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Environmental Influences On Business Enterprises

Essay by   •  January 11, 2011  •  1,008 Words (5 Pages)  •  1,079 Views

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Problem Statement

Peter owns a chain of health food stores in the United States. His store specializes in selling organically grown produce and health food to the local niche market. The entry of a new rival into the market has reduced the market dominance previously enjoyed by Peter’s company. The rival company, an established grocery store, is offering similar organic and health products.

Relevant Facts Related to the Problem

Some of the main factors for the decline in customers and sales are:

Competition: Entry of the grocery store chain into the organic and health food market has made a cut into the customer base. The competitor is selling similar goods at a lower cost than Peter’s store. Due to the high costs of raw materials, Peter is unable to lower his prices. Another factor is that the customer base targeted by Peter’s company is limited. Lack of marketing infrastructure and visibility has a negative impact on the business. His store currently does not offer additional services for customers.

Converting Problem into Opportunity

Environmental factors can have a major impact on the performance of health food business. For Peter to be competitive and be in business, he should first determine the factors that are contributing to the problem his business is facing. Steering the company in the right direction will require Peter to identify new strategies to counter the current shortcomings in the way the business is run. Identifying new opportunities in the industry will help Peter to look at new avenues for growth in the business. Based on the findings from research of the industry, Peter can definitely convert the problem he is facing into an opportunity. Here are some solutions that will help Peter retain his existing customers and grow his business:

Competition/Competitive Analysis: Competition can sometimes be good for business. Analyzing competitor products and identifying the differences in the offerings of products can be very useful. This will allow Peter to identify new products that he can stock up that will offset any comparative shopping by his customers. These new offerings will have to be as per the current trends in the health food industry.

Supplier: Peter will need to explore the possibility of identifying new suppliers for some of the products he is selling. This will give him the bargaining power required to lower costs on his procurements. Retaining the quality and lowering the supplier price will allow Peter to sell other products in his stores. Some of these cost benefits can be passed on to the customer as discounts.

Buyers: To retain existing customers, a high-level of service will have to be provided. Advertising and brand marketing will allow Peter to target new customers. He can start additional service offerings in his store to make it more attractive to the customers. Offering discounts through preferred membership is an excellent way to increase and retain customer loyalty. He can take advantage of technological advances and make online shopping available for his customers. He can also offer home delivery services to make shopping convenient.

Substitutes: Health food is becoming a popular preference of the people due to the increase in health issues due to fast food. Peter can take advantage of this trend and market his stores to a wider and more diverse consumer population. This can potentially increase the sales and thereby the revenue. He can differentiate his brand of goods in the market and attract consumers to prefer it over his competitor’s offering.

Participating in local community programs can increase the visibility of his company in local regions.

Challenges of Realizing Opportunity

The success of the company will depend on Peter’s ability to correctly recognize the various threats and opportunities present in the industry and within his company. Aligning these against the

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