Political and Economic Factors Affecting the Food and Beverage Industry

1. Demonstrate an understanding of the concept of the organisation and the environment in which it operates, including determining the competitive advantage for an organisation.

2. Identify and analyse organisational operations and responsibilities.

3. Discuss the needs of the consumer and people who work in a business.

4. Recognise a range of issues related to business and how they interlink.

The Food and Beverage Industry is considered as the largest sector in the United Kingdom (Martinez 2013). There are more than 7000 companies in this sector which employs a large number of people. PESTEL is a strategic analysis tool which is used to identify the impact of the internal as well as external business environment. The two factors of the tool are discussed namely the Political factors and the Economic factors.

Political factors

The United Kingdom is facing serious political turmoil after its separation from the European Union (EU). The primary issue for the industry is the sourcing of raw materials for the production process. This could lead to a change in the government policy. The industry would affect greatly by a decrease or an increase in the tax (Sandford 2015). The government interventions such as changes in the interest rates would affect the functioning of the company. The exit of Britain from the EU can bring obstacles for the food and beverage industry. The companies in the UK need to abide by the food regulations of the EU in case they want to export their products to the EU. The political environment of UK is unpredictable as of now and there may be emergence of various pressure groups. There can be political factors such as- Impact on economy, changes in regulations, political instability, trade control, bureaucracy and others.

Economic factors

The continuing recession in the global economy is the primary concern for the food and beverage industry. The economic downturn implies that the consumers would have lower purchasing capabilities (Sandford 2015). This would mean that there would be less consumption of the food and beverages products. This may lead to a lowering of the sales of the companies. This may also lead customers to shift to the cheaper alternatives. There can be issues with the operational costs and the labor costs. The inflation may cause serious trouble to the industry.

The American economy has improved little, though there is an increase in the consumer expenditure. The customers have also demonstrated a change in their purchasing patterns. This is caused due to the internal influences and the external influences. Three internal influences and two external influences of the consumer behavior that impacted the event are discussed.

Internal and External Influences on Consumer Behavior

Internal Influences

The consumers are affected by the internal characteristics such as motivations, perceptions and attitudes (Grewal et al. 2012). The motivation level of the customers decides if they are going to purchase a particular product or services. There is a direct connection of motivation with the needs of the customers. The companies need to influence the minds of the customers if they are eager to increase their sales (Grewal et al. 2012). The perceptions of the customers concerns with the selection, organization and interpretation of the information from the various sources. The companies should try to capture the aspect of selective attention of the customers. The attitudes of the customers, their feelings and preferences determine their buying patterns.

External Influences

There are external factors such as culture, subculture and social class that affect the consumer behavior (Batalla-Busquets and Pacheco-Bernal 2013). The culture is unique to a country and usually varies from one geographical location to another. The culture plays a major role in the purchasing decisions of the people. For example, there may be certain cultures that prevent girls from purchasing short dresses. The subculture is a subset of the culture like racial groups, geographic regions, religions and others (Batalla-Busquets and Pacheco-Bernal 2013). This group of people share display same values and have common experience. They may have identical lifestyle or similar preferences. The consumers are spending more on certain industries and less on other industries. The social classes comprise of the homogenous groups in the form of a social hierarchy (Batalla-Busquets and Pacheco-Bernal 2013). There are usually three types of social classes such as lower class, middle class and the affluent class. The majority of the consumers in America belong to the affluent class. They may not be inclined to the production or the manufacturing sectors. They are more interested for the lifestyle services. There are other factors such as unemployment which is affecting the consumers.

The UK construction industry has witnessed a low output in June as compared to May. The downturn of the construction industry may lead to overall recession of the UK economy. The two forces of Porter’s Five Forces are analyzed such as Competitive Rivalry and Bargaining Power of Customers.

Competitive Rivalry

There is a fall in the demand of the construction projects, which has led to an increase of the capacity of the companies (Solomon 2014). The quality surveying companies engage in fierce competition with its peers so that they can offer the lowest fees. They engage in stiff competition to provide the most economic costs to their clients. This would fetch them lucrative projects as the clients are looking for economical options. There is also intense competition regarding the submission of competitive tenders (Solomon 2014). The UK market is overcrowded with big construction firms. The intense competition has led to the low productivity of the construction sector as a whole.

