Assignment 1 Multi-level Business Environment Analysis Dilip Singireddy 8877545 Description of Business:

Assignment 1

Multi-level Business Environment Analysis

Dilip Singireddy 8877545

Description of Business:

The business is all about providing experience to kids and adults to have fun time. Miniatured fantasy rides are made available for customers to ride around the mall premises for age starting from 5 years, if below 5 years an adult can accompany the kids on the ride. Rides are charged based on the time customer is willing to rent, we host birthday parties and events too.

PESTEL Analysis (FRUE, 2020)

Element

Factor

Business Impact

Political

Tax Implications,

economic policies

Ease of doing business would be reduced due to fluctuating tax obligations, since Canadian economy depends on supply chain greatly its economic policies play a great role on imports

Economic

Inflation

Recession

Interest rates

Insurance cost

Current inflation is impacting interest rates and insurance, making it heavy on business purse. Obtaining a loan has proved to be a daunting task and repayment is a never ending. Finding skilled employees in a way has been easy due to abundance of talent available due to recession

Societal

Lifestyle of people

Spending and saving habits.

Attitude towards Leisure activities

People in Canada are mostly indoors for most of the times due to extreme weather conditions, this is a great opportunity to make money by offering leisure activities, there is a small population who are particular about attitude towards Leisure activities and spending on them

Technology

Supply chain gap

Changing manufacturing technology

Licensing

Patents

To manufacture and get the rides running, it is entirely depending on the factory in China, and there is a gap here, adding to these spare parts for the rides are not available immediately in case of any breakdown. It is simple technology and can be replicated easily if not patented or licensed

Environment

Management attitude

Employee relations

Customer service

Our business depends the way customers are served, as this depends on employees entirely managements attitude towards employees and their welfare matters greatly

Porter’s 5 forces model ( THE INVESTOPEDIA TEAM, Scott, & Williams, 2023)

Bargaining Power of Suppliers:

(H/M/L)

High

Since the rides are

Custom made, supplier

decides the price, power

of suppliers is centralized

Bargaining Power of Customers: (H/M/L)

low

Customers have no much options available as an alternative to our business offering

Threat of new entrants:
(High/Medium/Low)

High

It is an easy business model and can be replicated by others unless and until rights are reserved.

Threat of Substitutes: (H/M/L)

Low

Since our business is into convenience leisure, threat of an alternative to this is really low.

Threat of Rivalry:
(H/M/L)

Medium

Currently there is no existing business as ours, however there could be potential ones sooner, rivalry as of now is lower

Bargaining Power of Suppliers:

(H/M/L)

High

Since the rides are

Custom made, supplier

decides the price, power

of suppliers is centralized

Bargaining Power of Customers: (H/M/L)

low

Customers have no much options available as an alternative to our business offering

Threat of new entrants:
(High/Medium/Low)

High

It is an easy business model and can be replicated by others unless and until rights are reserved.

Threat of Substitutes: (H/M/L)

Low

Since our business is into convenience leisure, threat of an alternative to this is really low.

Threat of Rivalry:
(H/M/L)

Medium

Currently there is no existing business as ours, however there could be potential ones sooner, rivalry as of now is lower

SWOT analysis (FRUE, PESTLE ANALYSIS SWOT AND BUSINESS ANALYSIS TOOLS, 2020)

Strengths:

Communication with the customers is a great asset, everything boils down to customer service and keeping them happy with our offering

Our business is an unique experience, making customers curious about it.

Decision making is vested with employees on how to develop sales which is a big asset to us

Weakness

There is always a risk of incident in the mall causing injury to customers or other people at mall

Trends show sale value depends greatly on weather and holiday seasons

Breakdown of rides can hamper the trade for a day

The rides are mostly suitable for indoor conditions only

Opportunities

Make our service available in outdoors to attract more customers

Venture into a franchise to extend our wings

Offer merchandise to kids which can be a game changer in long term

Attract crowd by hosting fundraiser to charities

Threats

Entry of new players causing a disruption of our business

Insurance costs may go higher compared to current pricing

Threat of vacating business from mall premises in case safety of customers and shoppers is jeopardised

Covid like pandemic can disrupt business as it not an essential service

Market Profile analysis ( (Freedman, 2023)

Details of our Target market are as below.

Age: 4+ years

Gender: Meant for everyone

Occupation: All walks of life

Education: Not a bar to have fun

Needs: looking for a small time fun in indoor premises

Pestle Analysis

Success of a business depends on external factors where business is operated, Politics are significantly influenced by fiscal and economic policies. Variable tax liabilities can cause issues for businesses, particularly those completely reliant on the supply chain. Economic policies, such as those influencing imports, can also affect how simple it is to do business in Canada.

