Introduction to Creative Business Environment Assignment Sample
Question 1: SWOT analysis of Acerinox
Micro Analysis of strength and weaknesses of Acerinox
| Internal environment | Strength | Weaknesses | Strategic plan |
| 1. Financial | Great profit-generating power of Acerinox is one of the most effective financial strengths of this company. A large number of investors are motivated to invest in the steel industry and collection of capital is easy in steel industry. Around 177% profit has been increased by in the last financial year that this company has executed approximately 109 million GBP more profit than previous year. | Acerinox has executed a cash flow of almost 184 million GBP by investing more than 387 million GBP. As cited by Longhurst et al. (2020), company’s cash flow is not good enough as per its initial investment. Net cash flow shops effective operating strategy of a company which is necessary to operate daily activity. Goods cash flow helps to recover short term loss and handle uncertainties that available liquid assets are necessary to deal with unexpected uncertainties. | Profit margin is good in this company for proper utilisation of available resources. It has to make a strategy to control operating, investing, and financial activity of the company. This company must investigate reason for low cash flow and take initiatives to give strength to the financial condition. |
| 2. Managerial | As per the opinion of Wang and Wang (2020), management of Acerinox is efficient and it follows a decentralized structure to manage these organisations. A diverse team of the company helps to make effective plans and influence to reach predetermined goals of the company. | In certain cases, communication gaps arise between Chief Executive Officers of different departments due to decentralised structure of the organisation. Decision making about any new project takes time in this company because every official needs time to understand the proposal for approval. | Managerial activities of this company are good but communication is slow between officials and workers. Improvement of communication of Acerinox will give more efficient decisions and fast growth to the company. |
| 3. Infrastructural | Acerinox has a well-designed infrastructure that includes a large number of electromechanical machines. | Acerinox has not implemented extra employees to take care of these machines to remove the barrier of sudden shutdown of machine. | As cited by Leiber et al. (2018), Acerinox has to investigate its infrastructure and recruit engineers for the maintenance of electronic equipment. In this way company Acerinox will be able to continue the production process without any interruption. |
| 4. Suppliers | It needs a large amount of raw material in this company to continue production. As opined by Kamran et al. (2020), it collects raw material from different suppliers that help to provide uninterrupted service to the potential consumer. | Various suppliers provide raw materials that have faced complications to maintain a standard of their products. | Suppliers must allow credit purchases to make balance short term liquid assets of the company and invest in other innovative projects for the expansion of business. |
| 5. Manufacturing | Efficient use of electronic machines helps to produce goods without interruption and company is able to provide its products and services at a low cost. | A large amount of raw material is lost due to the technical shutdown of machines. | Human resources help to maintain quality of products and maintain a consistent production rate in Acerinox by proper training. |
| 6. Distribution channels | Acerinox takes support from many distributors to provide service in different countries. As cited by Pesce et al. (2018), it is the responsibility of the distributor to sell goods to retailers who will sell to the consumers. | Competitors have removed traditional distribution channels and reached directly to the consumer by implementing digital marketing strategy. | Acerinox has to make a strategy to implement an effective and efficient distribution channel for the company. |
| 7. Marketing | Many digital tools and social media platforms are taken into consideration for more engagement of potential consumers. | As opined by Namugenyi et al. (2019), using a digital platform without a strong website and application can lick companies’ valuable data. | Acerinox has implemented strong websites and digital applications and increased security of consumers and companies. |
| 8. Brand equity | Acerinox’s brand equity is well known to most the investors for its great service quality. | It is an international company and competition is high to maintain brand value. As per the opinion of Guangul and Chala (2019), branded companies are highlighted in the market that competitors promote fake reviews towards a brand company. | Acerinox produces quality products for its consumers and developed a supply chain to maintain its demand for brand equity. |
