Business Environment of Musto Company
The report provides analysis of the business environment that affects the decision making in the Musto Company in the United Kingdom. Musto is located in England and deals with clothing. Therefore it is a clothing company, which trades sailing clothes, shooting apparel, lifestyle outdoor apparel as well as equestrian clothing. The company sell it is clothing to over 40 countries of the different continent. The uniforms, it provides are trusted by over50, 000 professionals. They are worn by national teams, Olympians, as well as over 200 resorts, use them. However, the company is underutilizing the new technology such as new advertising technology e.g. linked in, viper, it is faced by competition from other superior clothing companies such as Fendi Company, House of Versace Company, Burberry Company, and their packing environment is still costly. Kenya is a good country that the country can extend it is business to for many reasons. These reasons include it is political stability, low competition and it has a high clothing demand.
Technological changes
The advancement of technology has contributed to current global progress. Due to the advancement of technology the communication technology has become strong force makes the sharing of the information to become easier and cheap (Payn et al., 2015, p. 23). The company is taking advantage of the technology in various platforms such as YouTube 40%, Twitter 5%, Facebook 20%, Instagram 15%, WhatsApp 5%, hangout12%, Pinterest 5% and linked in 12% (Allouhi et al., 2015, p. 5). The power of advancement of technology makes most of the company to expand globally that facilitate the affordable advertising of the goods and services to reach the potential customers that are targeted. Using this advanced communication technology aids in reaching every individual in the world making them aware of the products that are in the present market. At the same time, Musto has used Cibertill technology allowing it to store information in the cloud. This has aided in cloud marketing of their products.
Environmental factors
An environment is another factor that affects the company’s progress. According to the research indicates that some environments are not suited for the setting of the firms, because of the environmental changes of a specific state (Komu, 2017, p. 52). The company has focused on the sustainability of the favourable environment that is friendly for the comfortable provision of goods and services that are offered. For instance, Musto changed the situation of their offices to behind St. Katharine Docks, space behind it, from Liverpool Street. This aided in reducing the number of the plastic packing bag, it enabled recycling of the packaging materials and changed the mode of good transportation from air flight to shipping (Rwehumbiza, 2017, p. 31). This change enabled the Musto Company to support various projects such as Ocean Cleanup as well as Turn the Tide on Plastic bags. For instance, the number of packaging bags reduced from 200000 to 100002.
Demand
Demand is one of the factors that affect the trend of the future and developments globally. It depends on the price and the products that are in the market. For instance In the case of this company the price of the products and the amount of the goods the customers that are willing to purchase. Most of the time, the customers want to buy more products at a lower price (Luo et al., 2015, p. 62). The amount of product the customers are willing to buy is most of the time depends on the type of goods purchased. This arises when there is a relationship between the customer and income of the customers (Mirugi, 2017, p. 37). This implies that when the income becomes higher the demand for the goods and services increases and when the income comes down the demand of the products also fall. For instance, Musto Company, receives a demand from various parts such as Africa 20%, Asia 25, North America 1%, South America 2%, Australia 10%, Antarctica 15% and Europe 27%. Therefore, the demand is relatively high in the company.
Competition
Competition has become the primary challenge in the global market. It arises when many companies are situated in one geographical area, producing the same products in the market. This may lower the prices of the goods and services because the demand for the products is not directly proportional to the consumers (Makasi and Govender, 2017, p. 8). At the same time, similar goods that are cheap and act as the alternative to produced goods lower the price of the products produced by various companies. For instance, Musto Company faces completion from Armani Company, Fendi Company, House of Versace Company, Burberry Company, Prada Company, Hermes Company, Gucci Company as well as Louis Vuitton Company.
Political factors
Political factor is an external factor that can affect the global trend of the development and future progress. The managers are supposed to assess factors like demographical factors, legal and ethical factors while considering where to locate the firm (Gupta, 2017, p. 37). First, they should put into consideration on the state policies that might affect the company. Secondly, the increase and the decrease of the government tax, which becomes a political factor more especially to the company (Apunda et al., 2017, p. 9). Thirdly, is the issue of Political stability is a matter of balance should be put in place because different countries differ in between security and the regulation that it has to govern them. The political factors determine the political stability of a nation. The political stability of country aid in establishing a business that can last for an extended period. At the same time, the political factors determine the governing system of the country. For instance, Musto has not been able to supply areas such as Somalia in Africa, South Sudan in Africa, Pakistan, and Afghanistan, Iran as well as Iraq because the countries are politically unstable. Therefore this has impaired the expansion of the Musto Company.
