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Market Assessment

Table of Contents

Macro factors affecting the competitive forces.

Porter s five force model

Analysis of TUI travels.

Reference list

Macro Factors Affecting the Competitive Forces

The macro-environment is the general economy in itself. It affects business operations, decision making, and strategies and has a dynamic effect on business. These factors include political, legal, and social forces. The firm's macro-environment factors are the elements that have been characterized through industry the firm is currently based at

  • Economic factors- Economic factors are a key aspect of decision making. It includes the interest rate, inflation can directly impact the competitive forces and its operation (Lexis Nexis, 2018)
  • Technological factors include the materials and techniques associated with operations. These are automation, wireless charging, and the performance and efficiency. Technological changes make market dynamics with the development of remote technologies and ICT innovation.
  • Political and legal factors-The market is developed according to the political and legal environment for operations and legal factors for internalization. The import-export law is dependent on the same. They include a series of factors for uncertainty over bilateral tradeagreements and trade barriers as a barrier for business operations. The political factors are influenced by the business operations on the political stability and the bilateral ties the country is functioning on. The legal factors affect a firm's expansion on business activity in the function by operating and developing through industrial benchmark and a legal environment favorable for business continuity. Legislative for privacy and infringement have been strengthening in the digital expansion part from physical expansion adopted by companies for change adaptability for penetrating the business market for marketing revenues for establishing standalone operations and globalization (Calvelli, 2019).
  • Social, cultural forces, and demographic factors- These forces are crucial as they impact the purchasing habit and religious and social class. Demographics in the market presents challenges as a subset of education, age groups, income. The factors include the demographic forces as a country, region, and lifestyle.
  • Tax regulations of the country are central to tax restrictions, import and export regulation, and corporate tax structure as per the legal environment. The general economic regulations of permits and licenses are subjected to promotion on the nature of the industry with copyright and infringement laws for protection. The availability of labor law as a protection of labor widely varies across countries.
  • Environmental factor- The result of globalization on business is associated with a wide range of climatic conditions. Natural disasters and extreme temperatures will halt the production and manufacturing process. The environmental factors of a foreign country with business operations and freight delay may create short of resources. Environmental pollution's seen country s stance for environment protection of laws to prevent exploitation and restriction of activity in the area owing to the nature of the operation. Climate change and regulations in countries are evolving that require companies to prepare an action plan for the operation. The volatility of natural resources will result in an impact on the price of input cost to mimes risk.The use of clean energy and environment adherence is the practice followed by firs for suitability and environment protection norms for natural resource conversion. Waste disposal and environment practice are streamlined by each country for the ecological practice to reduce carbon footprints as a measure (Schmid, 2018).

Porter diamond model

The diamond model is used to determine the external competitive environment. This will help in the assessment of the business. The model highlights the government s action as a catalyst in improving the country’s position at the global level. This theory explains and able to understand the competitive edge by Michael Porter (Lexis Nexis, 2020). The porter analysis measures the environmental strength and its incidence on firms working and support industries.

  • Factor condition - This relates to different types of resources that are available in the nation. The basic resource includes the availability of labor and advanced resources is the availability of capital. Competitive advantage is established when the nation can caret for advanced resources (Adhikari, 2018).
  • Demand conditions- Demand conditions related to home demand, strong demand will result in more opportunities creation and growth. This demand condition helps in the industry to work for innovation and growth. The size of the market is an indicator of demand.
  • Related and supporting industries- The success level of industries can be related to the success of supporting industries. These industries through technological aid suppliers with mergers to function as competitive rivalry in the industrial sphere.
  • Firms target, structure, and rivalry- The firm structure is detailed by domestic rivalry due to the high intensity of competition. The level of competition is dented by the domestic rivalry. The more intense the rivalry the more innovation and technological update a firm will undertake. The target structure measures the size and operations for competitive proportions and intensity in the business domain. The domestic rivalry with undifferentiated products create higher competition with structure creating a duopoly market with a low-cost margin for all the industry market player
  • Government- Government plays a key role in the development of industry in the region. It helps finance and investment in the project. Government subsidies and financial incentives affect production. The government is central to functioning and operations for regulating the market and independence on shifting territory and investing and financing in the projects for support. In the diamond model the government act as functionary between the firms and related supporting industries functioning for market profitability and share.
  • Chance- There may emerge random events and this provides a chance for companies to innovate and take economic leverage. This is the probability for the random event to act as a chance in diversification and expansion through market entry by the players.
  • 4 drivers of internationalization

Internationalization is based on drivers that influence companies to process on company s capabilities. The business expansion attracts the diversification and the company's bottom line strategy for using the market by operations by revenue stream on a customer-driven approach in business functioning that affects the business at a macro level. These factors are governed by the legal and economic factors proportionate to their function and central innovation for expansion by the company in the foreign market (Glowik, 2016).