| 9. Innovative resources | As cited by Tang and Liu (2020), innovative ideas help to improve the managing activity of company. Acerinox promotes innovation to satisfy its real and potential consumers by adding value to their daily life. | Innovative effects regular production activity and it is hard to efficiency of new ideas before applying it in the production line. Preliminary cost is high to implement innovative ideas for organisation. | Acerinox has promoted creative employees to innovate efficient and effective strategies for the organisation. Those strategies are tested by experts, after approval of higher authorities the innovative resources are implemented in Acerinox. |
Table 1: Micro Analysis of strength and weaknesses of Acerinox
(Source: Self-made)
Macro Analysis of opportunities and threats of Acerinox
| External Environment | Opportunities | Threats | Strategic action |
| Competitor environment | |||
| Financial | Entrance of new competitors in market influence companies to develop their financial management structure to sustain business activities for long period. | Reconstruction financial structure is hard and it is necessary development of business in a competitive market. | Financial management of Acerinox evaluates different financial projects to choose most effective and efficient one. |
| Managerial | Companies develop managing ability while facing competitors in the market. | Competition of market is ever-changing and it is hard to manage company’s activities. | Acerinox has appointed an investigation team to manage business activities effectively. |
| Organizational | Electromechanical enhance productivity of a company and reduce error in production line. | Electromechanical is efficient but technical errors stop the whole operating activities of the company. | Electronic devices and human resources are implemented in Acerinox to improve organizational activity. |
| Supplier | This company collects a large amount of raw material every time those suppliers provide a cash discount. | As opined by Winarso and Do (2021), most of the suppliers refused to provide goods on credit that this company faced short term financial crisis. | Acerinox has to find most efficient supplier to get quality raw materials from to maintain outcomes. |
| Manufacturing | Most of the manufacturing unit is operated electronically so that manufacturing process is fast and efficient. | Technical error is a common barrier in an electronically operated
Production unit. |
Acerinox has to implement more human resources to check technical issues in the production unit and take necessary steps to resolve those unexpected problems. |
| Distribution channels | Acerinox does not have to face any complications during distribution of products in this traditional method. | There are many intermediaries in the distribution channel of Acerinox that consumers have to pay more for. | This company have to build their own distribution hub in different countries to reduce costs of products and services. |
| Marketing | As cited by Luo et al. (2021), a monopoly environment of market gives the independence to fix price of products. | It is hard to sustain business and earn profit in a competitive market. | Acerinox prepares best quality goods and creates a monopoly of that particular product. |
| Brand equity | High brand value attracts more potential investors and consumers. | Consumer does not prefer to choose unbranded products in a competitive market. | Acerinox has increased brand equity to attract consumers by taking innovative initiatives. |
| Innovation resources | Innovative ideas help to develop companies’ productivity. | As per the opinion of Benzaghta et al. (2021), inefficient ideas create many complications in the organisation. | Acerinox implements new ideas after testing its outcome and efficiency for the company. |
| Industry environment | |||
| Intensity among competitors | Rivalry among competitors creates a complex situation in a competitive market. | This competition reduces product quality due to increased production of a company. | This company have analyzed market competitions and then takes decisions for an organisation. |
| Threats of entrants | Entrepreneurs create strategies that help to develop companies’ decision making power. | As cited by Das (2017), a new entrant in a competitive market creates a competitive advantage. | Acerinox acquired other competitor companies to reduce market competition. |
| Effects of substitute goods | Substitute goods reduce production costs and give an opportunity to reduce the price. | Substitute materials that do not contain same quality will reduce quality of the product. | Quality ‘is maintained in Acerinox that it ignores substitute goods. |
| Supplier’s bargaining power | Cost of product is reduced by effective bargaining power with the supplier. | Suppliers reduce quality of products to reduce cost by bargaining. | Acerinox purchases goods from suppliers at a standard cost to maintain quality. |
| Buyer’s bargaining power | Buyers bargaining power reduces sales price of a product to purchase a large number of products. | Company’s profit margin reduces buyers bargaining power. | Acerinox gives discounts to its regular consumers and rates are fixed for new customers.