Supply Cost
The supply cost and the prices of the goods and services are related when the demand as a factor remains constant (Bohari et al., 2017, p. 48). The increase in the supply of the goods and services, lead to the fall of the prices at lower equilibrium. When the amount becomes the scarcity, while the demand remains constant the prices tend to become higher equilibrium hence lowering the quantity of the products. For instant Musto, supply cost has reduced over the years since it started in the year 1965. For instance in the year 2004 £80 million, 2008 £75 million, 2016 £1.5 million.
Kenya’s Domestic Factors Regarding Clothing and Textile Analysis
Demand
Clothing in Kenya is one of the goods that are highly sold in Kenya. Cloths can generate a profit of approximately 50 to 80 percent profit (Alimi and Ahmed, 2017, p. 42). The produced clothing in the country cannot satisfy the population. The Kenyan population is approximately 50 billion people, but the clothing supplied can only cater for 20 billion people in the country. For instance, the men and women clothing, beds, school uniforms, institution uniforms like police, children clothing among other basic clothing are some of the clothing goods that are highly consumed in Kenya. From 2015 to 2018 the demand for products increased positively. In 2015 the demand increased from 0.8, 1.2, 40, and 2018 respectively (Musau et al., 2017, p. 56). This shows that more clothing is need by people living in Kenya.
Competition
Textile, as well as the clothing industry products, face competition as well in Kenya(Katende-Magezi, 2017, p. 90). The most significant completion is from the second-hand products in the country. Many group and companies in Kenya import the second-hand clothes that are highly distributed and sold in various parts of the country. These second-hand goods are cheap, and many people tend to prefer them to new rights (Behuria, 2017, p. 43). At the same time, the local companies use materials and products that are cheap and are easily bought. For instance, the second-hand clothing (mitumba) are obtained at about ten times the new cloths rate on a daily basis. At the same time, the locally produced clothing is sold at the higher standard because of their availability to even local areas. Additionally, these local companies have provided the job opportunities to the local people who market their products more efficiently with effective communication (Mowforth and Munt, 2015, p. 89). Therefore, in Kenya, the domestic clothing are readily available, and imported second-hand clothing provided the show with a high completion in the production of new clothing that the U.K textile and apparel manufacturing company intend to supply as they expand their companies to Kenya. For instance, in the year 2004, 2008, 2012, and 2016 the sold second-hand clothes and beddings are approximately twice more than the new clothes and bedding from cloth and textile industries.
Cost
The cost of the new clothing in Kenya is relatively high. The new goods are sold at a higher price compared to the second-hand clothing (Posada et al., 2015, p. 43). This new clothing’s rate is almost ten times higher than second-hand clothing. For example in 2018, the secondly had dresses go 100 and the new go at 1000, this is approximately ten time the cost of the second-hand clothes. The same with other clothing such as trousers, beddings and carpets (Stewart and Wild, 2017, p. 64). However, at the time the cost decreases due to high competition from the second-hand clothing, (mitumba). Therefore the value of the goods shows an increasing trend in the country except for the time that the game is high or the demand for this goods decreases.
| Second-hand clothing (2018) | Dresses | trousers | beddings | Carpets |
| Price | 100 | 200 | 500 | 800 |
| Second-hand clothing (2018) | Dresses | trousers | beddings | Carpets |
| 1000 | 2000 | 5000 | 8000 |
Cultural
Culture is a crucial key factor that has influenced the type of clothing produced in Kenya. Kenya is a country that contains multiple cultures. The people in the country have traditional practices that affect the textile and clothing production. The regional demand is different: each county has it is prevalence (Posada et al., 2015, p. 43). However, most of the people have adopted the Christian religion that tends to neutralise their cultural practice. For example, women are required to be in dresses and skirts more than dressing in trousers, and jeans clothing are discouraged among the men as well. This is clear indication of the cultural influence on the required goods in many areas. At the same time, the Islamic in the coast area have their cultural dresses that cover all their body parts(Posada et al., 2015, p. 43). Their cultural requirement from the clothing and textile industry is quite different. Therefore cultural practices influence the required clothing and textile products in this country.
Political
Political culture determines the government policies on the production and selling of any goods and political stability. Kenya contains a democratic political system. This allows the freedom of expression in the country and investment in the country is allowed. This country is not faced with wars arising from political crisis often. However, the political tension rises especially during the election period whereby at time country gets into the internal wars. For instance, in the year 2007, the country got into post-election violence that resulted in the war. In this year, business was destroyed such Sony sugar company that was turned into ashes (Behuria, 2017, p. 43). However, this was only experienced at that particular time, and currently, the country election shows much improvement. No war has been reported from that which happen in the year 2007 post-election, the 2013 and 2017 election was well conducted without war. Although the price of goods reduces at this period due to people going to the countryside to vote (Behuria, 2017, p. 43).
