Business Report: PESTEL Analysis of Chick-fil-A's Hong Kong Venture

This report provides a PESTEL analysis, examining the political, economic, and social factors influencing Chick-fil-A's potential business expansion into Hong Kong. It begins with an introduction to the PESTEL framework and a literature review discussing the importance of strategic marketing tools in understanding external market conditions. The analysis then delves into the specific factors relevant to Hong Kong, including political control by China, economic opportunities as a financial center, and the influence of Chinese heritage and British colonial laws on the social environment. The report offers recommendations based on these findings, such as leveraging social media for communication and building strategies that respect local cultural sensitivities. Finally, the report concludes that Chick-fil-A's expansion into Hong Kong is feasible, provided the company considers the political, economic, and social nuances of the region. A company review of Chick-fil-A and a list of references are also included.

PESTEL Analysis

TABLE OF CONTENTS
INTRODUCTION ..........................................................................................................................3
LITERATURE REVIEW ...............................................................................................................3
PESTEL ANALYSIS .....................................................................................................................4
RECOMMENDATIONS ................................................................................................................5
CONCLUSION ...............................................................................................................................6
COMPANY REVIEW.....................................................................................................................8
REFERENCES................................................................................................................................9
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INTRODUCTION
Business environment is made up of several factors like employee behaviour, government
policies and legislations, surrounding culture, economic status of the country, etc. When a
company heads to take certain crucial decisions, some analytical information is to be collected
regarding the subject. PESTEL analysis is one such strategic tool that helps in identifying and
understanding the factors which affect the external environment of business and its functioning.
Political, economical, social, technological, environmental and legal factors are the main
components of this analysis. In this report, PESTEL analysis is to be performed for Chick-fil-A
with regards to three components i.e. political, economical and social factors. On the basis of
findings acquired by this analysis, certain recommendations have been provided in the
assessment so that the business expansion strategy of this company can be supported with valid
information. Moreover, the concepts discussed in this report, shall help in extending knowledge
and skills regarding business expansion planning and decision making.
LITERATURE REVIEW
Strategy itself reflects that every action or reaction has to be according to recorded and
planned events (). Considering marketing process, there are certain crucial points which need to
be evaluated by the company so that failure of proposed technique or strategy is minimised.
PESTEL is one such strategic marketing tool which helps in deeply understanding the external
market and its multicomponent conditions. According to Grünig and Kühn (2015), marketing is
the basic process that rules almost every activity which is initiated by companies for developing
customer relationships. The research that is required in aiding the marketing process can be
conducted using PESTEL tool.
Government, society, culture, environment, science and technology and the legal
frameworks are certain factors which influence external business environment. Grünig and
Morschett (2017) stated that every situation must be judged from all possible perspectives. This
shall help in making correct and effective decisions. Politics or political component of this
analytical tool depicts the amount of government intervention which can influence business
decisions. There are policies on employment, taxes, trade regulations, business management and
expansion, etc. which are significant in decision making process (He, 2015).
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However, social factors helps in understanding the influence or effect which is
experienced by Chick-fil-A while functioning in a particular section of the society. The
population, taste preferences of general groups, ethics, cultural trends, popular media and the
considerations that affect people when purchasing products and services are considered as the
social factors of business environment. According to Kapogiannis, Gaterell and Oulasoglou
(2015), the comparison of products with audience preferences helps in estimating whether the
product or service shall be successful or not. Moreover, marketing process is worse affected by
the cultural and social preferences of potential customers.
On the other hand, considering the economical component of PESTEL, the growth and
development of organisation in financial terms is examined. Grünig and Kühn (2015) stated that
every business irrespective of their functional space should be encouraged so that negative
impact on country's economy is not experienced. The lack of job opportunities and deficiency in
income are two factors which bring in recession and inflation. Economical factors include
interest rates, exchange rates, inflation, etc. and their impact on actions and strategies of Chick-
fil-A. It is important to conduct PESTEL analysis so that proper understanding regarding the
external business environment and its consequences on the performance of company can be
assessed (Neves, 2014).
PESTEL ANALYSIS
Hong Kong is a special administrative region in China. Considered as one of the greatest
tourist attraction points in the Chinese province, Hong Kong is one of the most feasible centres
for planning business expansion. The PESTEL analysis on Chick-fil-A with regards to three
significant components is given as follows:
Political: Hong Kong is controlled by People's Republic of China that looks after the
defence and foreign affairs of the country. All the trade related matters and subjects are
completely under control of this governance. Legislative Council (LegCo) is the main parliament
in Hong Kong. It is important for Chick-fil-A to know that the members of LegCo serve for four
years while an executive of Hong Kong Special Administrative Region is elected for
consecutively five years (Economic and Trade Information on Hong Kong, 2017). This implies
that any sort of changes in the administrative functioning and basic political structure of this
territory can impact the business adversely. Chick-fil-A must also prepare its strategies according
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to the current campaigns and reform bills which have been formulated by the region's
government.
Economical: The territorial area is quite small when considering Hong Kong with other
countries. But it is considered as the financial centre for the conduit of goods and capitals in and
out of China. Major industrial sectors and enterprises of the country provide a huge contribution
of 59% to Hong Kong's Gross Domestic Product. This implies Chick-fil-A has great economical
