Boots Company: Analyzing German Market for Business Expansion

This report provides a comprehensive analysis of the potential for Boots Company to expand its business operations into the German market. It begins with an introduction to Boots and the German market, highlighting key background information relevant to business development. The report then applies appropriate analytical approaches, including PESTEL and Porter's Five Forces models, to assess the external and internal factors influencing Boots' potential for growth in Germany. The PESTEL analysis examines the political, economic, social, technological, environmental, and legal factors. The Porter's Five Forces model assesses the competitive landscape. The report uses data and examples to support its findings and concludes with recommendations for Boots' strategic approach to entering and succeeding in the German market. The report emphasizes the importance of understanding the German business environment, including economic growth, trade policies, and the needs of the German consumer. The overall goal is to provide insights into the market conditions and the factors that will impact Boots' success in Germany.

Boots Company -Developing in
Germany

TABLE OF CONTENTS
INTRODUCTION:..........................................................................................................................1
Background of Boots .............................................................................................................1
Background of Germany .......................................................................................................1
Application of an appropriate analytical approach.................................................................3
Data and examples..................................................................................................................8
CONCLUSION: ..............................................................................................................................8
REFERENCES:.............................................................................................................................10

INTRODUCTION:
Every business needs to analyse market conditions and business environment in order to
survive in the market. They need to analyse what factors will affect them to grow and develop.
By analysing factors, strategies and plans are developed. These strategies help in expanding the
business operations in various countries (Botha, Kourie and Snyman, 2014). Moreover, every
business goal is to expand and grow in various countries to earn more profits. It is only possible
if country’s environment is fair enough to do business. This report will focus on how internal and
external environment of business affects its growth. Also, which factors needs to be determined
to identify growth opportunities.
For undertaking this report, the organisation selected is Boots. The cited firm belongs to
pharma sector and operates in UK. The existence of company on such a national level requires
effective business strategies to grow and develop (Moroni, Arruda and Araujo, 2015). Thus,
this report will help in developing a relevant one for the cited establishment.
Background of Boots
The company belongs to pharma sector and having its business operations within UK. It
is the leading health and beauty retailer in UK. It is a pharmacy chain that is having more than
2500 stores within UK. Its stores are located in high street market and shopping centres. Its main
products are related to beauty and healthcare as well as provide various services (Bah, and Fang,
2015). Along with this, there are many products sold by company such as medicines, food and
drink meals. Company is also having its own retail website. It contains a loyalty card programme
called as Boots advantage card. It usually focuses on high class customers that are able to
purchase their products. In the recent scenario, it has focused on people who are very conscious
about their health and beauty. Boots have also opened their stores in countries like Thailand and
Republic of Ireland. It is growing at a fast rate and generating huge revenues. In 2007, company
collaborated with US largest drug store chain Walgreens. They purchased 45% stake in Boots.
They formed an alliance known as Walgreens boots alliance. In US, it is they are having stores
by Walgreens and in UK by Boots (Savrul, Incekara and Sener, 2014).
Background of Germany
Germany is a country that is having high growth rate and GDP. Its economic growth is
increasing every year with the development of country and people. Due to continuous innovation
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in technology, many big companies have focused towards Germany to develop their business.
This is also due to the fact that Volkswagen who is auto mobile leader in the world is a German
company. Besides this, the market condition and business environment of country is suitable for
dong business. The income level and lifestyle of people have arisen. This is the reason why
people needs have increased (Eling and Schaper, 2017). They are demanding high quality
products to satisfy their needs. Germany follows same policies and regulations that has been
developed by EU. This makes it easy for companies to trade with other European nations. Also,
increase in innovation in Germany have companies. Trade policy, tariffs, import export policy,
etc. all are been effective thus providing stable business environment. Besides this, the exports of
product from Germany has increased to a great extent. It is expected to rise in the future.
The service sector of Germany accounts for 68.7% of GDP. Along with this, more than
3.6 million small and medium enterprise companies exist there. They are providing employment
to almost 68% of workers in Germany (Virglerová, Dobes and Vojtovic 2016). This is the main
advantage for Boots to expand business.
Trade policy- Germany follows the trade policy that is developed by European union. This has
allowed company to trade freely with EU countries. Also, currency rate is common so it becomes
easy to trade in common current rate. This provides stability in maintaining capital and cash.
Political outline- The current political state of Germany is their President is Frank Walter
Steinnmeier and chancellor is Angela Merkel. It is having 16 states or provinces. This shows that
nation is having a suitable political condition that favour Boots for doing business (Bartz and
Winkler, 2016).
Along with this, many new industries have been set up recently in Germany. It has
boosted its GDP and provided employment to people. The service sector is at boom. Also,
various new measures are taken by government to support small and medium enterprises. This
has improved their growth in many areas. Apart from this, current business environment of
nation is very good for doing business. It consists of diversified culture people who are having
different needs and demands (Ketata, Sofka, and Grimpe, 2015). They health sector of nation is
improving as measures are been taken by government.
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Application of an appropriate analytical approach
Business environment generally means internal and external factors in which a business
operates. These factors play a crucial role in the business operations as it can either affect
business in a negative or positive way. These factors determine the growth opportunities and
provide the competitive advantage in the market (Stahlhofer, Schmidkonz and Kraft, 2018). If
environment is analysed properly, it will be easy for business to operate in it. Internal factors
consist of employees, suppliers, stakeholders,etc. While external includes political, legal and
social, etc. the major impact is of external environment as it is directly connected and business
cannot control it. Boots wants to expand its business in Germany. So, for this, they need to
analyse what existing factors are and how it can affect it.
Internal environment- it exits within business and affects workplace environment and
surrounding. It can be controlled by taking appropriate actions or developing strategies. It is also
known as micro environment (Kew, and Stredwick, 2017).
External environment- It exists outside the organisation and can not be controlled. It can be
broken down into two that is micro and macro. Business success depends upon how they adapt
this the external factors. It includes government, customers, etc.
External business environment is usually described by these two elements that are as follows :-
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Illustration 1: Germany economic condition

