LCCB4005 Global Business Environment: Industry Environmental Analysis

This report examines the global business environment, focusing on the impact of the pandemic and key forces shaping the fashion industry. It employs Porter's Five Forces and PESTEL analysis to evaluate internal and external factors, opportunities, and challenges. The report highlights how the pandemic has affected the industry, including supply chain disruptions and shifts in consumer behavior. It also assesses how certain businesses adapted more effectively by innovating product lines, strengthening supplier relationships, and capitalizing on new opportunities like fashionable face masks. The analysis concludes that while the pandemic presented significant challenges, it also created opportunities for businesses to re-evaluate strategies and enhance their resilience.

The Global Business
Environment

Table of Contents
Introduction......................................................................................................................................1
Main Body.......................................................................................................................................1
Impact of the pandemic and also the main forces that have shaped the business environment.
................................................................................................................................................1
Evaluate the opportunities and challenges these forces have presented also how several
business have adapted better than other during this changing business environment............4
Conclusion.......................................................................................................................................5
References........................................................................................................................................7

Introduction
The global business environment is defined as the various task or activities of a business
influenced or affected by the global forces, these forces can be technological forces, global
competition or political and legal forces. These forces directly influence the functioning and
decision making of the business. Global business can help in enhancing the market size and
customer base, but there are various forces at global level that needs to be considered by the
business. This report includes various forces shaping the global business environment also the
international environment is analysed using various business models. In addition to this the
impact of the pandemic also the various forces that have shaped the business environment is also
highlighted. Furthermore the various opportunities and challenges that these forces have offered
in changing the business environment is also highlighted in this report.
Main Body
Impact of the pandemic and also the main forces that have shaped the business environment.
Business environment is defined as the process of combination of all the internal and the
external factors which directly influence the functioning of the business. For this report the
fashion industry has been taken as the base, these various has played an essential role in shaping
the business environment of the fashion industry (Bloom, 2017). But the current pandemic has
greatly influence the life of each individual so it will be difficult to say that business industries
are not affected by this pandemic, even the fashion industry has been impacted by this pandemic
as the government has shut down many manufacturing units also the international trade was
closed during this pandemic this has largely impacted the productivity and profitability of the
fashion industry, the impact of this pandemic was that in order to maintain the social distancing
the events were cancelled with the major revenue source for a fashion industry. The major forces
that have shaped the business environment of fashion industry are discussed below:
The internal forces: The internal forces are includes all the factors present inside the
industry has direct influence on the functioning of the business, in order to understand the
internal forces that have shaped the business environment of the fashion industry the Porter’s
five force model is taken into consideration (Charter, 2017).
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Porters five force model: It is an essential tool used by the marketer in order to analyse
the level of competition available in the market, and how business can enhance their profit
(Cherunilam, 2020). This analysis mainly includes five forces which are discussed below:
Level of competition: in case of this force if the level of competition is high in the
industry than the power company holds will be much lower. In case of fashion industry the
number of competitors is relatively high but also there is high demand for the brand which
allows some companies to gain competition advantage.
Threat of new entrants: This force defines that the entry of any new firm with new
innovation and ideas can reduce the power that already existing firms hold. In case of fashion
industry the entry of new firms is somewhat difficult; it’s high risk and high rewards situation for
the new entrants in the fashion industry for the new entrants.
Bargaining power of buyers: when the numbers of buyers are less in the market or the
potential buyers are present then their bargaining power will be higher and vice versa. In case of
fashion industry the bargaining power that the buyers holds is relatively high as there are
numbers of competitors and options available for the buyers.
Bargaining power of suppliers: If the number of suppliers is less in the market then they
will have more bargaining power in the market, in case of fashion industry the suppliers have
relatively low control over the fashion industry, and they have less bargaining power.
Threat of substitute: This force of porter’s five force model defines that if there are
similar products and services as of the company’s product and services then the power of the
power will be less in such case. In terms of fashion industry the availability of substitute
products is almost unavailable. The power industry holds will be higher.
From the above discussion it can be concluded that the internal forces has directly
influenced in shaping the fashion industry, it has helped them in analysing the level of
competition available in the market also the power buyers and suppliers hold in the market. But
the current pandemic has impacted the internal forces as well it has reduced the number of new
entrants into the market also it has impacted the profitability of the business (Hillary, 2017).
External forces: It is defined as all the external factors available in the environment that
directly influence the functioning of the business. In order to analyse the how external forces
shaped the business environment of the fashion industry the PESTEL analysis is taken into
consideration.
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PESTEL analysis: It is defined as the framework used by the marketer in order to
analyse the macro environment influencing the functioning of the business (Katz and Green,
2018). It stands for political, economical, social, technological, environmental and legal which is
discussed below:
Political factors: The political factors includes the government policies and rules that are
needed to be followed by each, political stability of the country creates favourable environment
for the industry but if there is political instability it create unfavourable environment for the
fashion industry to operate effectively.
Economical factors: The economical factors includes the fluctuation in demand and
supply also the taxation policy, income rate and level of consumers spending of a country. The
economic growth leads to the profitability and growth if a business and industry in a country,
they directly influence the business environment of a industry.
Social factors: The social environment includes the socio culture or consumer behaviour
a country, the culture prevailing in a country directly influence the business environment of a
