Strategic Management Assignment Example | Topics and Well Written Essays - 2500 words - 1

Strategic Management - Assignment Example king from both internal and external influences, explains strategies used by Davies in launching this new line, and proposes recommendations about whether this new launch can provide a return on the investment. The PEST Analysis, as part of environmental scanning, provides an opportunity to witness the different external conditions that influence decision-making. This model recognises political, economic, social and technological forces that will determine a firm’s adaptability to external trends. From the political view, Davies’ new business intends to launch 25 stores. Success domestically will determine whether to take this brand international and strategy could be impacted by different taxation or tariffs on imported products, cutting into the profit margin. Depending on the country where Davies might export his goods, political forces can determine speed of new market entry or regulate volume being delivered. The economic environment plays a considerable role in how a business develops strategy. Where this new line will be introduced, the UK, there is a current recession that impacts consumers at all different levels and market segments. In response to consumers slowing their purchases, especially in retail, high-end companies like Versace have stopped production on five different product lines in lower-priced ranges since they were not showing signs of profitability (Choi, 2009). Further, Tiffany closed its business focusing on Iridesse pearl jewelry to focus on diamonds due to sales slumps (Choi). This illustrates how the economic environment drives companies to streamline their product lines or enhance their sales focus on higher-profiting products. Spending patterns in consumer groups can strongly impact strategic direction, especially at the operational level like at Versace. Social trends, also external, impact how a company conducts business in a certain environment. A recent survey of citizens in Asia identified that Asians tend to worry about