Competitive Rivalry and Bargaining Power of Customers in the UK Construction Industry

Bargaining Power of Customers

The UK construction sector faces strong threats from the bargaining power of the customers. There are several construction service providers in UK who are ready to deliver the construction related projects to the clients. There are, however, fewer clients, who are eager to purchase the construction projects (Ye Shen and Lu 2014). There are also few developers who are working in the marketplace. In the recent times, there has been a decline in the developers and there has been less demand of the construction projects. There is a tendency of the clients and the developers to postpone their projects to a later date so that they can get lower costs of the building.

I am an extensive user of Twitter, both within the classroom and outside the classroom. I am fascinated by the features of the social networking site. I am also disturbed by few challenges of it.

Benefits of Twitter inside the classroom

Twitter is increasingly used in the classrooms for the benefit of the students (Safa et al. 2015). The main benefits are-

I can enjoy greater content engagement as I am able to engage with my colleagues and this foster greater collaboration.

I can provide the class with a running news feed.

I can check the upcoming due dates of the assignments.

Benefits of Twitter outside the classroom

The purpose of Twitter is not entertainment or keeping in touch with the friends or families. The social networking giant also benefits the students and the teaching faculty. During my academic tenure, I have experienced numerous benefits from the use of Twitter. Some of the few advantages of using Twitter are described below-

I can learn about new publications, research, conferences, seminars, lectures from tutors all over the world. I gather knowledge from all the information sources available at Twitter. I can stay updated about the recent happenings in my area of expertise.

I can engage in the community building exercises and can follow my favorite personalities.

I can post interesting updates in the Twitter feed, which brushes up my subject knowledge.

Challenges of Twitter inside the classroom

There are many challenges faced such as lack of attention to the course content and more focus on the entertainment section (Tiernan 2014). It often distracts me and I am unable to focus on my work.

Challenges of Twitter outside the classroom

There may be challenges regarding the network connectivity. Sometimes I am addicted to Twitter and it wastes my valuable time of studying. It also has a negative influence on the psychology of the students.

Benefits of Using Twitter inside and outside the Classroom

Twitter can be used to enhance student learning by giving them practical exposure to the theoretical concepts that they have learned in class. It is also a tool of student engagement and skill development in the students. It also teaches the students to keep their arguments brief and concise.

The news article on the impact of free trade and collateral damage is driven by globalization. There are two major drivers of globalization such as technological innovation and cross border mergers and acquisitions.

Technological Innovation

The technological innovation is the major driver of globalization. It has led to smooth functioning of the business entities across different geographical locations. There is also greater access to the goods and services of the other countries due to the improved technology (Ahuja and Novelli 2014). The fair trade deals with the fair trade practices where there is a need to offer maximum choices to the customers. The innovation in the technology also fosters greater trade opportunities across the borders.

Cross Border Mergers and Acquisitions

The mergers and acquisitions with the existing market leaders pose lucrative business opportunities for the multinational companies. It promotes free trade across the national borders and hence the business owners can engage in greater business prospects (Ahuja and Novelli 2014). The business owner of one country can merge their business with the successful businesses of the other countries. This would give them greater profit sharing and mitigation of risks.

References

Ahuja, G. and Novelli, E., 2014. Mergers and Acquisitions and Innovation.

Batalla-Busquets, J.M. and Pacheco-Bernal, C., 2013. On-the-job e-learning: Workers’ attitudes and perceptions. The International Review of Research in Open and Distributed Learning, 14(1), pp.40-64.

Carpenter, J.P. and Krutka, D.G., 2014. How and why educators use Twitter: A survey of the field. Journal of research on technology in education, 46(4), pp.414-434.

Grewal, D., Roggeveen, A.L., Compeau, L.D. and Levy, M., 2012. Retail value-based pricing strategies: New times, new technologies, new consumers. Journal of Retailing, 88(1), pp.1-6.

Martinez, M.G. ed., 2013. Open innovation in the food and beverage industry. Elsevier.

Safa, M., Shahi, A., Haas, C.T., Fiander-McCann, D., Safa, M., Hipel, K. and MacGillivray, S., 2015. Competitive intelligence (CI) for evaluation of construction contractors. Automation in Construction, 59, pp.149-157.

Sandford, C.T., 2015. Economics of public finance: an economic analysis of government expenditure and revenue in the United Kingdom. Elsevier.

Solomon, M.R., 2014. Consumer behavior: Buying, having, and being. Engelwood Cliffs, NJ: prentice Hall.

Tiernan, P., 2014. A study of the use of Twitter by students for lecture engagement and discussion. Education and Information Technologies, 19(4), pp.673-690.

Ye, K., Shen, L. and Lu, W., 2014. A discriminant model for measuring competition intensity of construction market. Engineering, Construction and Architectural Management, 21(2), pp.152-169.