As a business analyst for Norbrook Laboratories an examination of the current environmental factors that have an impact on the organisation has been requested. A PESTLE analysis will be used to identify and discuss a range of macro environmental factors and drawing attention to the positive and negative impacts. A SWOT analysis will be applied to Norbrook. The word SWOT stands for Strengths, Weaknesses, Opportunities and Threats. This report will also show the impact a SWOT analysis has on the decision making.
A macro environment is a serious external factor that cannot be controlled, can affect business strategies and performance. The decision making of companies can also be persuaded. “The macro environment was always changing and causing us to implement new strategies to keep our business afloat and alive.” (http://www.businessdictionary.com/definition/macro-environment.html). The PESTLE analysis is a structure used to look at a business's external macro environment. The letters of the word PESTLE stand for Political, Economic, Social, Technological, Legal and Environmental.
Positive factors that can affect organisations are setting corporation tax rates, and legislations. A positive Political factor is there may be a legislation to recycle electronic goods when they are no longer of any use or have reached the end of their life. “There are government initiatives to promote more recycling. These initiatives are sometimes backed by legislation.” (http://businesscasestudies.co.uk/jessops/responding-to-changes-in-the-market-environment/political-factors.html#axzz4QHByiVyQ). A negative Political factor for small businesses in America is president Obama wants to raise the tax for small businesses. “The president has proposed changing the federal tax laws so more of the profits earned by small businesses become subject to SE taxes.” (https://www.americanexpress.com/us/small-business/openforum/articles/why-obamas-budget-proposal-could-increase-small-business-taxes/). A trade war with China is a negative Political factor as China is putting a lot of money into America. “China is the top holder of U.S. government bonds with $1.3 trillion on their books.” (Riley, 2016).
Economic factors that affect businesses are interest rates, importing and exporting goods to other countries and exchange rates. A positive Economic factor is the interest rates for first - time buyers are lower and the growth rate in the UK has grown. “The UK economy advanced 0.5 percent on quarter in the three months to September of 2016.” (http://www.tradingeconomics.com/united-kingdom/gdp-growth). A negative Economic factor for businesses in the UK doing trade within Europe, is the exchange rate. The value of the sterling has fallen drastically since brexit. The recession had a negative impact in the UK and a lot of people were made redundant.
Social factors that can affect companies are an ageing population and the Corporate social responsibility (CSR). Positive Social factors are People over the age of 60 years old can get free bus and rail travel. “Corporate social responsibility (CSR) promotes a vision of business accountability to a wide range of stakeholders.” (https://www.iisd.org/business/issues/sr.aspx). Negative Social factors are people are immigrating to other countries to live a better quality of life or to be closer to friends or family members. The population is declining as to people immigrating and dying of natural causes. “The latest data from the Population Reference Bureau shows that there are 20 countries in the world with negative or zero natural population growth.” (Rosenberg, 2016).
Technological factors are organisations using different methods of marketing. Twitter, robotics, and social media are different methods of marketing. Positive Technological factors are Tesco's have invested a lot of money into their IT systems to help increase their profits. Satellites and other technologies such as optical fibres, provide a lot of telecommunication services around the world. The negative Technological factors are that digital media can be expensive and the older generation can't are do not know how to use more advanced technology services like, self-service and ATM machines. “Elderly people in general do not feel that computers (and the Internet) are meant for their use.” (http://www.marekvandewatering.com/texts/HCI_Essay_Marek_van_de_Watering.pdf).
Legal factors are laws that can affect certain businesses in some countries. A positive legal factor is there are tighter laws to promote health and safety in the work place and the national minimum wage has increased in the UK. Some of the negative Legal factors are that women do not get paid the same rate as men, women in general, get paid a lower salary. “or full-time, year-round workers, women are paid on average only 77 percent of what men are paid.” (http://now.org/resource/women-deserve-equal-pay-factsheet/). Workers in small companies in America do not get mandatory parental leave. “Workers in small businesses will not get mandatory parental leave, after veto.” (Myers, 2016)
The Environmental factors that affect companies happen outside the workplace such as, pollution, treatment of suppliers and ethical sourcing but competition would be the main factor as in how competitive other organisations are with products. A positive Environmental factor is BMW are expanding their relationships with long - term suppliers as they provide a large impact on the business. “Our global supplier network makes a major contribution to value creation, quality and innovation and hence to the success of the BMW Group.” (https://www.bmwgroup.com/en/responsibility/supply-chain-management.html). Negative Environmental factors are that Donald Trump claims that global warming is a hoax by China, to make American manufactures non – competitive.
