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The global business can be driven by political, technological and economic factors. The global business environment is the environment of different countries, regions and unfamiliar factors from the domestic environment. It can affect the decisions of the firms and according to that the company uses their resources and capabilities. The global environment refers to the atmosphere of the earth. The environmental issues can affect the local and national areas. The availability of raw material, supply of labour and the expectations of the workers depend on the global environment. It is important for the global companies to contemplate all the ideas for doing business in the international environment to understand all the laws so they can maintain the sustainability and the commitment to ethics (Radovi? et al. 2019). There are many challenges the companies have to face in the global environment including natural calamities, lack of leadership and others. The company Gucci is chosen for this case study. The company is one of the well-known companies. The company is mainly known for the manufacturer of luggage's, luxury travel bags and fancy bags. The company is holding a position in the global environment and the customers have good faith in the brand.
Major Challenges faced by Gucci in global business environment
Gucci is one of the top brands in international business. The company has their reputation that is strong enough among the customers. But in this year, 2020, Covid 19 has changed the business operations in all over the world (Barac et al. 2016). The pandemic due to Covid 19 has made the business slower than the last 10 years. The pandemic has its impact that is long lasting in the global business world. The company Gucci is the well-known brand but the company also faces the challenges due to Covid 19.
Global pandemic:
Pandemic has its own impacts on the people and it lasts for so long. People cannot get out of the house and in this situation, they are not mentally prepared for buying luxury fashion accessories. Besides that, the accessories of Gucci are expensive enough. Pandemic has its own effect on the people, and not only on people. It also affects the personal hygiene, and the personality of the people (Madi et al. 2017). It has also an impact on the buying habits of the customers and due to that the top fashion brands face challenges in the business world.
The crash in market and recession
Covid 19 worked as the catalyst for crashing the market of the fashion brands including Gucci. The company is a luxury brand and in the situation of recession some people are not able to buy those fashion accessories. The products of the company are quite expensive. Due to the pandemic, people cannot take risks to buy all those things. It exploits the global market of the company.
The mistrust of systems
Global consumers are becoming afraid due to the Covid 19. People are facing problems due to using masks, maintaining distance. People are fighting for vaccines and in this situation, people are not mentally prepared for buying expensive accessories. Even the executives started considering that they should shift from the expensive brand to the brands that are enough necessary in the situation of pandemic.
Weak productivity
The sale of the products has already decreased so the company makes the production slow. The business operations of the company become complicated. The pandemic has reduced productivity of the company (Tavares et al. 2019). The cost of the products increases due to the increasing prices of raw materials so the company resides to slow down the process of productivity.
The concerns of the environment
The company Gucci has its own business strategy and plans. But due to the pandemic, the company has to change all the strategies. Covid 19 has changed the global environment of businesses (Bertoli et al. 2016). Due to the lockdown, people stopped travelling so people have reduced their buying habits of accessories.
The shortage of the talent
The people are becoming unemployed and the company is becoming unable to hire new talents who can be beneficial for the company. Due to Covid 19, the rate of unemployment and underemployment have increased. So, it has failed to create the pool of talents. The shortage of talent can destroy the positions of the market. So, the company needs to widen the pools of talent that can affect the economy.
Advanced technology
The technology has powerful effects on the business. Gucci is one of the leading companies in the fashion industry. The company has upgraded their technology by adapting the technologies like blockchain, and the arrival of machines can change the operations. This can change the landscape of the business. The company can make profits by making e-commerce stronger.
SWOT analysis on Gucci
SWOT stands for strengths, weaknesses, opportunities and threats. The analysis is used to evaluate the competitive position in the international world of businesses. The analysis examines the external and internal factors of the company.
Strengths
The company Gucci has already a strong brand image in the fashion industry besides that it has created a bond of trust among the customers. The company also controls the channels of distribution. The company has its own strong supply chain besides that the company has good relations with the suppliers and retailers. The company has more than 250 stores in all over the world so it can be said the company is well known. Besides that, the company has a huge portfolio of products such as clothing, wallets and watches. The company has taken an initiative of CSR by partnering with UNICEF (de Bruin et al. 2020). The company also has association with the well-known companies like Ford and others. The company does their endorsements by the well-known personalities (Kumar et al. 2020). The advertising and promotion by the company made the company a top fashion brand.
