Danes Coffee UK Market Entry: A PESTLE Analysis Report (MRKT20057)

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Central Queensland University, Australia
Term – 2019
MRKT 20057 ASSIGNMENT 2
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Table of Contents
Executive summary.........................................................................................................................3
Introduction......................................................................................................................................4
Economic and financial environmental analysis.............................................................................5
Legal and Political environment Analysis.......................................................................................7
Social and cultural environmental analysis.....................................................................................9
Technological, environmental analysis...........................................................................................9
Conclusion and recommendations.................................................................................................11
References......................................................................................................................................12
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Executive summary
The assignment is constructed to provide deliverables regarding the marketing concepts
prevailed in the international market. With the help of this assignment, the marketing concepts
adopted by Danes Coffee are highlighted. With the help of the report, the market or the
environment of the UK is evaluated, and views regarding the same are presented. The report
likewise throws light on the external factors that can impact the production and proficiency of
the selected organization such as political, environmental and technological factors, etc. The
concerned report will help in resolving the major marketing related issues of the respective
organization.
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Introduction
Marketing is an essential component of the organization. In this era of digitalization and
competition, the organization is not able to grow if they do not adopt effective marketing
concepts. With the help of effective marketing practice, the managers of Danes Coffee are able
to extend the boundaries of its business to the international market. The assignment is developed
to highlight the marketing practices that are adopted by the managers of Danes Coffee. The
marketing practices of an organization depend upon the external and internal activities taking
place in the market. Danes coffee is a leading coffee distributing chain that is able to satisfy its
consumers. The information provided in the assignment will help the managers in evaluating the
external factors that can affect the global marketing practices of the respective firm. The external
factors that are identified with the help of the assignment will help in evaluating portraying the
environment of the UK and its impact on the organization based in the UK.
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Economic and financial environmental analysis
The coffee market of Danes Coffee in the UK market has created an impact in three different
ways as in the impact of the multiplier, indirect multiplier and in the form of distributive
channels. The inflation and economic growth of every organisation depend on its market share of
the company. The interest rate and furthermore employee retention rate is the essential elements
and aspects of the economic condition of Danes Coffee (Ai, 2013). It is analysed in 2008 that
most of the customers in the UK market are attracted by the Coffee products and there is a
sudden boom in the coffee market and such companies are enhancing their market share by
attracting more customer towards their services. The financial growth of the company depends
on the company overall performance and all such initials are depend on the employee
performance (Moya, 2019). Unemployment and some poor management may reduce the
customer retention rate of Danes Coffee, to reduce such challenges organisation have to develop
effective system and by providing proper learning and training programmes to employees may
lead to provide quality of services to the customer. This help in increasing profitability and
develop the financial feasibility of the company in the market. These are the main factors of
economic and financial growth of Danes coffee. Sometimes unemployment and reduce in
customer retention rate may lead to a negative impact on the company's performance (Reinecke,
et.al. 2012).
It is analysed that the retail prices of Coffee products in the UK are more costly as compared to
the prices of other countries. The country has earned and set effective coffee market from 2016,
which offers opportunities to Danes coffee to maximise its profitability and set sustainability for
a long period of time. Along with this Danes, coffee should develop some effective strategies
and technique that would help in engaging more customers in the market and to enhance market
growth (Ai, 2013).
Labour cost
It is analysed that labour cost in the county like the UK is higher as compare to past years. It is
analysed that labour cost in the country is continuously increasing in every quarterly period, and
from 2015 it is analysed that these are continuously increasing and there is no downfall in the
rate of labour cost. It can be a major challenge for Danes Coffee as higher the labour cost will
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reduce the profitability ratio of the company in the market. It is necessary to develop and
implement effective technique through which Danes Coffee can manage the manufacturing and
cost aspect in terms of labour.
Inflation rate
Inflation rate of UK is increasing as compared to the last three quarters of 2018, inflation rate
reduces from the ratio of 1.7 and which will lead to positive impact on the growth of Danes
Coffee, because high inflation rates leads to confine the production and sales of Coffee products
and which can be the best factor in maximising the profitability ratio. There are various products
of coffee companies and all these products are distributed among customers in the market with
the help of some distributive channels. Most of the products such as food and alcoholic
beverages can be offers directly to customers which can help in developing engagement of
customers in a more effective manner (Moya, 2019).