  • Customers - The customer market is essential. The questions that arise are the market is driven by a few customers.They are central in the market as service and product are centric to the customers in the long run.
  • Cost - The operations through internationalization will decrease operating costs in the long run. The return on investment of cost-benefit analysis will define the performance of the enterprise. Cost is indicative of the operating capacity of the organization in the expansion that will require financing and external support for scale and business finance.
  • Innovation- Innovation is critical for the opportunity to increase market share and undertaken risk for the new base for pivot.
  • Competition - The industry operating in has high-intensity competition affects market performance. The market is driven by the competitive sphere in the country.
  • Technological factors affect the company's operations for the viability of business with operations as an emerging technology. Digital footprints and technology are leverage in expansion and firms assessment for market functioning for internalization.

Porter's Five Force Model

Porter's five forces model identifies the competitive industry and its weakness and strengths. It analyses the corporate strategy and long term profitability by understanding the competition level.

The five force model is useful in understanding the factors for profitability and industry-related decisions for corporate strategy and profitability for expansion and relative measurement for competitive analysis (Perera, 2020).

Porter’s five forces are –

  • Competition in the industry
  • Potential of new entrant
  • Power of supplier
  • Power of customers
  • Threats of substitute
  • Competition in the industry

This refers to the number of competitors and the differentiating power in the same. A large number of competitors relates to less power for the company. The competition drive is decided through sales and profit. Competitor rivalry is the main driver with the presence of many competitors in the market, the share of the company offering undifferentiated products in the market.

  • Potential of new entrants into the industry

The potential of new entrant affects the company position. The competitors entering the market with less time and money can significantly weaken the competitor's position. The strong barriers to entry are beneficial for an existing company in the market. A profitable market attracts new entrants and barriers to entry owing to economies of scale and government regulation will restrict the profitability of the enterprise and indicates the attractiveness of the industry.

  • Power of suppliers

The next factor is the cost of input and the number of suppliers to enable the cost to the company to switch to other suppliers. The fewer supplier the more concentrated is the power. Supplier power can drive input costs through power concentration. The other case can be the availability of many suppliers in the market, the supplier uses input cost as low to gain profit (Perera, 2020). The analysis of supplier power creates essential input for relative strength and size of the growth and the cost of switching costs to analyze the relativity.

  • Power of buyer

The ability that customer has on price is one of the forces of porter model. The customers a company has and the output is dependent on the client base to negotiate the price. Buyer power is central to the individual for driving the price of the product. Few buyers in a business can dictate terms and the individual buyer becomes important for suppliers to assess the individual for market acquisition and profitability of the product.

  • Threats of substitutes

The substitute is a good that can be used in place of product or service. A company with no close substitutes have more power in increasing price while close substitute weakness market share and profitability of the product by power share (Schmid, 2018). The presence of substitutes in the market creates the likelihood of a change in demand in response to the price increase of the product that reduces the attractiveness of the market. 

International Strategy

International strategy for markets are essential for growth through structure of firm and its expansion plan.

There are three levels of international strategy - multi-domestic, global, transactional.

  • Multi domestic stagey- It maximizes local responsiveness by giving decision making to local authorities by local responsiveness for each country. The unit of economies of scale is difficult to achieve as different operations in the country. It is commonly used in Europe
  • Global strategy is centralized as more standardized rather than customization for all markets. The strategic units in each country are interdependent and economies of scale are achieved (Gruing, 2018).
  • The transactional strategy combines multi-domestic and global stray for efficiencies in large scale operation by balancing local and global goals and will require flexibility and coordination. The location strategy act as a benefit for the firm to achieve a financial outcome through product by service relative to the location. The skilled labor act as superior and market premium for low cost in operations. The location-specific advantages help in the implementation of international strategy in diversification. The real estate cost and market maturity play a key role in location selection (Puranam, 2016).

Market Entry Modes

  • Joint venture- A joint venture is a partnership that involves the company managed through an agreement between two companies. It is an effect on profit sharing but has risk potential of conflict for expansion.
  • Licensing and franchising- Licensing is an arrangement that involves a license given to the company for operating in different countries and the right to use the product or service.Franchising as market expansion works well with strong brand recognition that can be served at a multinational location.
  • Exporting-Exporting is selling into a market with collective working by agents and distributors for working. Apart from these market digital revolution has helped immensely in market expansion. This has helped in creating sales network and marketing communications through virtual subsidiaries. This is one of the easiest ways to enter the market and has the advantage of avoiding expenses for establishing operations.
  • Acquisition -Acquisition as a strategy has an option for scaling business but does involve high risk. They are appealing as they have quick access to gain market portion and is useful in the case of consolidation (Hill 2017).
  • Greenfield analysis-This includes establishing business through a whole new subsidiary for control by providing the opportunity of better control and involves the cost of operations for establishment in a new country.

Analysis of TUI Travels

The analysis of TUI travels can strategize through the profitability of its operation in the travel and leisure industry to swiftly respond to the opportunity for sustainability and growth

  • Threats of new entrants

New entrants in the travel industry through lower price and new value proportion poses threats to TUI. TUI has managed to build an effective barrier to safeguard its product. The product design and raw materials shift can be used to mention its market dominance.

