About Studio Roosegaarde and its Pollution eating Bike
Question:
Discuss about the Strategic Marketing for Bicycle and Flood Insurance.
It has been observed by various market analysts that only those businesses become successful which understands that external environment does not stay same. It changes from time to time and it is not dynamic. This assignment will highlight the importance of PESTEL analysis for Studio Roosegaarde which is aiming to enter a new market in Paris with its innovative and environmental friendly product Pollution eating Bike.
Studio Roosegaarde is basically a social design Lap which is founded by Daan Roosegaarde in the year 2007. The main aim of this innovative studio is to design products which can be beneficial for controlling the Pollution which is engulfing a lot of popular places across the world. The studio has successfully invented a lot of innovative products and “Pollution eating Bicycle is one of the most popular and important product of this studio (Studioroosegaarde.net, 2018).
The idea of inventing such products came when Dan Roosegaarde visited the beautiful city of Beijing and found that how pollution has created huge impact on the city. After that with his group of engineers and design artist he created an array of products which popularly known as Smog Free Project. All the products of this project are specialized in controlling pollution. The bicycle inhales the polluted air and purifies it and then it releases clean air. The bicycle works in a similar way like Daan’s other products like Smog free tower.
In the current business scenario, one of the major challenges that are faced by the business organizations is the diverse external environment. This is due to the reason that in the current time, performance of the business organizations is being determined by different factors such as market trend and economical situation. Moreover, majority of the contemporary business organizations is operating in the global market and thus, the intensity of the external environment is more. As stated by Ho (2014), initiation of the pest analysis helps in having strategic analysis of the organizations. This is due to the reason that initiation of the strategic analysis with the help of the pest analysis will enable the managers in having effective knowledge about the strategic intent of the organizations. Moreover, it is also be stated by the author that initiation of the pest analysis will also help the business organization in identifying the trend of different external factors to be faced.
For instance, initiation of the pest analysis will help the business organizations to determine the trend in the political environment. Thus, it will be easier for the business organizations to determine the coming challenges and opportunities in terms of the political environment. This will also help them to initiate business strategies in accordance to the identified issues. The author has also stated that initiation of the pest analysis will also help the business organizations to have effective process of decision making process. This is due to the reason that initiation of the pest analysis will help the organizations to have overall knowledge of their external environment and these will help in the deciding the business strategies accordingly.
Challenges faced by business organizations in the contemporary market
There are some authors who have different opinion regarding the use and effectiveness of pestle analysis. According to Bell and Rochford (2016), the effectiveness of the pestle analysis will be more if it can be merged and conjunct with other different strategic tools. This is due to the reason that pestle analysis is not only the strategic tool that can be used by the business organizations rather there are different strategic tools that can be collectively used in order to have more and enhanced effectiveness for the business organizations. The authors have also stated that swot analysis can be used along with the pestle analysis in order to have more effective strategic analysis of the organization.
According to the authors, pestle analysis helps the business organizations in effective determination of the external environment but it cannot help in determining the internal environment of the organization. Thus, in this case, swot analysis can help the business organizations in determining the internal environment of the organizations. Effectively using both the swot and pestle analysis will help the business organizations to first determine the challenges and opportunities from their external environment and in accordance to that using of the swot analysis will help to identify the positive and negative factors. Therefore, it can be concluded that conjunction of swot and pestle will have more effectiveness and holistic impact on the business performance.
According to Andre Cavalcante (2013), one of the major challenging areas for the contemporary business organizations is technology. This is due to the reason that in the current time, technology plays the major role in determining the effectiveness and performance of the business organizations. However, on the other hand, technological environment is rapidly changing and it is important for the business organizations to cope up with the change. In this case, the author has stated that different strategic tools should be used in order to determine the technological change and trend in the market. According to the author, pestle is one of the most effective tools to be used in determining the technological development and change. This is due to the fact that pestle analysis is having a separate element of technological environment.
