The major five forces include as follows:
”¢ The threat of new competitors (participators);
The emergence of new firms in the market is always fraught with danger for the companies already working in the industry. There are a lot of threats posed by the arrival of newcomers. The likely decline in profits associated with an increase (worsening) of competition is among these threats.
According to Porter (1979, p. 138), “New entrants to an industry bring new capacity, the desire to gain market share, and often substantial resources.”¯
”¢ Substitute products;
The methods of price competition, advertising campaigns, production of new or attractive products, and improvement of service quality when distributing goods can significantly impede the promotion of substitute products.
”¢ The power of the buyers (consumers);
Michael Porter mentioned that the buyers should be considered to be competitors in the industry since they required a constant reduction of prices, quality products and services, improving the quality of service.
”¢ The power of the suppliers;
The suppliers have a huge impact on the industry. The company competes and struggles not only with its manufacturers, but also with its suppliers. The suppliers can raise prices for their products or reduce the quality of delivered products and services.
”¢ Intersectoral competition (rivalry) and its intensity.
The intensity of competition can vary from a peaceful co-existence to a hard and rough way of ousting each other from the market. The situation is exacerbated when the industry has a lot of competitors, or when these competitors have equal powers. Talking about the model of competition, it is necessary to note that the companies are trying to occupy a prime position in the market through the price wars, advertising campaigns, new products, service quality, product warranty and much more.
Observing PESTEL analysis (also well-known as STEP), it is possible to say that this is a marketing tool designed to identify political, economic, social, and technological aspects of the environment that affect the company’s business.
People study politics, because it regulates the power, which in turn determines the impact of the company and obtains the key resources for its activities. The main reason for studying economics is to create a picture of resource allocation at the state level, which is essential to any enterprise or a company. Important consumer preferences are determined by a social component of the PEST analysis.
The final factor is a technological component. The aim of this research is to identify the trends in some technological development, which are often caused by the changes and losses of the market, as well as new products.
Six main factors
Talking about six main factors that Jengo Ltd. should investigate when preparing forecasts for the year ended 30 June 2012, it is possible to say that these main six factors must be observed according to the above-mentioned PESTEL analysis. As it was listed above, the PESTEL analysis is a marketing tool designed to identify political, economic, social, and technological aspects. This analysis helps any organization understand what is happening with it and if it is necessary to resolve these issues.
For Jengo Ltd, the examination must be the following:
Examining a political aspect, it is important to note that Jengo Ltd. operates within the United Kingdom, which has political stability at the moment. The most authoritative body that regulates business in the UK is the Local Authority. Moreover, dresses are made in the countries with low costs and thus their import is not really expensive.
Talking about a social and economic factor, we can say that Jengo’s business can be found in sufficiently populated and rich areas and regions. In addition, the UK has economic growth and interest rates.
Exploring a technological aspect, it can be concluded that Jengo is behind in its online business development, because it has not its own online store, despite the fact that online marketing and e-business are the norm rather than the exception to the rule for a lot of companies who produce clothing lines.
If we are talking about an environmental aspect, it should be mentioned that Jengo must take into account the rate at which the necessary materials for the clothes’ production are likely to be taken in the near future. Legally, clothing businesses areĀ controlled by the government.