BA30591E: Evaluating Terra.com Start-Up with Porter & PESTEL

This report provides a comprehensive analysis of Terra.com, a retail start-up in the UK, focusing on the internal and external factors influencing its business operations. It begins by outlining different types of business organizations, including sole trader, partnership, and company structures, justifying t...Read More

Project 2

TABLE OF CONTENTS
INTRODUCTION ..........................................................................................................................3
Types of business organisation ..................................................................................................3
Internal factors that may affect the start-up................................................................................4
Applying porter five forces framework ......................................................................................4
Applying PESTEL analysis........................................................................................................6
CONCLUSION................................................................................................................................9
REFERENCES..............................................................................................................................10

INTRODUCTION
Start-up business are firms or organizations that are focused on a single services or goods
that the owner of the company want to establish it into the market in order to satisfy the needs of
customers. The chosen industry is retail company named as Terra.com, situated in UK, providing
various products or services in order to satisfy the wants of customers. The company offers
varieties of products such as groceries, homeware, food items, electronics and clothing. A
management team of this company is going to plan and expand its business after completion of
its stores in UK and start online services too so that people can purchase goods via website.
The present report will be based on start up business that is sole trader. Furthermore, the
report will provide detailed information about external and internal factors that may affect the
business operations and activities in organization. With the help of porter five forces and
PESTEL analysis the report will evaluate various factors that may impact the company
performance at present or in the future.
Types of business organisation
Sole trader- A self-employed person who runs their own business and owns profits or
loss as an individual in order to provide various types of services or products to customers in the
market is known as sole trader (Ono, 2019). Advantage- people can start their own business or
start working right away, as they don't need to register their business, and they have full control
over it which is good. Drawback- person is responsible personally for any types of losses and
debts of the business such as office rent, cost of equipments and taxation.
partnership firm- when two or more person agrees to share the business profits and run
business together is known as partnership firm. Advantage- In this firm, partners can make
decision-making process faster and raise funds easily this is the major advantage. Drawback-
Here, each of the partner is liable for any kind of losses.
Company- when company is registered under companies act, it can be unlimited and
limited company, public or private and others. Advantages- All the risk is divided into several
members. Drawback- As compared to partnership firm, a company has lots of restrictions.
The business structure chosen in the report is sole trader because people can start working
their business operations, and they have full control over it which is beneficial for them to take
major decisions by their own.

Internal factors that may affect the start-up
In today's business environment, internal factors can impact the business operations both
negatively and positively. Human resources- it related to the people who work in the company to
achieve goals, hence it is said that the business performance is also influence by the quality of
the people who work for firm.
employees- staff members, workers, employees of the company can influence a business
operation through their ability to satisfy the needs of customers. They can also influence the
operations and activities through their individual or group performance and productivity level.
As we all know employees plays a vital role in the company as they are completing task or
projects provided by the firm (Internal factors, 2022). A poor performance employees can
influence negatively the performance of firm and affect the reputation as well. Due to this, sales,
revenue and profitability of the business also get impacted badly. So, while recruitment process,
Human resources of Terra.com needs to focus on hiring right people and provide them training
and development programs, as per their qualification and experience so that they can achieve
short and long term goals.
Leaders and managers- They can influence a business operation through various factors like
setting budgets, creating new policy, maintaining relationship with team-mates, decision-making
process and providing feedback to employees. An effective leader or managers can make
important decision which can improve productivity, increase profits and grow the business
operation. A poor decision-making process can impact the motivation level of staff members and
production of the firm. The leaders and managers are responsible to encourage their employees
to achieve goals or objective and work on areas of improvement which is beneficial for future
performance. They are responsible for creating policies with the help of human resources
management team, and set realistic goals.
Applying porter five forces framework
This method is established by Michael E porter in the year 1979, in order to evaluate the
competitive strength and business position of company in the market. With the help of this
theory, the company can determine the attractiveness and competitive intensity of business
industry. By applying this framework, a firm can identify where power lies in a situation of
business. Managers use this method to understand whether new services or product of start-up

are potentially profitable or not. Therefore, this can also be to find out the areas of improvement
and strengths and avoid mistakes in the future.
Source: (Irfan and et.al., 2019)
Competitive rivalry- This is the main driver for the company, due to heavy competition
in the market, managers needs to focus on market strategy used by other brands. Here, major
driver is capability and number of market competitors. Nowadays, many retail company offering
undifferentiated services or goods, it will decrease market attractiveness.
Supplier Power- The purchasing power of suppliers is totally based on the uniqueness of
their service and goods, it is basically depends on the demand of the product (Porter's five forces,
2022). This assessment is driven by the relative size and strength of the supplier and cost of
switching from one to another.
Buyer purchasing power- This assessment highlight about how easy it is for customers
or buyers to drive product price down. Basically, it is driven by the importance of each

individual person who buys products or services and number of purchaser in the competitive
market.
Threat of substitution- Nowadays, company is providing similar product or service to
customers, so it is said that close substitute goods exist in a market which needs to be taken into
consideration while making any important decisions (Lord and et.al., 2021). It increases the
chance of customers switching to other options available, so they it is said that it will decrease
the power of suppliers and market attractiveness.
Threat of new entry- due to heavy competition in the market and new entry, business
think twice before launching its market strategy and product or service. They believe that
profitable markets attract new entry, which increase more productivity and profitability (Kustipia
and Wulung, 2021). For example- due to this, many industry are forces to keep prices down and
spend more to retain customers. But it has put pressure on business related to costs or prices of
products. It is depended on distribution channels, government restrictions and brand awareness,
economies of scale and others.
Applying PESTEL analysis
PESTEL analysis is a method or business strategy used by company to find out the
external factors that can influence negatively or positively the operations of business. It is
designed for business expansions a growth and make major decisions based upon this analysis.
With the help of this framework, Terra.com can easily provide an overview of their weaknesses
and strengths and various factors can be determined to find out threat and opportunities.