Employment rate
The employment rate is playing a vital role in every company, the overall performance of a
company depends on its employment rate. The higher employee turnover ratio leads to loss for
the company and develops a balance between employee retention rates. The main motive of
Danes company should develop more engagement of employee by providing proper training and
learning programmes. It is analyzed that employee rate of Danes Coffee in the UK has managed
better employee rate which helps in accessing the organisation to increase profitability and
enhance market growth (Reinecke, et.al. 2012).
Interest rate
The interest rate of the UK at present lies between 0.65 and 0.75 according to the Bank of
England. It is necessary for the concern of Danes company to analyse regularly about the interest
rate as such rates will directly create an impact on the financial and economic growth of the
company.
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Legal and Political environment Analysis
Political relationships
For successfully entering the market of the UK or other markets, it is important to have a
Political relationship between the countries. It provides various support to the organizations in
entering into a different market. Danes Coffee have to compact with such a situation in order to
enter their company in a new market. The healthy political relationship between Australia and
the UK would be beneficial for the organization. However, the organization still have the needs
of raw materials and manufacturing of coffee from the country which has a good relationship
with the UK. In order to maintain the reasonable price of the coffee, Danes Coffee can
manufacture coffee and source raw materials within the UK (Ai, 2013).
Political instability
The political condition of the UK is unstable as compared to Australia which might create a
problem for Danes Coffee. Trade laws do get changes because of the uncertainty of political
conditions (Lekakis, 2013). Danes Coffee have to follow these laws in order to save the company
from any legal issue in the future. It would be tough for the company to enter the market of the
UK because of the unstable political condition over there. The changes in trade laws have been
implemented by the government of the UK. It will be important for the company to adherence
these laws in order to remove the negative publicity (Mangena, Tauringna, & Chamisa 2012).
Wars, riots or cease-fire are the various political instability which can lead to the downfall of any
company in the market of UK. In order to avoid those political instabilities, it is important for the
Danes Coffee to enter their business in the market of less political instabilities. It is important for
the company that UK people remove the ban on the products of the company.
Regional Integration
Danes Coffee can expand their business in the global market with the help of regional
integration. Regional integration is the biggest opportunity for Danes Coffee in order to expand
its business in the international market. UK market has the tendency of providing qualifies
infrastructure and infrastructure improvement which would be beneficial for the company of
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Danes Coffee. With the help of Regional Integration, Danes coffee can attract the new customers
which will enhance the growth of the business.
Government standards.
Government has set a high standard for the manufacturing of coffee products in the UK. In order
to match these standards, an organization has to manufacture quality coffee products in the
country in order to attain adequate prominence. This will assess the company to operate its
business responsibly and ethically.
Fair trade laws
There is a huge rise in the trend of coffee in the UK, but in order to attain market dominance, it is
important for Danes Coffee to manufacture sustainable coffee products which consist of certified
coffee and fair trade of coffee (Carvalho, et. al., 2016). In order to expand their business in the
market of UK, it is important for Danes Coffee to follow fair trade laws which ensure a fair price
to the producers and also to the customer. Danes Coffee can produce different coffee products in
order to enhance their business in the market of UK. The company has to adhere to the new laws
of import-export in order to successfully import and export coffee products in the country (Ai,
2013).
Employment laws
The employment laws are in favour of the employee who is working in the organisation which
provides them equal treatment, fair pay discrimination based on sex, caste, colour, and region. It
is compulsory for every organisation to abide by all the rules of the UK government. Along with
this the law offers and recommended that employee should be provided safety measures at the
workplace and this will help in developing feeling among employees that they are part of an
organisation (Malik, et.al., 2013).
It can be analysed that all these factors will help in motivating the employees and beside such
laws, it is the duty of organisational manager to provide full support to employees and should
develop better coordination and communication and this will lead to result in higher profitability
and market share of company in the global market (Reinecke, et.al,. 2012).
