Impact of External and Internal Factors on River Island's Business

This report provides a comprehensive analysis of River Island's business environment, focusing on the external and internal factors impacting its operations and decision-making processes. It begins with an introduction to the business environment, followed by an in-depth PESTLE analysis to identify political, economic, social, technological, environmental, and legal factors affecting the company. The report then employs a SWOT analysis to evaluate River Island's strengths, weaknesses, opportunities, and threats. The interrelationship between these external and internal factors is then explored, illustrating their combined influence on the company's strategic decision-making. The report concludes by summarizing the key findings and implications for River Island's future success within the fashion retail industry.

BUSINESS AND BUSINESS
ENVIRONMENT

Table of Contents
INTRODUCTION...........................................................................................................................2
MAIN BODY..................................................................................................................................2
External analysis..........................................................................................................................2
SWOT analysis in context of company........................................................................................5
Impact of external and internal factors on decision making procedure.......................................5
CONCLUSION................................................................................................................................5
REFERENCES................................................................................................................................6

INTRODUCTION
Business environment indicates collection sum of all companies, people, businesses and
other forces that are outside power of specific industry. It describe as combination of some
internal or external factors that may be influence business sales and operations management. It
permits for progress of organizations and also their downfall. The current study is based on River
Island which is located in London founded by Bernard Lewis in 1948. This report will explain
external factors identify by using PESTLE analysis that impact on business and it also justify
internal forces determine via SWOT analysis. Furthermore, this assignment will clarify
interrelationship between both forces and its influence on decision making process.
MAIN BODY
External analysis
PESTLE analysis is one of the best tools utilized in context of businesses, it is used to
analyze & measure external factors impact on operations and companies functions. It aids an
company determine external forces that could affects market and analyze how they could directly
influence sales.
Political factor-
These are all as regards how and to what extent a government intervenes in economy. It
includes trade restrictions, tax policy, trade restrictions, foreign trade policy and political
instability or stability. It is clear from all these elements that political factors have an affects on
firms and how they manage businesses. Here, it is used for River Island to identify factor which
impact on its success. Brexit and geopolitical instability increase pervasive sense of uncertainty
in worldwide economy (Garcia-Torres, Rey-Garcia and Albareda-Vivo, 2017). It put negative
impact on fashion industry and River Island as well it decrease its sales rather than before and
make restrictions for purchasing as well as selling products from outside of UK. It may be reduce
operational efficiencies and decrease production efficiency which in return affects brand image
within marketplace. Brexit is the main factor which affects a lot more than the other one.
Economic factor-

It has significant influenced on how a firm does business & also how beneficial they are.
It includes interest rates, inflation, economic growth, exchange rates and disposable income of
customers. These forces can be broken down into macro environmental components; it deals
with management of demand in any economy. In context of River Island, currency change is one
of the economic factors that put negative impact on sales of company (Ceccagno, 2017). It can
be said that rapid currency change influence organization where sterling pound is strong tourists
and visitors visiting United Kingdom will shop less because it will be more costly for them to
purchase apparel and other products. Currency exchange is the biggest issue faced by River
Island that directly affects sales and profitability rather than before. Firm had to take effective
action to retain their existing consumers with them.
Social factor-
It had an essential role in growth of fashion retail sector; these forces include age
distribution, career attitudes, population growth and lifestyle changes (Ratcliffe, 2017).
Consumer lifestyle change is one of the social factors that directly impact on productivity and
sales River Island negatively. People prefer to wear clothes according to their lifestyles sudden
changes put negative impact and high pressure on River Island Company to design their clothes
according to current market trend that is beneficial for business growth as well as success.
According to this modification management put extra efforts to meet the needs of their
consumers which is not easy to do but important in term of organization progress more than its
competitors operating within same sector since for so long. Lifestyle change also influences
buying behavior of buyers and they take decision accordingly.
Technology factor-
Advancement of technology impact management and marketing practices thereof in three
different ways such as new way of manufacturing products, distributing things and
communicating with target markets (Dissanayake, 2019). With digital technology River Island
can enhance their marketing procedure in better way, it increase their operational efficiency more
than before and permit them to reach at target consumers. For example, by using digital
marketing tools or channels company can promote their brand all around the world and spread
info about their products which is quite beneficial in term of maximizing consumer’s base and

