Australian UGG Boots Pty Ltd: Genuine Australian Made Sheepskin Boots

About Australian UGG Boots Pty Ltd

Question:

Discuss about the dynamics of the business environment and how it impacts the decision making and policing formulating process by the management.

Australian UGG Boots Pty Ltd is a footwear manufacturing organization that was established in 2006. The products that the company offers specializes in genuine Australian made sheepskin boots. The company is located in Melbourne and has the distribution, manufacturing, administration; and retail form the factory is all situated in the same location. The company is driven by passion and dedication of the founders. Every product that the company is hand crafted and has been backed by quality assurances as it is the proud member of bodies such as Australian Made and Australian Sheepskin Association. This guarantees the authenticity and the claims of the organization of being made in Australia and that the quality of the products and the factories has been regularly monitored by the Australian Sheepskin Association (Australianuggboots.com.au, 2017).

The organization recognizes the responsibility it has towards the society and the environment hence has been associated with several other associations to contribute. The company has also received accreditation from the international brand Ozitude® which proves the quality and the innovation the organization invests in manufacturing the products (Australianuggboots.com.au, 2017).

However the organization has been recently subjected to a lot of media and press attention due to the Law suit the owner, Eddie Oygur has registered against the Deckers Corporation for trade marking the word “UGG”, this could mean that the company will have to give up the business operation (Smh.com.au., 2017).  

The country that has been chosen for evaluation of the opportunity is Finland, which is a European country and the climate of the country is subjected to severe cold conditions which is a good opportunity for the company. Finland gained independence in the year 1917. The country is a part of the European Union and is characterized   high quality education, promotion of equality, and a national social welfare system. One of the major issues that the country is presently facing is the aging population along with hindrances from the fluctuations of an export-driven economy (Finland.fi, 2017).

In order to understand the prospect of a business organization in an international market it is important to analyze the business environment (Wild et al., 2014).  Strength and weakness are the aspects related to the internal business environment of the country, on the other hand the opportunities and weakness are analyzed with respect to the external business environment (Hamilton  & Webster, 2015).

In order to conduct the strategic analysis of the macro environmental factors of a country PEST analysis is used. This process seeks a holistic approach towards the evaluation of the prospect of a company in the international market. The PEST analysis guides the management of an organization to take decisions regarding the expansion and strategies of growth. The analysis will provide information for the organization regarding the aspects that should be focused upon while choosing the mode of such as socio-cultural distance, country risk, market size and growth, and trade barriers (Gupta, 2013).

Opportunities and Challenges

Political: The country has a stable parliamentary republic government that is complemented by a contemporary and competitive economy. The country enjoys trade and business liberties form the government. It is also welcoming to other investors in terms of export duty imposing. Both private and public business enterprises have trade liberties under the government which allows the organization to grow and expand.  The government has also supported the business environment of the country during the period of recession (Holt et al., 2017).

The political environment is also characterized by high government spending and rigidity in the labor market. The spending of the government is close to half of the GDP of the country but this sending ensures welfare of the people (Cia.gov, 2017). For a startup to incorporate a business in Finland would take an average of 14 days which is much lesser than anywhere else in the world (Santonen & Paasonen 2015). Licensing procedure is also less complicated and takes less time. As a part of the European Union the trade policies of the country is liberal. The government of Finland in June 2016 enacted a Competitiveness Pact in order to reduce the labor cost of the country. This pact included factors like more flexibility into the wage bargaining system and increased hours worked. Health care and social services are from the beginning the prime focus of the government. Most of government spending is also channelized in these directions (Santonen & Paasonen 2015).

Economic:  The country has joined the European Union in the year 1995 and has adopted the euro as the currency in 1999. Finland has a highly industrialized, largely free-market economy the purchasing power of the people and the GDP are high amounting to per capita GDP of $42,300 (2016) (Cia.gov, 2017). This gives an opportunity for business to thrive and grow in the Finnish land. The rate of unemployment of the country is low and is reducing even further (Chetty et al. 2015). One of the most important aspect of the economy is the export of commodities such as electrical and optical instruments, paper and pulp, chemicals, equipment and machine, transport systems as well as timber. Due to the global economic crunch the demand of Finnish exports has been affected negatively and the economy has faced severe losses, the local business and also foreign investors have felt a crunch in the profitability. But the country has successfully overcome the repercussion of the global crunch (Midttun et al. 2015). The country has been known to be one of the best performing economies. But theeconomy of Finland has suffered a drawback form the global financial crunch from the year 2012 to 2014.

The debt ratio and the general government finances were impacted negatively from the recession. The growth of the economy recovered from 2015, posting a 0.3% GDP increase before growing 1.4% in 2016 (Cia.gov, 2017).