PESTEL – It is a framework used by company to analyse and monitor changes in external
factors. By analysing this company can conduct SWOT analyses. It will help in finding out
opportunities and threats along with strengths and weakness (Hillary, 2017).
Illustration 2: PESTEL analysis
Political – These factors consist of government laws and regulation that will have a direct impact
on business. For example: change in any policy or impose of tax on business will affect its
overall operations. It includes various policies like fiscal, trade, tariff, etc. that affect the business
decisions. Any change in political framework of country will impact business to a great extent.
Germany is known for its very harsh political condition due to some powerful leader like Hitler.
Country is having good relations with its neighbours (Schaltegger, Hansen and Lüdeke-Freund,
2016). So, it will be easy for Boots to expand their business. Moreover, it is important that
Economic- It is related to national income of country. It determines the economic growth of
country. The economic growth of country is determined by factors such as GDP, inflation rate,
etc. So, any change in this will affect company’s long term strategy and plans. Moreover, change
in currency rate is also considered in this. Decisions of trading import export, income of people
and price of product are considered while taking the business decisions. Germany is having a
good economic growth and its GDP is increasing every year (Botha, Kourie and Snyman,
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2014). So, boots can expand their business. They must focus on high class people who are
conscious for their health.
Social – It refers to surrounding environment in which a business operates. These factors are
related to living standards of people. It determines the needs of people. Any change in needs and
taste of people will impact the business decisions. Thus, business has to change their strategies
so that it can survive for a long term. They must develop products accordingly to society’s needs.
People in Germany live a high standard life. So, it is easy for Boots to establish store there so
that it can fulfil the needs of people. Other than this, boots should not develop products that can
create a bad impact on the health of people (Moroni, Arruda and Araujo, 2015). Otherwise, it
will be difficult for boots to sustain in Germany.
Technological – Technological development of a country plays a vital role in attracting
companies for doing business. It helps business to implement new technology so that product’s
quality can be improved. Also, it helps in increasing the efficiency of business. Moreover,
technology provides opportunities for growth by developing new products. Germany is a country
where most of the innovation occurs. So, it’s a golden opportunity for boots to develop business
there. But existing of such companies can impact its business (Bah, and Fang, 2015). It will
give a tough competition to boots. Company needs to promote themselves in an effective manner
to attract the customers.
Environmental- This factor is considered as the most influential as it can also lead to huge loss
of business. It can create a bad image of business in the market. It includes atmosphere, climate,
etc. that influence the business decisions and strategies. Government develops laws and
regulations that have to be followed by companies. Also, its positive impact is companies
operates within set boundaries to protect environment. Boots need to consider Germany’s
environment situation (Savrul, Incekara and Sener, 2014). This will help in identifying in what
way they can do business. As boots provide health facilities, more emphasis should be on this
factor.
Legal – All the laws and regulations developed by government come under this. The laws
relating health and safety, working hours, salary and wages, etc. have to be followed by
company. They must work for the interest of workers and provide proper health measures to
them. According to laws and regulations, companies develop their own policies. So, any change
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in these will lead to affect the overall business operations (Eling and Schaper, 2017) Germany
is known for its strict rules and laws of employees. They are having labour unions who work for
the interest of workers. Boots needs to create policies properly so that their operations can be run
in a smooth way.
Porter's five force model- It is marketing tool that helps in analysing the current market
condition of particular country or market. It enables company to analyse industrial competition,
intensity and attractiveness of industry.
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Illustration 3: Porter's five force model