Weaknesses
The company has to invest a huge amount of money in the endorsement of the company and also invest a lot of money to protect and maintain the brand image of the company. The company also has to face the losses because of the fake products of the brand worldwide. Besides that, the products of the company are quite expensive so all the people cannot afford the products. Some competitors copy the designs of the company so sometimes the company faces false allegations on the brand.
Opportunities
The company is already well-known for its branded products and also trustworthy. So, it can be said that in future the company can easily tap markets of developed countries like India and China. The company can easily create competitive advantage in different segments of business and can be the opportunity for Gucci. The company can create their new customer panel that are mostly youngsters by creating stylish designs.
Threats
The fashion industry is competitive and the segment of the company is limited enough. It can be a barrier for the growth of the company. The substitute of the company' s products is available enough and the customers have so many options. It is a global brand so global price fluctuations can affect the company.
Pestle Analysis
PESTLE analysis helps to evaluate the key factors including political, economic, sociological, technological, legal and environmental influences on an organisation. It describes the framework of macro environmental factors that can affect the strategic management of the company.
Political factors
The political factors can affect the company. The political challenges can affect the environment and stops smooth functioning of the company. The political system can give protection to the intellectual property that can create negative consequences for Gucci. The higher levels for taxes for the products so it can affect the profitability of the company. The brand has already faced negative consequences due to their import, export operations. Besides that, due to Covid 19, the government increases and makes the rules strict so it can create problems for the organisation.
Economic factors
The economic factor focuses on the purchasing power of the consumers. The company has faced challenges due to high prices of the products. The positive contribution to the economy has increased the domestic production of the company. The operation done by the company has increased the capital of the company. The economy of the world decreases due to the pandemic. The company is facing challenges. Besides that, the company has high priced products so the sales of the products are becoming less.
Social factors
Gucci is a luxury brand and the customers have specific demand for it. The company always delivered the luxury fashion accessories including wallet, bag at its best quality. They have established a loyal base of customers. The company has promoted their products to the general in an effective way. The company recognises the value of its own employees and helps to enhance the lives of the people to make the products and also the company supports the community. The company contributes to a variety of projects such as the rights of women, and also promotes the health of the children.
Technological factors
The technology has its own effect on the brands. The company is focusing on developing the new ideas by applying various types of technologies. The company is trying new innovations to improve the efficiency of the products. The company is creating awareness and they have promoted the products on YouTube, and other social media. The company produces the products and helps the company to increase the revenues.
Legal factors
The company Gucci follows all the laws and regulations to provide the customers unique products. The company ensures that all the employees will get treatment. The company should also protect the products from infringement. The company faces challenges with the other rival companies.
Environmental factors
The company Gucci has a commitment to fight against environmental issues so they can safeguard the planet and maintain sustainability. But as mentioned above, the company has many competitors. The company has a new target to establish the new standard in the luxury retail industry. The companies follow to create a cruelty free model. The company is already influential so the company is creating the goals achievable.
Porter's five forces model
The Porter's five forces model measures the successes of the company by evaluating the insights of the company.
Intense rivals
There is an intense level of competition in the fashion industry. The industry engages the companies to give rewards to the customers by giving them services at affordable rates so they can become engaged with the company. The company is already fighting with the rival companies. In the situation of Covid 19, the company is trying to maintain environmental sustainability so it can be beneficial for the company.
Threats of new entrants
One of the crucial factors is intensity of competition. Due to entering the market, the company is trying to innovate new ideas and apply the technologies so they can hold their position in the international market.
Threats of substitutes
The products of the company have many substitutes. There are many substitutes of the company's products. Besides that, there are many fake products of the company. It can ruin the images of the company.
Bargaining the power of suppliers.
The company is already a famous brand but the company is facing challenges due to the pandemic. The economic situation decreased due to the pandemic but the company is trying to switch low-cost things so that they can increase the customer's demand. The products have their dependency over the suppliers.
Bargaining the powers of buyer
The company always allows the clients to have the high power of bargaining. The low cost enables the customers to seek other suppliers. The company always tries to engage their stakeholders so that they increase the business on a constant basis.
Conclusion
The company Gucci is also a well-known brand. Due to the pandemic, the whole world is facing the recession. The marketing crashes due to the pandemic. The company Gucci, is a well-known brand but the pandemic decreases the production of the company. But it can be said that the company is trying to overcome the challenges by innovating new ideas and adapting the technologies.
References
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