  • Bargaining power of buyers-Buyers demand is central to mimic price and quality that can shift easily. TUI's customer base is strong but its effectiveness is dependent on discounts and offers. The tourism industry fluctuates with change in buyer's needs and a wide range of services offered creates low brand loyalty and switching power of buyers. TUI can eliminate the same through direct sales
  • Threats of a substitute product - The service with value proportion as airline companies offer product value with its packaging as a bundled package. The growing tourism demand creates experiences for travelers and theses value proportions act as substitutes due to their rising growth (Raghunath, 2017).
  • Bargaining power of suppliers- TUI s strong supplier integration creates the bargaining power of suppliers as strong.
  • Rivalry among the existing competitors- The existing competition comprises of will decline in market share of TUI but overall group overall long term growth can be maintained through its sustainability. The privately owned and geography spread operators act as competition in the TUI s market.

PESTEL Analysis of Risk Measurement

Globalization is instrumental in the market and cost-efficient supply chain. The risk in expansion has risk of political instability that may result in disruption. The government and bureaucracy and legislation affect the workers and consumers in business operations. According to WTO the restrictive trade measures with an average of 22 measures increase uncertainty in the company for operations. Regionalization has less degree of policy integration among government as it strengthens globalization by the movement towards regional markets open for self-intent and groups. The convergence and mobility of consumers and distribution channels affect globalization. The recession has the potential for customer design making and radically results in a change of plan due to price fluctuations. PESTEL analysis helps in situational analysis for external forces that can affect business in the long run. These factors possess a challenge in business expansion. PESTEL aims to create opportunities and gather information for strategy modification and implementation in the long run for future development at the macro-level (Lexis Nexis, 2020). 

The social diversity and background reflect the attitude and immigration provisions that affect the supply chain integration of the company. The monitoring of supervisory authorities and long-lasting competitive advantage is through benefit to the end-user. Reliable technology helps in reducing financial loss and in case time awareness for the quick response

Regulatory risk impacts business magnet and corporate action as the international regulatory landscape is challenging for new market entry for countries in intention expansion

TUI s Strengths and Weakness

TUIs strengths are its brand recognition and ability to maintain cost with divers and scale of operations through a wide verity of services and diverse workforce 

 TUI can tackle the changes in future-TUI can maintain competition through innovation and lowering the feed cost.The expenditure on research and quality will differ from other firms from entering the market for TUI to regain new markets.

Future Impacts

There are rising threats as new firms entering the market. The tour operator is offering a package in a smaller quantity. This will dramatically reduce TUI s market share. The development of new products will be challenging. The global recession has reduced the expenditure on travel. It is necessary for partnership with airlines for travel and effective cost to save more and travel as the new campaign. Service integration through supplier position will ensure the service ecosystem that TUI has developed over the years. The new design and travel will have to undergo operational cuts to ensure the suitability and maximization of profit. The European market post-recession was moving the same as the American market with a rise in online bookings for tour plan and annual online operator CAGR will continue to increase over the years. The low-cost airline may impact the change in the profitability of the business. The risk level increases the complexity of the market and the cost of operations in the travel industry. The American business set up that is the takeover by the European market is a part of geographic dispersion as part of cultural and social exchange.

SWOT Analysis for Competitive Advantage

SWOT analysis through skilled workforce for customer relationship management by brand equity enables distribution network. The network overseas by strong portfolio of distribution network and potential stake is vital for tourism sector growth. The cost of operation and marketing strategy is relative to the logistics cost taken by the company and the internet boom that has taken over the market (Frynas, 2015).

Reference List for Strategic Marketing Issues in Emerging Markets

Adhikari, A. (2018).Strategic marketing issues in emerging markets. USA: Springer publications 

Calvelli, A., Cannavale, C. (2019).Internationalization firms: Strategy, trends, and challenges. London, UK: Palgrave Macmillan

Frynas,G.J.Mellahi,K. (2015).Global strategic management. UK: Oxford university press

Glowik, M. (2016).Marketing entry strategies: Internationalization theories, concepts, and cases of Asian high technology firms. Germany: Degrouter Oldenburg

Gruing, R., Kuhn, R. (2018).The strategic planning process: Analysis, options, and projects. Berlin, Germany: Springer publication

Hill, C., Schilling, M.A., and Jones, R.G. (2017).Strategic management: Theory: An integrated approach. OH, USA: Cengage learning

Lexis Nexis. (2020).The macro-environmental influences on your company. Retrieved from https://internationalsales.lexisnexis.com/glossary/compliance/pestel-risk-monitoring

Perera, R. (2020). Understanding of porter’s five force model. Sri Lanka: Nerdynaut publications

Puranam, P., Vanneste, B. (2016).Corporate strategy: Tools for analysis and decision making. London, UK: Cambridge university press

Raghunath, S., Rose. I.E. (2017). International business strategy: Perspectives on Implementation in emerging markets. London, UK:Palgrave Macmillan 

Schmid, S. (2018). Internationalization of business: Cases on strategy formulation and implementation. Berlin, Germany: Springer publication

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