PESTLE analysis of Norbrook
Large organisations like Norbrook would understand the factors of using PESTLE and would use the PESTLE analysis to plan an effective approach in meeting the organisation's objectives and reduce any mistakes that may stop the business from progressing. Norbrook has appointed Sir Ian Gibson as the chairman of Norbook. Sir Ian Gibson has good manufacturing and international business knowledge. Sir Ian Gibson would bring a positive political factor to Norbrook and help Norbrook progress with his excellent business experience. Brazil, Russia, India, China, South Africa, are all emerging economies called BRICS Norbrook are trying to emerge into Brazil who is one of the emerging economies and has a 12% market share in Brazil which is a positive political Factor.
A negative Economic factor that may affect the profits made by Norbrook on their facilities based in America is the high tax rates. “The United States may soon wind up with a distinction that makes business leaders cringe — the highest corporate tax rate in the world.” (Kocieniewski, 2016) The high tax rates may force Norbrook to leave America and position their facilities elsewhere.
Social media is growing and the majority of young people now use social media and social networking sites like twitter and facebook to send messages to friends and follow people. Employees who work for Norbrook are not permitted to use mobile phones are social networking sites while at work. This could have a negative impact on Norbrook and put people off deciding to work for Norbrook. If Norbrook changed their rules about being able to use mobile phones and social networking sites while at work, it would have a positive impact on the organisation.
Norbrook is always looking to improve their services for existing and new clients, as the digital revolution is expanding, with an impact on social technologies. Norbrook has created a new veterinary App for android phones. “Norbrook has launched the Android version of its existing free iPhone app- ‘the Veterinary Excellence Tool' (VET).” (http://www.norbrook.com/news/4230/norbrook-launches-android-version-of-veterinary-app). This is a positive Technological factor for Norbrook as this App has a range of functions to help farmers and other veterinary professionals.
Norbrook takes health and safety for their employees very seriously. All employees must reverse into parking spaces to reduce and avoid any accidents that may occur. “It is of the utmost importance that this industry takes a responsible approach for Health and Safety of the individual.” (http://www.norbrook.com/about). Employees are trained to assure health and safety. Norbrook wants to have a zero accident rate, which would be a positive Legal factor for the company and employees.
The Environmental factors that affect Norbrook can be put into internal and external environmental factors affecting businesses. The internal factors are organisational structure and the quality of manufacturing. Norbrook cannot control the external environmental factors but it helps the growth of the business if Norbrook invests in the environment. “Norbrook also continuously invests in the environment, with a policy of \"green means green\", to secure its bright future through sustainable growth.” (http://www.norbrook.com/brazil/articles/).
Internal & external analysis of Norbrook and Tesco
Norbrook brand name would be an internal strength as Norbrook are a well-established pharmaceutical company and situated worldwide. Norbrook would have good recognition and customers would recognise their brand.
Norbrook provides all their customers with a range of services. “We are able to provide our clients with a full range of services such as process development from bench top to pilot plant scale, and validated technology.” (http://www.norbrook.com/articles/). This is a strength as it will keep clients interested in buying and doing business with Norbrook as clients will benefit from getting access to their services and specialised equipment.
Norbrook only provide veterinary pharmaceuticals for animals and not humans. This is strength for Norbrook as they can concentrate all their time, facilities, research and development into providing the best products and treatments for animals. Norbrook research and development facilities are a key factor and the largest in Europe. “Ballyedmond Castle Farm is a key component of Norbrook's Research and Development. The research farm, which is the only one of its kind in the United Kingdom and the largest of its kind in Europe.” (http://www.norbrook.com/about).
Norbrook is a very rigid organisation which would put people off for working for them and the only shareholders of Norbrook are the immediate family with no one else allowed to become a shareholder of the business all which is a weakness for Norbrook.
For Norbrook to dominate the pharmaceutical market and to remain as one of the best veterinary pharmaceutical companies worldwide, the employees will have to work longer working hours and will have more stress. This is a weakness for Norbrook as some employees do not choose to have a job that is stressful are to work longer working hours
One of the suggestive weaknesses for Norbrook is that they rely heavily on the UK market for revenue generation.
One of Tesco's aims is to provide customers with products at a good value for money and to offer a quality service. This is a strength as Tesco is a business that is customer orientated.
Tesco's are also the biggest retailer in the UK with 2200 stores and, sell a various range of products.
Tesco has high staff morale, they are constantly training and mentoring employees and pay bonuses, benefits and employees can get a pension, all which is a strength for Tesco's.
Strength for Tesco's is that they have an effective online operation and are the first company in the UK to carry out online sales.