However, the author has also stated that in some cases, pestle will not be the only tool to determine the technological environment. This is due to the reason that there are some other effective tools also available for the business organizations that can help in determining the technological change. Another tool that is stated by the author in determining the technological change is competitive analysis. According to the author, initiation of the competitive analysis helps the business organizations to identify the strengths of their competitors in the market and technology is one of the factors to determine. Thus, using the competitive analysis with the pestle analysis will help the business organizations to determine the industry standard in relation to the external environment. The organization will be able to initiate their strategies more effectively if they have the knowledge about the industry standard.
Effectiveness of PESTEL analysis and its importance for strategic analysis
Out of the six elements of Pestel analysis 3 elements can create huge impact on the business of Pollution eating bikes. Those 3 elements are Environmental factor, Economic factors and Political factors.
Paris is considered to be one of the most polluted city of the world now. It is really shocking to believe that the city has suffered hugely in last decade due to air pollution. The affect has been so bad that the government has made public transport free on days when the smog level is high so that people do not use their personal vehicle. According to Fyhri and Fearnley (2015), the Cars are the main reason behind this air pollution. The condition of air is such bad that it is equivalent to smoke 10 cigarettes in a room of 30 square kilometres. In the weekend the scenario changes a bit as people do not go out much with their vehicles but in daily weekdays the scenario gets worst.
This particular scenario of the city automatically increases the demand of products like Pollution eating Bicycle of Studio Roosegarrade (Motherboard, 2018). The cycle is specialized in inhaling the smog and transforming it into clean air and then releasing it. This measure can definitely help in reducing the air pollution.
Products like Smog Free towers of Studio Roosegarrde have already become popular in china. As per Daan Roosegaarde the Chinese people is no more bothered about a Rolex watch or a Ferrari all they want is a pollution free clean air. This is why Daan has already join hands with the OFO and TeZIGN in order to design such products. Similarly Daan can easily do partnership with IDEO who mainly operates in European countries in order to do the business in the most cost effective ways. As both Studio Rooegaarde and IDEO operate in under EU so import and export tariffs will not be high.
The political culture of Paris is greatly influenced by the economic and geographic characteristics of France. France is one of the most populated countries in comparison to other European countries which are nearly 65 million (Kie?kowska et.al 2017). The majority of these population leaves in the urban areas and the income of people living in Paris is also high as compared to people living in the interior parts of the county (the Guardian, 2018). This is also a main reason behind rise in air pollution in Paris as almost everyone has their own personal vehicle. As discussed earlier the vehicles are major reason behind the air pollution hence government is taking serious steps in order to reduce the pollution level of the country. Government are trying to increase the number of electric cars. The country does not have any major political issues apart for the conflict between monarchist and republicans. This issue do not create any impact on the business of the country and most importantly when it comes to issues like Air pollution everyone stands in unity.
All this factors are extremely important for the company Studio Roosegaarde to enter the market of Paris.
Use and effectiveness of SWOT analysis and PESTEL analysis
The major problem that the Studio Roosegaarde can face is the competition from other companies who are also inventing similar products like this. The second issue that company can face is setting up a price for their product.
In Paris there are lots of cycle manufacturing companies like Alcyon, Automoto Cyfac etc. All this companies have their unique range of bicycles and majority of the customers buys them as they trust them as a brand. The sales of these by cycle have jumped to about 25% in the last 2 years since the air pollution level has increased. All these companies are also trying to introduce pollution free cycles. Now to enter in such a market can be a problematic for the company. So to overcome this situation Studio Roosegaarde has to follow the similar process that is taking help from the government and showcasing the product as a necessity to the people of Paris like the way they did in China. They already have good brand image after becoming successful in China. They need to utilize that image in order to get an entry to the market.