|
| General environment | |||
| Political | Political support like favourable laws helps to expand business activities of a company. | Changes in a political environment created complications in managing a business for different rules and regulations of different political leaders. | Acerinox made its plans based on the upcoming political environment. |
| Economics | Good economics of a country helps to get m more investment, productivity, and consumer base. | A collapse in economy leads to a shutdown of company’s activity. | Acerinox invests in economically balanced countries that have the least chance of economic crisis. |
| Socio-cultural | Developed society helps to provide efficient educated workers for the organization. | It Is hard to manage a business with uneducated workers and manage their activities. | Employees are recruited based on the literacy in Acerinox that helps to get effective workers for the organisation. |
| Technological | Using updated technologies influences high production in an organisation. | A technical error can stop whole operating activities and companies may face loss due to this reason. | Acerinox has implemented workers for maintaining technologies and influencing consistent production with technology. |
| Legal | A country’s globalisation law can create a favourable environment for an organisation. | As cited by Segrest et al. (2020), law of cross border investment creates many complications to operating business internationally | Management teams of Acerinox are aware of country’s law and they make plans based on that. |
| Environmental | A stable environment influences more production and minimum complication in business. | Companies make different decisions frequently in an ever-changing environment. | Acerinox has established its operating centre where the environment is in favour of its business. |
| Demographic | Demand for goods and services increases in high demography. | Engagement of potential consumers is less in a low demographic country. | Acerinox has expanded business in high demographic countries and created high demand. |
| Ethical | Good ethics for a company increases productivity and influence to expand a business. | Unethical employees always try to take the advantage of controlling gaps. | Training programmes are organized by Acerinox to develop ethics of employees. |
| Regulatory | Effective regulators reduce idle time and utilize available resources to achieve company’s goals. | Inefficient regulatory consumes time and productivity decreases with time. | Acerinox has appointed an efficient and experienced regulatory team for total utilization of resources. |
Table 2: Macro Analysis of opportunities and threats of Acerinox
References
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Das, M.P., 2017. SWOT analysis of micro, small, and medium enterprises in rural society: A study conducted in the Ganjam District of Odisha. International Journal of Scientific Research and Management, 5(8), pp.6569-6575.Available at: https://www.academia.edu/download/55468536/ijsrm-_Paper_Publication_on_MSME.pdf
Guangul, F.M. and Chala, G.T., 2019, January. Solar energy as renewable energy source: SWOT analysis. In 2019 4th MEC international conference on big data and smart city (ICBDSC) (pp. 1-5). IEEE.Available at: https://ieeexplore.ieee.org/abstract/document/8645580/
Kamran, M., Fazal, M.R. and Mudassar, M., 2020. Towards empowerment of the renewable energy sector in Pakistan for sustainable energy evolution: SWOT analysis. Renewable Energy, 146, pp.543-558.Available at: https://www.sciencedirect.com/science/article/pii/S0960148119310055
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Longhurst, G.J., Stone, D.M., Dulohery, K., Scully, D., Campbell, T. and Smith, C.F., 2020. Strength, weakness, opportunity, threat (SWOT) analysis of the adaptations to anatomical education in the United Kingdom and Republic of Ireland in response to the Covid‐19 pandemic. Anatomical sciences education, 13(3), pp.301-311.Available at: https://anatomypubs.onlinelibrary.wiley.com/doi/abs/10.1002/ase.1967
Luo, W., Lei, L., Guo, Y. and Ren, Y., 2021, March. Research on Development Countermeasures of Prefabricated Buildings in Chongqing Based on SWOT Analysis. In IOP Conference Series: Earth and Environmental Science (Vol. 702, No. 1, p. 012014). IOP Publishing.Available at: https://iopscience.iop.org/article/10.1088/1755-1315/702/1/012014/meta
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Pesce, M., Shi, C., Critto, A., Wang, X. and Marcomini, A., 2018. SWOT analysis of the application of international standard ISO 14001 in the Chinese context. A case study of Guangdong Province. Sustainability, 10(9), p.3196.Available at: https://www.mdpi.com/336452
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Wang, J. and Wang, Z., 2020. Strengths, weaknesses, opportunities and threats (Swot) analysis of china’s prevention and control strategy for the covid-19 epidemic. International Journal of Environmental Research and Public Health, 17(7), p.2235.Available at: https://www.mdpi.com/674804
Winarso, H. and Do, A.D., 2021. Strategy for Growing the Business of Representative Office Company in Iron and Steel Industry. IPTEK Journal of Proceedings Series, (1), pp.102-107.Available at: https://iptek.its.ac.id/index.php/jps/article/view/10857
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