Source: (Gechkova and Kaleeva, 2021)
Political factors- The rules, regulation and policies made by government can influence
the business growth and development. It includes trade policy, labour laws and taxation policy
which needs to be taken into consideration while making any important decisions (Pestle
analysis, 2022). Nowadays, government is supporting retail company for e-commerce which is
the biggest opportunity for Terra.com and trend such as online shopping, home deliveries and
smooth operations is also opportunity and threat for company. This has positively impacted the
activities and stability of company. They are encouraging businesses to use technology and e-
commerce or advanced innovation to use online platform for the convenience of customers.
Economic factors- These factors are totally related to the revenue of firm. It may include
interest rates, unemployment rates and more. With the help of this factor, company can collect
information about the customer's purchasing power and plan product price and other important
decisions. A little change in the economic factors can influence the business operations and its
functions. So, firm's managers needs to focus on these factors such as tax, cost of raw materials
before making any informed decisions. In developing countries, economic stability has growth
opportunities for Terra.com.

Social factors- nowadays, customer buying behaviour or purchasing power is also
depended on trend and market condition. As people are more attracted towards online shopping,
the company need to use this method effectively to attract more customer and gain this
opportunity.
Technological factors- Technological advancement plays a vital role in determining a
company's weaknesses and strengths. Innovation, technical support, automation and awareness
about technology are the important factors that help company to plan for future, it is suggested to
gain this opportunity (Thomas and et.al., 2021). For example- The company needs to hire more
people for technological advancement in order to improve a better customer experience and
encourage employees.
Environmental factors- people are more concerned about environment before
purchasing anything from market. By considering ecological factors, company can focus on
environment friendly services or products in order to attract more customers (Casañ, Alier and
Llorens, 2021). For example- plastic free packaging, using renewable energy, the firm could
implement extensive energy saving policies in its business operations because of increasing
popularity of low carbon lifestyles. By doing so, they will be able to maintain sustainability of
business and improve environmental impact.
Legal factors- The company needs to focus on changing import and export regulation
and can ensure about long term goals related to e-commerce through regulatory compliance.
Recommendations
 It is recommended to use effective marketing strategy and distribution channels in order
to promote brand image and attract more customers. It includes advertisement, direct
selling, online platform, social media, newspapers and focus on market campaign and
surveys to collect feedback. They need to focus on demand of customers, trend,
preferences and choices through market research and development method (Ekaterina,
2021). Firstly they need to set target market and classify audience according to
segmentation targeting and positioning strategy.

CONCLUSION
To conclude, by using Pestle analysis company is able to identify key issues or factors
that can critical impact on long term success. By evaluating the report, it has been recommended
that the firm should expand its business and its operation in emerging markets and developing
countries after establishing its stores in UK for attracting more customers they can easily use
promotional activities such as advertisement, social media, media print, newspaper and
campaigns.

REFERENCES
Books and Journals
Casañ, M. J., Alier, M. and Llorens, A., 2021. A Collaborative Learning Activity to Analyze the
Sustainability of an Innovation Using PESTLE. Sustainability. 13(16). p.8756.
Ekaterina, Z., 2021. Market research and market entry recommendations in UK, Poland, and
Germany for a FinTech company.
Gechkova, T. and Kaleeva, T., 2021. HARBOUR INFRASTRUCTURE PROTECTION–
PESTLE ANALYSIS. KNOWLEDGE-International Journal. 49(5). pp.961-967.
Irfan, M. and et.al., 2019. Competitive assessment of Indian wind power industry: A five forces
model. Journal of Renewable and Sustainable Energy. 11(6). p.063301.
Kustipia, R. and Wulung, S. R. P., 2021. Porter's Five Forces Analysis: Potential of Extreme
Night Culinary Tourism.
Lord, J. and et.al., 2021. Examination of nursing home financial distress via Porter’s five
competitive forces framework. Health Care Management Review. 46(3). pp.E50-E60.
Ono, T., 2019. Types of business organization of agricultural organized management entities:
according to labor indicator by using microdata from 2015 agricultural census. Journal of
Rural Economics. 90(4). pp.339-344.
Thomas, P. J. M. and et.al., 2021. A PESTLE analysis of solar home systems in refugee camps
in Rwanda. Renewable and Sustainable Energy Reviews. 143. p.110872.
Online
Pestle analysis. 2022. [Online]. Available through:
<https://www.professionalacademy.com/blogs/marketing-theories-pestel-analysis/>
Porter's five forces. 2022. [Online]. Available through:
<https://www.mindtools.com/pages/article/newTMC_08.htm>
Internal factors. 2022. [Online]. Available through:
<https://www.bbc.co.uk/bitesize/guides/zxq43k7/revision/2>