There is also enough fiscal freedom in the economy for business organizations to thrive as the taxation rates are moderate. This also allows multinational organization to expand their business in the economy. Inflation rate: 0.4% as on 2016 (Cia.gov, 2017).

Strengths and Weaknesses

. The rigidity of the labor market is one of the most challenging barriers of the economy. Increasing the demand for exports is also a challenge for the country (Jääskeläinen  & Christerson, 2015). 

Social and cultural: The population of the country is sparse and mostly situated around the capital Helsinki. The standard of living of the people is high and modern owing to the high purchasing power and high standard of education in the country. The lifestyle of the people does not change. The social security of the people is strong and is well known all around the world. On the other hand, the Finnish government provides the citizens the best quality health care system which is decentralized. The society is liberal and is modern in outlook and welcomes innovation and creativity. The society is also very fashion forward society and because the climatic conditions of the country are extreme the products that the organization is offering will be perfect for the people (Ahlberg, 2016).

Technological: Finland is known as the leader in technology in Europe and the quality and investment in technological innovation and creations are very high quality and is renowned world-wide. Nokia is the best example of Finland’s technological advances. The government has also been supportive towards technological development in the country and is now focusing on environment friendly clean technology. The country has been observing a good balance in between public and private funding. One-third comes from the government whereas two-third of the research development funds in Finland comes from private sector. Finland has a well management in their development funds and uses it widely in developing their country’s Technology (Enqvist, 2014).

Conclusion

The target markets of the company are people who are looking for a comfortable pair of UGG Boots at a moderate price. The target market should be from an average or above average income group. Finland is the best place for expansion as the target market as it has been analyzed that the per capita GDP of the country is high. The country is also welcoming of business in the economy with its liberal business and trade policies. The craftsmanship, the premium quality of the pair of boots and the passion of the owner that drives the organization will be recognized in the Finnish culture as people prefer to have a high standard of living as well

Reference List:

Ahlberg, E. (2016). Trend, status or need? A study of men’s fashion customer behaviour in Norwegian, Swedish and Finnish markets.

Australianuggboots.com.au. (2017). About Us. Retrieved 21 December 2017, from https://www.australianuggboots.com.au/en/company/about-us

Chetty, S., Ojala, A., & Leppäaho, T. (2015). Effectuation and foreign market entry of entrepreneurial firms. European Journal of Marketing, 49(9/10), 1436-1459.

Cia.gov.(2017). The World Factbook. Retrieved 21 December 2017, from https://www.cia.gov/library/publications/the-world-factbook/geos/fi.html

Enqvist, J., Graham, M., & Nikkinen, J. (2014). The impact of working capital management on firm profitability in different business cycles: Evidence from Finland. Research in International Business and Finance, 32, 36-49.

Finland.fi. (2017). Home Page. Retrieved 21 December 2017, from https://finland.fi/

Gupta, A. (2013). Environmental and pest analysis: An approach to external business environment. Merit Research Journal of Art, Social Science and Humanities, 1(2), 13-17.

Hamilton, L., & Webster, P. (2015). The international business environment. Oxford University Press, USA.

Holt, J., Leach, A. W., MacLeod, A., Tomlinson, D., Christodoulou, M., & Mumford, J. D. (2017). A quantitative model for trade pathway analysis of plant pest entry and transfer to a host in European Union territory. EPPO Bulletin, 47(2), 220-226.

Huhtala, J. P., Sihvonen, A., Frösén, J., Jaakkola, M., & Tikkanen, H. (2014). Market orientation, innovation capability and business performance: Insights from the global financial crisis. Baltic Journal of Management, 9(2), 134-152.

Jääskeläinen, J., & Christerson, L. (2015). Finnish SMEs expansion opportunities to the Swedish market: Implications for marketing strategy through partner network.

Midttun, A., Gjølberg, M., Kourula, A., Sweet, S., & Vallentin, S. (2015). Public policies for corporate social responsibility in four Nordic countries: Harmony of goals and conflict of means. Business & Society, 54(4), 464-500.

Santonen, T., & Paasonen, J. (2015). Evaluating private security sector market perceptions in Finland. Security Journal, 28(3), 230-251.

smh.com.au. (2017).  Australian ugg boot manufacturers fighting to use the word ‘ugg’. Retrieved 21 December 2017, from https://www.smh.com.au/business/consumer-affairs/australian-ugg-boot-manufacturers-fighting-to-use-the-word-ugg-20160523-gp1pwt.html

Wild, J. J., Wild, K. L., & Han, J. C. (2014). International business. Pearson Education Limited.

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