Tesco's have declined in the market share as discount chains such as Aldi and Lidl have become more popular, which is a weakness. “Tesco\'s market share falls to a 10-year low as Lidl and Aldi continue to gain on big four supermarkets.” (http://www.thisismoney.co.uk/money/markets/article-3210623/Tesco-s-market-share-falls-10-year-low-Lidl-Aldi-continue-gain-big-four-supermarkets.html).
Tesco's are purposely delaying their payments to suppliers, which is a weakness and could lose any future dealings with suppliers they are delaying payments to.
Tesco's have overstated their profits by £263 million which originally was £250 million and will be punished by regulators including the Financial Conduct Authority (FCA) which is another weakness for Tesco's. “Tesco has announced it had overstated its profits for the first half of the year by £263m, slightly higher than the £250m originally estimated when the company was hit by an accounting scandal.” (http://www.itv.com/news/story/2014-10-23/tesco-profits-overstated-by-263-million/).
Tesco mobile has grown and have moved into a profitable position. Tesco is suggesting further development in the technology sector for further growth, which is a good opportunity for Tesco.
Tesco Direct have had good development through online and catalogue shopping as their technology has grown and will improve sales which is a good opportunity for Tesco to improve their technology services. “Technology in Tesco – Using Technology To Improve The Shopping Experience.” (http://ecommerceworkroom.co.uk/technology-in-tesco-how-tesco-are-improving-online-and-offline-shopping/).
There is a treat from Walmart who are the market leaders. Walmart wants to take over Tesco and has the means to do so. “Walmart (WMT) has launched an ambitious program to boost its presence in the U.K.” (http://www.cbsnews.com/news/walmart-vs-tesco-why-the-odds-favor-the-british-retailer/).
Because of the credit crunch, Tesco has to focus on getting basic products at a lower price and not focus on getting brands at a higher price, which suggests a change in price.
The business environment is always changing and companies need a competitive strategy to gain an advantage over its rivals. It is important for a business to embrace change. Mergers and Acquisitions is a good strategy to get a competitive advantage. “merger means a combination of two companies to form a new company, while an acquisition is the purchase of one company by another.” (http://www.investopedia.com/terms/m/mergersandacquisitions.asp). Norbrook could use Porters Five Forces to improve their business strategy. Porters Five Forces is a good tool that can assess the potential for profitability. There is five forces that affect the competition which are: Supplier Power: The supplier has the power to drive up the price of goods. Buyer Power: Customer has the power to drive the prices down. Competitive Rivalry: The strength of competitors in the industry. The threat of Substitution: When customers use different goods and services instead of using your own. The threat of New Entry: When competitors can easily enter the market if they can see that your business is making a good profit and drive your prices down.
A SWOT analysis of Norbrook
A SWOT analysis is to be applied to Norbrook. The brand name of Norbrook is strong as they are well known and in the pharmaceutical industry. This would give Norbrook a competitive edge over its competitors. The customer would recognise Norbrooks brand on products which would influence customers to buy a product From Norbrook.
As Norbrook offer a range of services to customers, this is a good decision that will influence potential clients to use Norbrooks services and benefit from using specialised equipment and having access to their services. It will also influence clients to buy products from Norbrook as they get to use the services provided at Norbrook.
Norbrook only provides pharmaceuticals for animals and not humans. Norbrook has invested 30 million pounds into research and development which is vital to Norbrooks success and influences the decision to only make pharmaceuticals for animals. Plus Norbrook is also releasing a range of new products this year. “Norbrook has a large pipeline of new products which will be coming to the world market from December of this year.” (http://www.norbrook.com/articles/). This will also influence the decision not to make pharmaceuticals for humans when Norbrook is one of the leading competitors in the Veterinary pharmaceutical industry.
Norbrook is a very rigid organisation with Lord Ballyedmond immediate family the only shareholders in the business, which is a weakness. The decision that influences Norbrook to have a very rigid organisation is to remain a leading competitor in the pharmaceutical industry Norbrook have to run and operate a tight, rigid organisation, plus by not letting any other shareholders buy into the business Lord Ballyedmond immediate family get to have more of the profits made by the business.
Employees working for Norbrook have more stress and would have to work longer working hours which is a weakness. The decision that influences Norbrook for staff to work longer working hours and more stress is for employees to keep on producing products and services which will keep customers happy and attract potential clients in the future.
A weakness for Norbrook is that they rely heavily on the UK market for revenue generation. The decision that influences Norbrook to rely heavily on the UK market for revenue generation is because Norbrook makes the most profit from selling pharmaceutical products in the UK. “Pharmaceuticals is an extraordinarily profitable business.” (http://www.bbc.co.uk/news/business-29659537).
