tax heaven
nation
 In this country the health insurance is compulsory
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 It also has high intellectual property rights which are enforced with
consistency
 There are anti-corruption measures
 There is high suitability for the foreign investments as here the investment
code is transparent and is administered effectively (Vasant, 2018).
 The federal law has been effectively applied by maintaining law and order
 Here strict packaging and labelling requirements are adhered to with a
significant tariff
Environmental analysis
 There are massive biodiversity and salt
 The environmental performance index of Switzerland counts among the top 5
countries that are generated 39% from nuclear power and 56% of the energy
is generated from the hydroelectricity (E. Dobbs, 2014)
 When glanced about the recyclable materials Switzerland comprises of nearly
66% to 96% of recyclable materials.
 There is the loss of biodiversity and suffers from climatic changes
Thus from this analytical framework, it is evident that doing business at Switzerland
seems attractive and is highly beneficial for Joma Sports. Switzerland ranks 33
amongst 190 economics and according to the analysis of the World Bank ratings, it
fell from 31 to 33rd ranking in 2017 (Hamilton and Webster, 2015). The ease of doing
business in Switzerland is depicted as under:
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Fig: Ease of doing business in Switzerland
Source: https://tradingeconomics.com/switzerland/ease-of-doing-business
Switzerland remains unaffected by the economic environment in Europe and through
the above analysis there emerged many export opportunities for the pharmaceutical,
energy, ICT, research centres and other business service providers (UK Trade &
Investment, 2012). From the external factors analysis some of the strengths and
opportunities that emerged of the business environment at Switzerland which will be
beneficial for Joma sports are as under;
Some of the strengths of the business markets in Switzerland for Joma Sports
include the central location in Europe and the workforce of the country that is flexible
enough and is well-educated. The research and development rate and high-
spending in it render strong collaboration between the business and academia. It has
a comparatively stable macroeconomic environment as compared to other European
countries for Joma Sports. It also has trading partners that lead to mature trading
nation with developed infrastructure (Jain, 2017).
Some of the opportunities were also identified by Joma Sports of starting a business
in Switzerland as it has a strong demand for quality products and services which
Joma Sports can take advantage of, it has a highly automated and efficient
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manufacturing sector through which Joma being a manufacturing company can
benefit from it.
Switzerland is not a part of the EU so Switzerland has an advanced and competitive
market. The business culture of Switzerland is a formal one and focuses on forming
long-term relationships. It renders personal relationships through competence and
performance efficiencies. There is a stringent hierarchy at Swiss businesses culture
and those who are at senior business positions receive great respect (Jain, 2017).
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Porter’s five forces analysis
This is another analytical tool that will help in conducting the competitor analysis of
the Joma sports in Switzerland.
Fig: Porter five forces analysis of Joma in Switzerland
Source: https://www.slideshare.net/yuvarajhid/porters-five-forces-24847182
Barriers to Entry
As Joma is a sports accessory and athletic shoe manufacturer so it has less threat
for new entrants into the same market as there is high entry barrier in this industry.
Due to the high cost involved in the research and development and high scale
production, there is large capital investment needed on the innovation of the
products which reduces the entry of new manufacturers. This helps Joma to retain
the advantage of the performance over its emerging competitors (Foreign &
Commonwealth Office, 2017).
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Bargaining Power of customers
There is high bargaining power of the customers in the market as Joma has a large
number of customers as compared to the number of firms in the same industry. So in
order to increase the market share of Joma in Switzerland, it is continuously
increasing its products and markets through e-commerce and online shipping.
Through this, the intimacy is achieved among the customers and the accessibility
has been enhanced. It has a brand identity which plays a critical role in influencing
the customer’s behaviour and offering its customers trust and quality products
(Harrison, 2013).
Bargaining power of suppliers
There is wide availability of the input suppliers in the sportswear industry which leads
to a little differentiation prevalent among the suppliers so the bargaining power of the
suppliers becomes non-existence. As the power of the suppliers is low in case of
Joma as it uses standardised input procedures with regard to the supply, logistics,
labour force and others, due to the presence of the global networks the labour
availability is cheap and firms are easily able to switch between the suppliers quickly
(Vasant, 2018).
Threats of substitutes
There is little alternative available for sportswear and athletic footwear industry that
can allow them to switch between each other. So the buyer’s propensity to substitute
is low and the substitutes available is less as the sporting purpose of athletics cannot
be replaced by boots, sandals dress shoes and many more (E. Dobbs, 2014).
Competitive rivalry
There are many competitors of Joma which includes Nike. But it is not true that these
all companies have the power to compete with Joma. Some of the competitors of
Joma include Nike, Legea, Brooks, Adidas and Reebok (Hamilton and Webster,
2015).