opportunities and feasibility when developing a business in this territory. Current economic
growth of this region is reduced to 1-2% in 2016 while before 2015, it was about 4.5%. The
availability of cheap labour and abetting fiscal policy ensures that growth of the company is
possible up-to a great extent (Overseas Business Risk - Hong Kong, 2016).
Social: The culture and society of Hong Kong is extremely influenced by Chinese
heritage and British colonial laws. The people and population of this autonomous territory is
completely different from mainland China. This diversity and good amount of inclination
towards British culture and beliefs can be a feasible opportunity for Chick-fil-A to develop their
business in Hong Kong. It is important for the company to develop strategies in such a way that
there is no harm or abuse caused to the cultural, social and religious beliefs of people (Economic
and Trade Information on Hong Kong, 2017). Marketing strategies can be influenced from
Chinese culture and Buddhism depending on the product or service which is to be marketed.
From the above findings, it can be inferred that while planning a business expansion in
Hong Kong, Chick-fil-A should evaluate the business opportunities carefully. The presence of
large number of competitors in foreign markets is a threatening situation. In order to safeguard
the company from loosing resources, it is important to perform an internal and external analysis
of business environment.
RECOMMENDATIONS
In the above discussions, it was described that PESTEL is an important tool in
developing strategies which are aiding businesses. The use of PESTEL in understanding external
business environment can be efficiently done when organisation is aware about the critical
functioning in targeted country or market (Shabanova and et. al., 2015). Hong Kong is one of the
key shopping destinations for people around the world. Most of the market share is in hands of
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local businessmen and commercial clients. This implies that strategic planning and marketing
processes have to be initiated for developing in Hong Kong markets.
Cultural background and the influence of British beliefs is dominant amongst people of
Hong Kong. They have a centralised belief that they are different and unique from the mainland
Chinese population. Chick-fil-A can use this attribute of the Hong Kong society and culture and
develop strategies in an effective way. Moreover, it is recommended for the company to use
social media as the basic platform for getting connected with foreign audience (Sargeant and Jay,
2014). This shall help in bridging the communication gap and also develop better connection
even before the launch.
Despite of different precautionary measures being taken by Chick-fil-A, there is a
possibility that certain type of miscommunication in terms of culture and heritage can take place
(Neves, 2014). This implies that local people and the domestic businesses that have been
operating since a long time shall take advantage and hinder organisation's progress. Hence, it is
important to build up strategies in such a way that criticism acquired as a response of the
audience can be used for further development. This implies constructive criticism. It gives
organisation more of publicity and people get to know about products and services differently
(Kapogiannis, Gaterell and Oulasoglou, 2015).
Taxes and economic welfare are some of the major concerns when company is planning
foreign expansion. It means that a new starting has to be made in entirely alien land with mere
experiences. Hence, such a crucial decision is significantly influenced if sudden disturbances are
caused in the economic situation of the territory (Shabanova and et. al., 2015). It is
recommended for Chick-fil-A to take help of a financial analyst and gather funds which can be
used in case of emergency or when monetary help is needed.
CONCLUSION
Through this report, it is understood that PESTEL analysis can enlighten various facts
and subjects which can hinder business functioning when developing in foreign markets. The
different aspects of using PESTEL tool have been discussed in this report. An analytical research
is also provided for the company Chick-fil-A regarding the external business environment in
terms of political, social and economical factors influencing business decisions and strategies.
Moreover, it is inferred that the viability or feasibility of planning a business expansion in Hong
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Kong for Chick-fil-A is favourable. This signifies that the company can establish a new
restaurant in this Chinese territory with certain precautionary steps being taken in terms of
politics and legislature.
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COMPANY REVIEW
Chick-fil-A is a renowned American fast food company that operates in different parts of
the continent in the form of restaurants. The company headquarters are situated in Atlanta and
was founded in 1946. Currently about 2000 restaurants have been established solely in USA.
This depicts the quality of food products that are produced by the company is meeting customer
demands and reaching the standard satisfaction levels. The average sales per restaurant has
reached up-to $2.7 million US dollars. This implies that current economical conditions of this
company are well above the minimum levels. The organisation promotes its products and
services with a slogan of “Eat Mor Chikin”.
The most famous products of this company include chicken sandwich which is
considered as the speciality of Chick-fil-A. This organisation has maintained the authenticity
and taste but also welcomed technological advancements with at-most grace. Hence, customers
have become brand loyal to this firm.
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REFERENCES
Books and Journals
Grünig, R. and Kühn, R., 2015. Global Environmental Analysis. In The Strategy Planning
Process (pp. 89-96). Springer Berlin Heidelberg.
Grünig, R. and Kühn, R., 2015. Strategy Planning Process. In The Strategy Planning
Process (pp. 41-52). Springer Berlin Heidelberg.
Grünig, R. and Morschett, D., 2017. Determining the Target Markets. In Developing
International Strategies (pp. 85-104). Springer Berlin Heidelberg.
He, Z., 2015, August. External Environment Analysis of Commercial-use drones. In 2015-1st
International Symposium on Social Science. Atlantis Press.
Kapogiannis, G., Gaterell, M. and Oulasoglou, E., 2015. Identifying uncertainties toward
sustainable projects. Procedia Engineering. 118. pp.1077-1085.
Neves, M. F., 2014. The future of food business: the facts, the impacts and the acts. World
Scientific.
Sargeant, A. and Jay, E., 2014. Fundraising management: analysis, planning and practice.
Routledge.
Shabanova, L. B. and et. al., 2015. PEST-Analysis and SWOT-Analysis as the most important
tools to strengthen the competitive advantages of commercial enterprises. Mediterranean
Journal of Social Sciences. 6(3). p.705.
Online
Economic and Trade Information on Hong Kong. 2017. [Online]. Available
Through:<http://hong-kong-economy-research.hktdc.com/business-news/article/Market-
Environment/Economic-and-Trade-Information-on-Hong-Kong/etihk/en/
1/1X000000/1X09OVUL.htm>. [Accessed on 27th March, 2017].
Overseas Business Risk - Hong Kong. 2016. [Online]. Available
Through:<https://www.gov.uk/government/publications/overseas-business-risk-hong-
kong/overseas-business-risk-hong-kong>. [Accessed on 27th March, 2017].
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