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Social and cultural environmental analysis
Scrutinizing the social and cultural changes is essential for the growth prospects of the firm. The
perception of the consumers and their purchasing power has a lasting impression on the growth
and the policies adopted by the organization. Some of these factors in regards to Danes coffee
are as follows:
Awareness among consumers
The consumers of the UK are highly aware of their powers and the value they hold in the market.
Hence it becomes essential for the organizations to work in a more specific accurate and ethical
manner. This will not only help in enhancing the goodwill of the organization but will likewise
help the firm in enhancing its chain of consumers. Aside to this, the organizations that work for
the betterment of the environment and participate in all legal activities tend to attract the concern
of the consumers. Hence the managers of the respective firm should try to protect the
environment in order to attract consumers (Lekakis, 2013).
Coffee culture
Every country has its own specific coffee culture that is to be followed by the organizations in
order to attract the concerns of the consumers. With the help of various studies and researches, it
is identified that in the UK the individuals belong to different culture have their own coffee
habits. The organizations need to match these patterns in order to enhance their proficiency. The
coffee drinking habits of the individual's changes with the change in their culture. Some culture
prefers coffee while others prefer tea or other beverages. It is essential for the organization to
study the requirements of all the cultures before implementing their policies. It can likewise
impact the cost structure of the firms and the level of their proficiency (Mangena, Tauringna, &
Chamisa 2012).
Technological, environmental analysis
Technology is another significant element that plays a vital role in the growth and development
of an organization. With the advancement in technology, the requirements of the consumers are
also increasing. All the organizations are taking steps to the digital platform in order to gain a
competitive advantage (Ai, 2013).
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Alongside the tools and techniques used for the preparation of coffee are likewise changed with
the evolution of technology. The companies are trying to make use of latest and upgraded
roasting and brewing machine for preparing perfect coffee in their firm. Making use of effective
technology will help in enhancing the quality of the product and will also help in attracting the
concern of the consumers. These tools can likewise assist the managers of Danes Coffee in
introducing new and innovative types of coffees in the market. This will help the managers in
enhancing the sales of the organization. By using latest and technically upgraded models, the
organization is able to attract a number of consumers (Moya, 2019).
But the use of most advanced machines can likewise be seen as a costly affair for the
organization. Investing in highly advanced coffee machines is not possible for all organizations
(Lekakis, 2013). The managers of the firm have to evaluate the budget of the organization before
they try to buy the machines. Alongside nowadays the consumers prefer to purchase coffee
machines on their own and try to make their own coffee. In such an atmosphere the investment
of company can go waste, and it can impact the profitability of the organizations (Ho, 2014).
Aside to all of these issues the most powerful one is the trend of online shopping. With the
increasing trend of online shopping, offline outlets are losing their importance. Consumers
nowadays don't like to visit coffee outlets. In fact, they like to order their coffee to enjoy it at
their home or workplace. This factor can hit the profitability and potential of the firm in an
insignificant manner. Hence the respective firm should try to expand its boundaries to the online
market. They should try to provide the service of online orders to their consumers. This will help
the firm in enhancing its sales and sustainability in the market. The firm can likewise adopt the
strategy of providing the advantage of online payment to the consumers (Lekakis, 2013).
With the help of all of these factors, the organization will be able to enhance its sales and
sustainability. This will likewise assist the firm in enhancing its level of consumers and gaining
competitive advantage.
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Conclusion and recommendations
It is concluded from the above report that Danes coffees have developed its market share in an
effective manner. The report helped in deriving how economic and financial growth of the
company are playing an essential role. But for better improvements company should develop
some effective techniques and approaches to develop effective management which would help in
increasing the performance of the organisation. The company should analyse the sudden
environmental changes which would help in setting up pricing strategies and engage more
customer in the market in availing the services.
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References
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 Carvalho, J.M., Paiva, E.L. and Vieira, L.M., 2016. Quality attributes of a high
specification product: evidence from the speciality coffee business. British Food
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