Threat of substitutes-.It means that what product can be used as replacement for a specific
good. Customer may prefer to change goods if they find other product cost low and consists of
same features to fulfil their needs. Company is highly affected by threat of substitutes as it leads
to decline in sales and profits (Virglerová, Dobes and Vojtovic 2016) Boots can provide new
services and products to people to retain them. It can also reduce cost to this.
Power of buyers – It means how buyer can affect price of product. Buyers can influence
company price by switching it to other company. More number of buyers, less power a company
holds and vice versa. Boots is having a large number of buyer so they can easily affect its price.
Boots can develop new products
Power of suppliers– It means supplier can affect price of product. Suppliers can do this by
providing various services and reducing cost. Boots are having a lot of suppliers form where raw
material are purchased. So it is not dependent on any one supplier. This gives them benefit as
power of supplier is not very dominant. They can buy raw materials from supplier whose price is
low. So if one supplier increases its price, Boots can buy it from another.
Competition in industry – It means that how intense is the competition in industry. If there are
many companies than competition will be stiff and vice versa. This depends upon power of
company to influence its customers by price and product. Boots can develop a strong customer
base by segmenting the market (Bartz and Winkler, 2016). It will help in competing with other
companies. They can also collaborate with other firms to reduce market competition.
Potential of new entrants- it means that the entry of new companies will make a huge impact
on market condition. It will decrease the exiting market share of existing companies. Boots is
effectively using new technology, they have developed pricing strategy, reduce their costs etc.
this will be beneficial for them in creating strong barriers so that new companies can not enter.
Also, it will retain their customers and market share.
Hence, from the above analysis it can be concluded that business environment should be
analysed by company before establishing its operations in another country. It will help in
providing right data so that decisions and strategies can be developed. Boots must be do full
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analysis of German people and country (Ketata, , Sofka and Grimpe, 2015). It will be beneficial
for them to remain survive for long term.
Data and examples
The data and statistics gathered and collected form various articles shows that Germany
is having vast opportunities in which Boots can grow and expand its business. It shows customer
change in taste and preference (Stahlhofer, Schmidkonz and Kraft, 2018). Also, how their has
been shift in lifestyle of people on health care. By analysing this data it will be easy for Boots to
find out what current economic condition of Germany is. This can be observed by data and
analysis that is given below:-
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Illustration 4: Export share

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Illustration 5: Pharmaceutical market
Illustration 6: Pharma contract manufacturing

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Illustration 7: Cosmetics market
Illustration 8: Production of Pharmacuetical products

CONCLUSION:
This report concludes that business environment needs to be considered while developing
business in other countries. Boots belongs to pharma sector and is having its business operations
within UK. It is the leading health and beauty retailer in UK. They want to expand business in
Germany. Germany is a country that is having high growth rate and GDP. Its economic growth
is increasing every year. For this they need to analyse various factors. It is because change in
external factors will impact business to a great extent. Business environment generally means
internal and external factors in which a business operates. These factors plays crucial role in
business operations as it can either affect business in negative or positive way. The data and
statistics gathered and collected form various articles shows that Germany is having vast
opportunities in which Boots can grow and expand its business.
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REFERENCES:
Books and journals:
Botha, A., Kourie, D. and Snyman, R., 2014. Coping with continuous change in the business
environment: Knowledge management and knowledge management technology. Elsevier.
Bah, E.H. and Fang, L., 2015. Impact of the business environment on output and productivity in
Africa. Journal of Development Economics.114. pp.159-171.
Bartz, W. and Winkler, A., 2016. Flexible or fragile? The growth performance of small and
young businesses during the global financial crisis—Evidence from Germany. Journal of
Business Venturing. 31(2). pp.196-215.
Eling, M. and Schaper, P., 2017. Under pressure: how the business environment affects
productivity and efficiency of European life insurance companies. European Journal of
Operational Research.258(3). pp.1082-1094.
Hillary, R. ed., 2017. Small and medium-sized enterprises and the environment: business
imperatives. Routledge.
Ketata, I., Sofka, W. and Grimpe, C., 2015. The role of internal capabilities and firms'
environment for sustainable innovation: evidence for Germany. R&D Management.45(1).
pp.60-75.
Kew, J. and Stredwick, J., 2017. Business environment: managing in a strategic context. Kogan
Page Publishers.
Moroni, I., Arruda, A. and Araujo, K., 2015. The design and technological innovation: how to
understand the growth of startups companies in competitive business
environment. Procedia Manufacturing.3. pp.2199-2204.
Savrul, M., Incekara, A. and Sener, S., 2014. The potential of e-commerce for SMEs in a
globalizing business environment. Procedia-Social and Behavioral Sciences.150. pp.35-
45.
Schaltegger, S., Hansen, E.G. and Lüdeke-Freund, F., 2016. Business models for sustainability:
Origins, present research, and future avenues.
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Stahlhofer, N.J., Schmidkonz, C. and Kraft, P., 2018. Case Studies: Conscious Business in
Germany. In Conscious Business in Germany (pp. 69-115). Springer, Cham.
Virglerová, Z., Dobes, K. and Vojtovic, S., 2016. The perception of the state's influence on its
business environment in the SMEs from Czech Republic. Administratie si Management
Public. (26). p.78.
Online :
Boots, 2018. [Online] Available Through :
<http://www.Boots-uk.com/about-Boots-uk/company-information/>
Walgreens Boots Alliance, Inc. Porter Five Forces Analysis, 2018. [Online] Available Throug:
<http://fernfortuniversity.com/term-papers/porter5/analysis/3263-walgreens-Boots-alliance--
inc-.php>
Germany: economic and political outline, 2018. [Online] Available Through:
<https://en.portal.santandertrade.com/analyse-markets/germany/economic-political-outline>
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