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Challenges for Joma of doing business in Switzerland
Some challenges also emerge for Joma to expand its business operations in
Switzerland as Switzerland does not form a part of the EU membership which is
governed by a series of bilateral agreements. Some of the unique challenges include
the domestic rules and regulations that apply to the business units operating in
Switzerland (Deng, 2017). Joma will also face challenges as EU standards will not
be adopted and there will be highly regulated markets present. At Switzerland, there
is a reluctance to take risks and for the same reason, Joma may be slow at decision
making power. There is a large focus on the premium and quality products which
may emerge another challenge for Joma to operate in Switzerland. Another
challenge may be a shortage of resources which leads to high prices of the
resources. Due to globalisation, there is high pressure to innovate and thus
increasing the competitive pressure for Joma a Switzerland. At Switzerland, the
manufacturing companies also are faced with the talent shortages that is depicted by
the young people through lack of interest in a technical profession (Geppert, et al.
2016).
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Recommendations for Joma to overcome these challenges at Switzerland
Joma can seek to expand in the emerging countries like China and India and
prepare themselves for the economic engines of next generation in Africa, Asia and
Latin America. The focus should be laid on tapping the best talent so that the
untapped resources can be better put to use in developing new growth markets and
utilise the energy and raw materials to the best use. This will help in coping with the
future competition in manufacturing companies (Hult, 2015).
Fig; Current challenges
Source:
https://www2.deloitte.com/content/dam/Deloitte/ch/Documents/manufacturing/ch-en-
manufacturing-white-paper-switzerland-summary-05052014.pdf
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CONCLUSION
In a nutshell, it is evident that Switzerland is one of the most high-income economies
in the world. And through this reason, it benefits many investment friendly nations as
the service sector of Switzerland contributes nearly 70% of the GDP and renders
employment opportunities to nearly three-quarters of the active workforce. The
economic framework of Switzerland for Joma is such that it has an array of well-
educated workers and efficient government that moderates the risk for the business
ventures. There is moderate taxation policies and has a flexible labour market that
will render many business opportunities to Joma Sports expanding at Switzerland.
For the international companies to settle around at Switzerland these aspects thus
render attractiveness. It has got excellent technical skilled workers that will make this
location to expand Joma and to optimise its value chain. Thus through these
opportunities and attractiveness of Switzerland, it renders the best location to Joma
to invest their money in expanding their operations here so that their business may
turn to the profitable venture in Switzerland.
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REFERENCES
 Deng, P., 2017, January. Revitalizing Outward FDI from Emerging
Economies: A Social Relational Perspective. In Academy of Management
Proceedings (Vol. 2017, No. 1, p. 13146). Academy of Management.
 E. Dobbs, M., 2014. Guidelines for applying Porter's five forces framework: a
set of industry analysis templates. Competitiveness Review, 24(1), pp.32-45.
 Ebert, R.J., Griffin, R.W., Starke, F.A. and Dracopoulos, G., 2014. Business
Essentials. Pearson Education Canada.
 Foreign & Commonwealth Office, 2017, Guidance Overseas Business Risk –
Switzerland. Online available at
(https://www.gov.uk/government/publications/overseas-business-risk-
switzerland/overseas-business-risk-switzerland) last accessed April 2018.
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management in a global context: Experiences from Britain and Germany.
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 Hamilton, L. and Webster, P., 2015. The international business environment.
Oxford University Press, USA.
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(https://prezi.com/a_cyy11mo9ac/switzerland-pestle-analysis/) last accessed
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 Iamsiraroj, S., 2016. The foreign direct investment–economic growth nexus.
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(http://www.sachdevajk.in/2017/09/07/pestle-analysis-of-switzerland-2/) last
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 Johnson, D. and Turner, C., 2015. European business. Routledge.
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 UK Trade & Investment, 2012. Doing business in Switzerland. Online
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 Vasant, S., 2018. INVEST IN SWITZERLAND BUSINESS ENVIRONMENT.
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 Wang, C., Hong, J., Kafouros, M. and Wright, M., 2018. Exploring the Role of
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APPENDIX
Appendix 1- GDP of 2017 of Switzerland
Source: https://countryeconomy.com/gdp/switzerland
Appendix 2- Tax structure of Switzerland as compared to OECD average
Source: https://www.oecd.org/tax/revenue-statistics-switzerland.pdfv
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Appendix 3- Unemployment rate of Switzerland
Source: https://www.statista.com/statistics/263707/unemployment-rate-in-
switzerland/
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Appendix 4- : labour Force in Switzerland
Source: https://www.bfs.admin.ch/bfsstatic/dam/assets/2040009/master
Appendix 5: Employment at Switzerland
Source: https://www.bfs.admin.ch/bfsstatic/dam/assets/2040009/master
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Appendix 6- Productivity of Switzerland
Source: Swiss National Bank, 2017
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