The recession, interest rates, inflation, and insurance costs are a few of the economic issues that the company must deal with. Businesses may experience budgetary constraints as a result of the current inflation rates increase in borrowing rates and insurance premiums. Despite this, the recession may increase the supply of smart individuals by expanding the talent pool.

The business is also impacted by societal factors like leisure-time attitudes, lifestyle choices, and shopping habits. Due to the severe weather, Canadians spend more time indoors, which presents a business opportunity for individuals in the leisure activities sector. A certain percentage of the population also exhibits a strong interest in leisure activities and is willing to spend money on them.

Patents, licencing, supply chain gaps, and changing production methods are a few instances of how technological factors impact the industry. Dependence on a Chinese factory for the construction and operation of rides could be risky, especially if spare parts are hard to find. In addition, the technology used in the sector is sufficiently straightforward that duplication is possible even in the absence of patents or licencing agreements.

Additionally, important environmental elements like customer service, staff relations, and management attitude must be taken into consideration. Excellent customer service is essential for the business’s success, and how staff are treated has a big impact on it. Therefore, a key factor in ensuring happy customers is management’s attitude towards workers and their wellbeing.

Overall the external environment to carry out a business in Canada is moderately satisfactory

Porters 5 forces model

New rivals are viewed as a very significant threat. The business model for the leisure activities industry is typically straightforward to replicate if no intellectual property rights or patents are in place to protect it. There will probably be increased competition as a result of how simple it may be for new rivals to enter the market, which could decrease the market share of already established firms.

The perception is that suppliers have significant negotiation leverage. Due to the fact that the rides the business offers are customised, the suppliers have a significant impact on determining the cost and terms of supply. This concentration of power may limit the company’s capacity to negotiate fair terms, which could also increase costs.

Currently, the threat of rivalry is categorised as medium. Despite the fact that there aren’t any businesses that offer the same services as the one in issue right now, new competitors might soon enter the market. It is anticipated that as the market becomes more saturated, competition and rivalry will worsen.

It is believed that consumers have little negotiating leverage. Customers don’t have many other options when it comes to comparable recreational pursuits. The corporation has more negotiating power when setting prices and offering services since customers have fewer options.

Threats from replacements are thought to be insignificant. Because the company focuses on providing convenient leisure activities, direct alternatives are less likely to have an impact. It can be difficult for customers to replicate or substitute the company’s unique offers with alternatives.

SWOT analysis

First off, the company is excellent at communicating with customers and prioritises providing outstanding customer service to guarantee client pleasure. This emphasis on creating strong bonds with clients is a huge value. The company also provides a distinctive and exciting experience that attracts clients’ curiosity and distinguishes it from rivals. Another asset is the decentralised decision-making structure, which gives staff members freedom in coming up with their own sales plans.

More issues with the company still need to be addressed. Accidents and injuries are always a possibility at the mall, which could damage the business’s reputation and erode client confidence. Since the weather and the holiday seasons have a considerable impact on sales value, the company is vulnerable to swings in demand. In addition, ride breakdowns might result in a day’s worth of missed revenue, which lowers earnings and lowers patron pleasure. The rides’ accessibility and clientele are also constrained by the majority of their intended indoor venues.

The success of the company depends on its ability to spot growth prospects. A wider client base can be attracted and income potential can be increased by expanding the service to outdoor places. The chance to grow the company’s clientele and access new markets is provided via franchising. By boosting brand recognition and patron loyalty, selling products geared towards children can have a lasting effect. Hosting fundraisers for charities can also draw people and produce favourable press, further increasing the company’s brand.

The corporation still has to cope with hazards despite these opportunities. The company’s market share and competitive posture may be impacted by new competitors joining the market. The cost of insurance is increasing, which poses a financial risk and potential profit constraint. The company runs the possibility of being kicked out of the mall if consumer and customer safety is compromised, which could present challenging operational challenges. Last but not least, because the company is not regarded as providing a critical function, it may be affected by unavoidable disasters like a pandemic like COVID-19.

References

THE INVESTOPEDIA TEAM, Scott, G., & Williams, P. (2023, March 31). Investopedia. Retrieved from Porter’s 5 Forces Explained and How to Use the Model: https://www.investopedia.com/terms/p/porter.asp

Freedman, M. (2023, Feb 01). Business News Daily. Retrieved from How to Conduct a Market Analysis for Your Business: https://www.businessnewsdaily.com/15751-conduct-market-analysis.html

FRUE, K. (2020, Jul 28). PESTLE ANALYSIS. Retrieved from Create a PESTLE Analysis Template or Download One For Free: https://pestleanalysis.com/pestle-analysis-template/#Technological_factors

FRUE, K. (2020, Sep 20). PESTLE ANALYSIS SWOT AND BUSINESS ANALYSIS TOOLS. Retrieved from How to Do a SWOT Analysis Perfectly in 4 Steps: https://pestleanalysis.com/how-to-do-a-swot-analysis/#List_the_Strengths