The second problem that can take place is the setting up a proper price. The Chinese economy and the French economy have huge difference. In addition, the China is having huge population compared to France. Thus, it is recommended that they should initiate mass market pricing strategy in Chinese market. This is due to the reason that niche marketing can be successful in Paris due to their higher per capita income compared to China. On the other hand, initiation of the mass market pricing strategy will help to increase the sales volume. Due to the fact that China is having huge population, increase in the sales will reduce the average cost of production and also helps in enhancing the sales revenue. Another advantage for studio Roosegaarde in initiating mass market pricing strategy is attaining economies of scale. It is important in operating in large country like China. Attaining economies of scale will ensure that unit sold of the products will be more and the threat of new entrants in the market will also be lower. Thus, in the initial stage of the operation in China they should have lower price level in order to gain maximum customers. Attaining maximum market reach in the initial stage will help to gain positive and extensive brand value. This will further help them to have long term viability and sustainability in the market.
These are the recommendations of that the company can follow in order to do proper business in the Paris.
Conclusion
From the above analysis it can easily be understood the importance of PESTEL analysis for any company trying to do business in a different market. All the 6 elements plays a pivotal role for a business to operate properly without any risk. Pestel analysis is a reality checking process for every company and also the key to success as in the case of Studio Roosegaarde who understood the demand of the products of Smog Free Projects in China and now its trying to increase its business all over the world as pollution is one of the major concern in every country.
Reference List
André Cavalcante, S., 2013. Understanding the impact of technology on firms’ business models. European Journal of Innovation Management, 16(3), pp.285-300.
Bell, G.G. and Rochford, L., 2016. Rediscovering SWOT’s integrative nature: A new understanding of an old framework. The International Journal of Management Education, 14(3), pp.310-326.
Browne, M., Knoller, C. and Richter, A. 2012. Behavioral Bias, Market Intermediaries and the Demand for Bicycle and Flood Insurance. SSRN Electronic Journal.
Fyhri, A. and Fearnley, N., 2015. Effects of e-bikes on bicycle use and mode share. Transportation Research Part D: Transport and Environment, 36, pp.45-52.
Ho, J.K.K., 2014. Formulation of a systemic PEST analysis for strategic analysis. European academic research, 2(5), pp.6478-6492.
Kahn, M., 2018. Prospects for Cooperation in Science, Technology and Innovation among the BRICS Members. BRICS and Global Governance, p.168.
Kie?kowska, J., Tokarczyk-Dorociak, K., Kazak, J., Szewra?ski, S. and van Hoof, J., 2018. Urban Adaptation to Climate Change Plans and Policies–the Conceptual Framework of a Methodological Approach. Journal of Ecological Engineering Vol, 19, p.2.
Lichter, A., Pestel, N. and Sommer, E., 2017. Productivity effects of air pollution: Evidence from professional soccer. Labour Economics, 48, pp.54-66.
Motherboard. 2018. These Bicycles Eat Smog and Spit Out Clean Air. [online] Available at: https://motherboard.vice.com/en_us/article/qvdnxm/smog-free-bicycles-china-studio-roosegaarde-pollution-air [Accessed 21 Apr. 2018].
Schepers, P., Fishman, E., Beelen, R., Heinen, E., Wijnen, W. and Parkin, J., 2015. The mortality impact of bicycle paths and lanes related to physical activity, air pollution exposure and road safety. Journal of Transport & Health, 2(4), pp.460-473.
Song, J., Sun, Y. and Jin, L., 2017. PESTEL analysis of the development of the waste-to-energy incineration industry in China. Renewable and Sustainable Energy Reviews, 80, pp.276-289.
Studioroosegaarde.net. 2018. Studio Roosegaarde. [online] Available at: https://www.studioroosegaarde.net/info [Accessed 21 Apr. 2018].
the Guardian. 2018. French political culture. [online] Available at: https://www.theguardian.com/education/2003/oct/01/languageresourcesfrench.languageresources1 [Accessed 21 Apr. 2018].
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