generate brand awareness. River Island do majority of its sells online when they adopt advanced
technologies it strengthen its marketing and online selling process rather than its competitors. It
allow online shopper to purchase products offered by firm, so it can be said that this factor
affects positively.
Environmental factor-
In recent time, government and consumers is more concern about environmental safety
and sustainability they work really very hard to protect atmosphere from air, land and water
pollution. Local and national authority put high pressure on fashion sector to reduce their carbon
footprint which makes River Island able to sustain for longer period in industry (Brenot and
et.al., 2019). Many clothes are made from cotton but it picked then shipped all over to be sewn as
denim. Chemical easily make their way into cotton material meaning those jeans people are
wearing could be soaked in dangerous compounds. It increases water pollution that is very
harmful for environment and impact on brand image negatively. When people wash their denim
jeans and rinse water throughout water wholes at home it goes directly to tanks and then mix into
river. It pollutes water and makes it harmful for animals that live in water.
Legal factor-
It includes equal opportunities, customer’s rights & laws, health and safety regulations,
advertising standards and product safety. Without focusing on all the legal factors River Island is
unable to sustain for longer within fashion industry, it may be decrease its sales, profit margin
and productivity level more than its competitors (Lee, Seifert and Cherrier, 2017). Not working
in compliance with law can bring company in a lot of distress as workers and consumers can
bring forth a law suit against them when terms and conditions have not been met. Consumer’s
protection act is the legal factor that impacts on River Island in positive manner because
company is already comply with it and follow all the principles. They provide services according
to buyers needs and offer quality products to them. Management gives importance to client’s
values and understands their needs which are quite beneficial for business success.
Internal analysis in context of company
SWOT analysis is one of the best framework or techniques used to define and determine
the strengths, weaknesses, chances and threats of a company. In simple word, it considered as

strategic planning tool utilized to aid a business or firm identify strength, loopholes and threats
related to project planning and business competition. Here, it is used in context of River Island
which operates their business in London.
Strengths-
With more than 60 years of fashion retailing experience, River Island is one of the most
popular and famous brands on high street. Within organization management renowned their
stylish and affordable fashion for consumers. Unique touches workers bring to their collections
aid them to standout from rest of high street.
 Innovation shows company strength it gives them a competitive power over other
manufacturers such as Zara, Topshop and H&M. Being such as creative retailer, gives
company a opportunity to differentiate their self (Iqbal, 2019). They utilize different
innovative approaches such as famous designer to design range of collection for
consumers.
 Along with this strength, River Island collaborates with their bloggers which is another
strength of this company. Bloggers introduce new clients for firm and they reflect in
varied way than what outlet does.
 River Island generates brand awareness among target market by creating their websites
where management updates all the information relate to its products or services with
better description. It create majority of company selling, therefore websites is one of
strengths that strengthen brand image.
 Pricing structure of this firm enables consumers to purchase apparel from River Island
outlets. Organization is devoted to offering their buyers with highest quality products and
at affordable prices.
Weaknesses-
River Island aim to bring original and new fashion to consumers, with great design at
heart of everything they create. Almost all of their items are created in house and as firm have
one of the biggest design team on high street.

 After all these things still company has some weakness that affects its business practice
negatively.
 River Islands largest weakness is their lack of role model, they do not use famous face for
its consumers to recognize brand within market (Liu and et.al., 2019).
 It impact on sales and customers base negatively as it decrease operational efficiency.
They deal with many issues due to lack of role model.
 Organization has a lot of products in outlets sometimes so much that it cannot overwhelm
for consumers. When people visit in stores of firm a lot of items make them confuse and
they are unable to choose the best one for themselves as well as family members. Without
taking appropriate action company was not able to sell goods in effective manner.
 Lack of business expansion make River Island brand productivity worst than its
competitors. Firm is well known in United Kingdom but not as much in rest of whole
world, they do not have any outlets in US which is a biggest loss for business.
Opportunities-
With more over than 350 outlets across UK, River Island operate their business in
effective manner, but some activities affects its business growth negatively without gaining
market opportunities company is unable to retain consumers.
 Brand expansion is one of the best opportunities for company which they can use to gain
competitive advantages and become a global leader within fashion industry. By
establishing their business into new market place River Island increase sales and
profitability more than past few years (Leducq and Scarwell, 2018). It allows them to
gain the attention of new consumers towards purchasing products along with existing
one. Currently they has outlets in Poland, Ireland, UK, Georgia and Belgium, when they
open new store in America it give company a change to become leader in marketplace.
 Organization has many global chances to expand and open up more outlets for example
they can create a plan on opening in Australia along with America after launching an
online site for down under.
 Furthermore, along with the above opportunity River Island could begin up a store points
card which can be different from what its business rivals do, it could be a card consumers
scan when they make a purchase and get points. It could be same to M&S rewards card.