industry, in case of fashion industry this factor plays a major role as when it comes to clothing
each has their own culture, if the fashion is not according to the culture needs then it will hugely
impact the company.
Technological factors: The technological factors are the adoption of new technology in
order to satisfy the customers, having the advance technology will benefit the industry to attract
the large number of customers and enhance their productivity.
Environmental factors: The another external factor is environmental factors, these
factors are define as the corporate responsibility towards creating sustainable environment,
business working towards this factors will be benefited effectively and vice versa.
Legal factors: This factor includes the laws, rules and legislation of a country that’s
needed to be followed by each and every individual, strict legal law can create barriers for the
fashion industry and effect their demand in the market.
From the above discussion it can be concluded that the external factors has great
influence in shaping the business industry, any change in these external factors will directly
influence the functioning and profitability of the fashion industry (Kerzner, 2018).
Impact of the pandemic
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The starting year of this global pandemic has created a reduction in the demand in the
industry also equally effected all the each level’s of supply chain in the fashion industry. Due to
this pandemic many businesses had to stop their operations, many global fashion industries had
been suffered a lot and lastly has to close down due to the government closing the manufacturing
operations. In addition to this many fashion events were cancelled in order to follow the
guidelines of social distancing, the industries were facing the problem of consumers demand
effectively. The internal and external business forces were also affected during the pandemic as
the entry of new entrants were closed, the level of competition were reduced, the pandemic has
forced individual to remain at home which has affected their business, they were forced to shut
down their business due to loss they faced, this pandemic has effected them emotionally,
financially and mentally (Kirton and Trebilcock, 2017). The profitability and productivity of the
business was hugely impacted.
Evaluate the opportunities and challenges these forces have presented also how several business
have adapted better than other during this changing business environment.
The various opportunities and challenges these forces have presented for the fashion
industry is discussed below:
Opportunities
 The main opportunity that these forces have presented for the fashion industry is that the
economic growth of the country will create huge demand for the fashion industry.
 The another opportunity is that advancement in the technology will help in attracting
more customers for the industry.
 Also the low threat of new entrant will enhance the power of existing firms in the
fashion industry.
 The digital store fronts will create huge demand of fashion industry among the customers
as due to the current pandemic it will allow customers to do the shopping using digital
platforms while effectively maintaining social distancing (Kohnova and Papula, 2017).
Challenges
 The major challenges faced by fashion industry presented by these forces are the
increasing number of competition in the industry.
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 Another challenges presented by the forces for the fashion industry can be the
unstable political environment and strict legal laws which can create unfavourable
environment for the industry.
 The threats of new entrants will new innovative idea can create challenge for the
fashion industry.
 The another challenge created by the forces for the fashion industry is the changing
taste and preferences of the customers and the change in the trends in the industry
(Madsen, 2020).
During the pandemic when some business were severally effected or mostly had to be shut
down due to high loss and facing challenges and were struggling to endure while some business
have found the way to flourish more effectively, these business have adopted better than the
other during this changing business environment. In order to survive and grow during this
difficult time these business has completely simplified and developed innovative lines of product
and services in the market. As the pandemic has showed the value of relationship between the
business and its suppliers as well the customers (Nayak and Mohanty, 2017). The current
pandemic has allowed many business to adapt themselves better than the other by coming with
new innovative ideas that can be offered to the customers in order to enhance their productivity
and profitability. It has provided enough time for the business firms especially fashion industry
to slow down and reconsider their strategies and policies. Many fashion industry has effectively
utilised this opportunities and offered themselves as the brands moving towards manufacturing
fashionable corona virus face mask. The demand for the mask during this pandemic, so some
brands has effectively utilised this opportunity which lead them to enhance their productivity and
profitability also helped them to maintain their brand image during the pandemic (Rönnberg,
2017).
Conclusion
From the above report it can be concluded that the global business helps in enhancing the
market size and the customers base, but there are numbers of forces available at the international
level that directly influence the functioning and working of the business at the global level. It is
also analysed that the current impact of the pandemic has directly affected the business
environment at the global level the pandemic has affected the profitability and productivity of the
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business and forced them to shut down their business, the current pandemic has created many
challenges for some business as well as created opportunities for some other business. This
report helps to understand how various forces have shaped the business environment during the
pandemic and also the various challenges and opportunities that they created for the fashion
industry during this pandemic. In addition to this report also discuss about how some firms have
been able to adapt better than other in this changing business environment.
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References
Books and Journals
Bloom, P., 2017. The ethics of neoliberalism: The business of making capitalism moral. Taylor
& Francis.
Charter, M. ed., 2017. Greener marketing: A responsible approach to business. Routledge.
Cherunilam, F., 2020. International business. PHI Learning Pvt. Ltd..
Hillary, R. ed., 2017. Small and medium-sized enterprises and the environment: business
imperatives. Routledge.
Katz, J.A. and Green, R.P., 2018. Entrepreneurial small business. McGraw-Hill Education,.
Kerzner, H., 2018. Project management best practices: Achieving global excellence. John Wiley
& Sons.
Kirton, J.J. and Trebilcock, M.J., 2017. Hard choices, soft law: Voluntary standards in global
trade, environment and social governance. Routledge.
Kohnova, L. and Papula, J., 2017. Key differences in perceiving innovation between businesses
that see the strategic importance of innovation and those that only claim to be
innovative. Global Journal of Business, Economics and Management: Current
Issues, 7(2), pp.216-224.
Madsen, H.L., 2020. Business model innovation and the global ecosystem for sustainable
development. Journal of Cleaner Production, 247, p.119102.
Nayak, S. and Mohanty, V., 2017. Green HRM for business sustainability. Indian Journal of
Scientific Research, pp.102-106.
Rönnberg, L., 2017. From national policy-making to global edu-business: Swedish edu-preneurs
on the move. Journal of Education Policy, 32(2), pp.234-249.
Usunier, J.C., 2018. Intercultural business negotiations: Deal-making or relationship building.
Routledge.
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