Although it may not be the ‘credit crunch ’ and the restriction of credit itself that has an impact on SME survival, but rather the consequences arising from the recession, the difficulties may lie with downturn in trade leading to reduction in cash flow and turnover. (Ma and Shumin 2010) A Pestle analysis is therefore necessary to relay any future potential issues.
With the current state of the economy Acme Whistles Ltd has managed to avoid the negative impact of the recession by having the demands of the B2C customer as well as the B2B customer and offering a range of whistle products they appeal considerably to their particular target market. It is important in this particular economic climate to be aware of emerging markets entwined which consequently transforms to potential global competition where levels of resources could allow a level of some type of cost advantages and as well as cash flows for research and development.
With emerging markets likeChinaandIndia, comes the demand for new products as well as the careful consideration for the needs and wants of the various types of customers. In additions customers across the globe are constantly moving towards being more environmentally conscious therefore careful deliberation has to be taken to determine what product is best suited to a particular market.
Even though one of Acme ‘s competitive advantages is that it has a range of patented designs which span back to the 1880’s it currently also has the longevity as well as the popularity in form of large customer base (both domestic and business) spanning across 120 countries. Evidently with low cost producers as well Acme Whistles existing and evidently with this particular climate, it might be difficult to exist or enter the market. As a result policies are put in place to ensure fair competition.
Although Acme’s dominance may not cause concerns in its home country, it could be deemed risky especially in new territories where laws protect local producers. Therefore careful analysis would help to identify what laws are applicable in terms of regulating competition.
As stated in the aforementioned customers are becoming more and more environmentally aware and as a result the demand for products that are environmentally friendly has increased therefore questions such products that are bio-degradable might need to be asked.
With the expansion of the World Wide Web means quicker access for the customer to place their demand but it also means Acme Whistle Ltd can assist its customer and meet customer expectation. In addition a user friendly website especially where the head office of the company remains in the home country therefore having an easy shopping experience online is essential with detailed information about its products.
The benefit of the pestle analysis is therefore the ease to use it, as well as the fact that it opens up the business to the possibility of future businesses turning an opportunity into strength. On the other hand the unpredictability of the market as well as oversimplified use of data makes it difficult to expand on possible opportunities.
But besides understanding the dynamics of the internal factors surrounding Acme Whistle Ltd, a careful analysis of internal factors is equally necessary which is applied to the Acme engraving whistle. Porter provides this model which identifies five major factors that would assist a company in determining its opportunities and threats in relation to its existing or potential environment.