Threats-
It can be said that competitive rivalry among existing players within specific sector create
intensive competition environment that directly affects sales and profit margin.
 High competition within fashion sector between existing companies is a big threat for
River Island as it put pressure on company to enhance their business practices and
performance level more than past few years. It considered as one of the biggest threats in
context of organization (Macchion and et.al., 2017). It is big threat to company and other
retailers, cheaper manufacturers such as Boohoo and misguided sell similar fashion as
firm but at a much cheaper price as they are online retailers so can threaten organization
sales.
 Another threat to River Island is demand of quick and rapid turnover, organizations such
as H&M have a very quick turnover so it can be threaten and put high demand on
company.
 Along with above threats, organization business also gets affected due to some external
change. For example, alternation in policies relate to environment that retailer works in
can have a terrible effect on company as changes in tax policies could modify way firm
does business and hit profitability that are made.
After conducting above external and internal analysis it can be said that all the factors are
interrelated with each other. For example, changes in tax policies impact River Island business
activities negatively, it define as threat to company. It examines that technology advancement
give organization a change to expand their business within new market place. By using digital
marketing tools company is able to spread common info about itself and generate their brand
awareness in systematic manner.
Impact of external and internal factors on decision making procedure
River Island is a high street fashion Brand in London which operates in number of
international markets. It is a private firm owned by Lewis family and manages their business in
effective manner. It has fast become designer and creative brand of high street with outlets in
over than 18 nations. There are some macro and micro environmental factors accessible in
marketplace or fashion industry which affects sales, productivity and profit margin of company.

It also impact decision making process of management as they had to focus on negative affect
and take appropriate action regarding all above them.
Changes in taxation policies put high pressure on River Island management to manage
their business practices in systematic manner. Manager had to take effective decision they
conduct board meeting and decided to pay tax according to change which may be impact
positively as it allow firm to sell their products across nation and buy raw materials from
different market effectively after paying taxes.
Currency change is an economic factor that also impact on decision making activity of
River Island business owner and administration. They had to consider this factor on serious note
because it highly impact on productivity and revenue of company. Management takes decision to
change their pricing structure according to the situation and manufacture products according to
clients needs that help people to retain with buying apparel offer by company.
There are some internal factors available that also put impact on decision of company and
production process of River Island. From example, company had some weaknesses which cater
other retailer chance to become global leaders. Management feels more pressure and then takes
decision to overcome all weaknesses by taking right action at right time. They make plan to
promote products in market by inviting celebrities as role model it help to gain the attention of
new people and retain the current one for longer period of time. They can increase their selling
and profit with a famous or popular face out for people to associate & recognize brand within
Fashion industry.
Lack of business expansion is weakness, it force management of this organization to
expand their business within well developed and profitable market. By possibility expanding to
America and Australia they can increase their selling more than other retailer and strengthen
brand image.
In order to gain competitive advantages all above decision taken by River Island are
playing vital role and cater many benefits. As it help to improve business performance and
production procedure.

CONCLUSION
From above analysis it has been concluded that River Island is one of the most famous
high street fashion and clothing brand in UK. They satisfy consumers and fulfill their needs by
offering products with better quality. Furthermore, it has been summarized that after analyzing
external and internal business Environment Company take effective judgment, they work with
skilled applicants who are able to create plan and strategies to overcome and eliminate negative
impact in systematic manner.

REFERENCES
Book and Journals
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and Fashion (pp. 95-113). Woodhead Publishing.
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Industry?. In Fashion Industry. IntechOpen.
Garcia-Torres, S., Rey-Garcia, M. and Albareda-Vivo, L., 2017. Effective disclosure in the fast-
fashion industry: from sustainability reporting to action. Sustainability. 9(12). p.2256.
Iqbal, F., 2019. A human fashion brand model to define critical symbiotic relationships for
celebrity fashion emulation (Doctoral dissertation, The University of Salford).
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Ratcliffe, A., 2017. Are Mature Female Consumers Well Served by the Fashion Retail Sector?.