There is a Global Event Tech being held in Liverpool 2016 which would be a good opportunity for Norbrook to attend. “Global Event Tech provides professionals the opportunity to interact and engage with live tech demonstrations.” (http://www.thevenueexpo.co.uk/global-event-tech-announced-as-part-of-international-festival-for-business-2016/). The decision that would influence Norbrook to attend the Global Event Tech in Liverpool is because Norbrook is situated worldwide and are continuing to expand, which gives Norbrook many opportunities in the future to be successful.
Norbrook has 80% of its stock in farm animals and only 20% stock in pets. One of Norbrooks plans over the next number of years is to change their stock and have 60% stock in farm animals and 40% stock in pets which is a good opportunity for Norbrook. The decision that influences Norbrook to have more stock in pets is because Norbrook can see more people investing money into their pets. This will help Norbrook grow as they have grown 11% last year while other competitors have grown an average of 4 – 6%.
The pharmaceutical industry has a large potential for growth. Norbrook is merging into Brazil who is one of the emerging economies called BRICS. Norbrook already has a 12% market share in Brazil. This would be a good opportunity for Norbrook to invest more money into facilities, operations and production in Brazil as Brazil are an emerging market. The decision which would influence Norbrook to invest more money into Brazil is Brazil is an emerging market and has plenty of labour and a demand for the goods Norbrook can supply. “The people who live in an emerging market, however, still have plenty of labor to offer and a need for the goods you sell.” (http://smallbusiness.chron.com/advantages-doing-business-emerging-market-22717.html).
Norbrook is situated worldwide and emerging into new countries. The reason that influences Norbrook to expand and develop is because Pharmaceuticals in the animal health industry is starting to grow rapidly, which is a threat for Norbrook. “Over the last few years promising new startups are emerging in the animal health industry. Ranging from new vaccines for comestic pets this growing industry is set to boom in 2016 and beyond.” (http://animalhealthasia.com/hypfiles/uploads/2016/05/Animal-Health-Investment-Article-January-2016.pdf).
Employees for Norbrook using a USB memory pen while at work at Norbrook, can be a threat. By using an external device like a USB memory pen can make important files disappear, which would not be good for a large organisation like Norbrook. “External devices that can make files disappear. The use of USB memory sticks and other types of external devices is also a very common vector in the spread of malicious code.” (Ramos, 2016). The decision that would influence Norbrook not to let employees use a USB memory pen or external devices while at work is because there is a threat that external devices and a USB memory pen can make important files disappear and Norbrook would not want this to happen.
A threat to Norbrook is vulnerabilities to software. A decision that would influence Norbrook to invest extra on online security is because there is a large impact on social technologies and on Norbrook getting their website hacked. “The exploitation of software vulnerabilities is another way that malicious code is spread, mainly through office applications, browsers, and websites.” (Ramos, 2016).
Macro & micro factors that impact upon Norbrooks business objectives
The macro factors that have an impact on Norbrooks business objectives are Norbrooks brand name. Competitors can copy products that Norbrook sell and produce but cannot copy Norbrooks brand name. Norbrooks brand name is strong as Norbrook are well established and their brand name is recognised worldwide. This can keep Norbrook a leading competitor in the pharmaceutical industry which is a business objective for Norbrook.
A business objective of Norbrook is to invest in research and development. Norbrook has invested a large amount of money into research and development for new products. “Norbrook invests significantly in the research and development of new products.” (http://www.norbrook.com/articles/). The research and development of new products have a positive impact on Norbrooks business objective as it will help promote new clients.
Norbrook only produces products for animals and not humans. This is a good strategy as a business objective for Norbrook is to dominate the veterinary pharmaceutical market. By not producing are selling any products for humans Norbrook can concentrate their time on research and development for animals.
One of Norbrooks business objectives is to expand. Norbrook has an opportunity to expand by attending a Global Tech Event in Liverpool. This will give Norbrook the opportunity to learn new technologies that are being shown at the Global Tech Event which will help Norbrook progress and expand in the veterinary pharmaceutical industry. Norbrook has 80% of its stock in farm animals and 20% of its stock in pets. In the future, Norbrook is going to have 40% of its stock in pets and 60% of its stock in farm animals as Norbrook can see people putting more money into products for their pets. BY Norbrook putting more of its stock into pets, it will help Norbrook expand.
Norbrook is situated worldwide and is emerging into Brazil. This is a good strategy from Norbrook as a business objective of Norbrook is to increase their sales revenue. Brazil is an emerging economy and wants more business to start up in their country. This will help Norbrook increase their sales revenue by selling more products and services in Brazil.
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