Policies and regulations
The Kenya government has established policies and regulation that govern business. Licensing is one of Kenya’s regulation. Any business in the country must be licensed as multiple businesses or single business (Behuria, 2017, p. 43). At the same time tax is a necessary payment in this country. All business are taxed according to their income on a monthly basis (Behuria, 2017, p. 43). The taxing is done in every county. If the business is located in different counties, then each business is differently taxed at the rates of those counties. Tax in urban areas is higher than rural areas. Any industry must meet the human and environmental rule and regulation at the same time. Therefore Kenya has a set of rules and policies that govern any business in the country.
Ethical issues
In Kenya, every business is required to have the code of behaviour or conduct as well as ethics. The products that are produced and the production process should not cause harm to people. The business should be conducted fairly, and customers need a fair treatment as well. The culture of people should be respected. The seller’s decisions should be respected as well. Also, the administrative rules, policies should be preserved and adhered to at all cost (Behuria, 2017, p. 43).
Conclusion
The UK textile and manufacturing company for it to expand its business investment boundaries to other countries, it is important for it to consider global factors like demand, political, competition, supply cost, environmental changes as well as technological changes. Kenya is a potential country to set business because according to the analysis of the findings it meets most of the domestic requirement.
Recommendations
- Musto Company should look for ways on how to adapt other new technologies to promote effective communications to its consumers globally through advertisements, e.g. Emails, linked in, Hung out, spark, emo and Viber.
- The company should consider having more packing places apart from behind St. Katharine Docks to other parts of the world.
- The company should consider improving the quality of the product, advertising mechanism and sales rates to overcome the competition coming from other companies globally.
- Kenya is a good country to invest in since it has a great clothing demand. People in this country can buy the product.
- Competition can be conquered through the production of fair clothing that goes at a low price. Should consider the production of cheap goods and sail them to Kenya.
- Before expanding your business to Kenya, ensure to have consulted and registered your company to be legal according to the Kenyan law.
- Consider production of goods that are relevant to the culture, and that can be accepted by the people in the community
- Should have the finance for capital and payment of labour for at least one year since it may take a year to gain the profit.
References
Allouhi, A., El Fouih, Y., Kousksou, T., Jamil, A., Zeraouli, Y., Mourad, Y., 2015. Energy consumption and efficiency in buildings: current status and future trends. J. Clean. Prod. 109, 118–130.
Apunda, E.A., de Klerk, H.M., Ogina, T., 2017. Technical knowledge and skills development in the informal sector in Kenya: The case of custom tailors. Int. Rev. Educ. 63, 341–361.
Behuria, P., 2017. The political economy of import substitution in the 21st century: the challenge of recapturing the domestic market in Rwanda.
Bohari, A.M., Hin, C.W., Fuad, N., 2017. The competitiveness of halal food industry in Malaysia: A SWOT-ICT analysis. Geogr.-Malays. J. Soc. Space 9.
Daniel, B., 2015. Big Data and analytics in higher education: Opportunities and challenges. Br. J. Educ. Technol. 46, 904–920.
Fahimnia, B., Sarkis, J., Davarzani, H., 2015. Green supply chain management: A review and bibliometric analysis. Int. J. Prod. Econ. 162, 101–114.
Gupta, P.M., 2017. Swift Shifting in Customer’s Attitude towards Second-Hand Items: A Study of Parameters Included in Clothes Purchasing Decisions–In Special Reference to Meerut Region (Uttar Pradesh, India). AAYAM AKGIM J. Manag. 7, 8.
Katende-Magezi, E., 2017. The impact of second-hand clothes and shoes in East Africa.
Komu, C.W., 2017. Factors That Affect Relative Product Quality of the SMEs in the Kenyan Apparel Industry (PhD Thesis). United States International University-Africa.
Luo, X., Wang, J., Dooner, M., Clarke, J., 2015. Overview of current development in electrical energy storage technologies and the application potential in power system operation. Appl. Energy 137, 511–536.
Makasi, A., Govender, K., 2017. SuSTAINABLE MARKETING STRATEGIES IN THE CONTExT OF A GLOBALIzED CLOTHING AND TExTILE (C&T) SECTOR IN ZIMBABWE.
Mirugi, F., 2017. Role and Impact of EPZ in Attracting FDI in EPZ Apparel and Textile Industry in Kenya (PhD Thesis). United States International University-Africa.
Mowforth, M., Munt, I., 2015. Tourism and sustainability: Development, globalisation and new tourism in the third world. Routledge.
Musau, E.G., Namusonge, G., Makokha, E.N., Ngeno, J., 2017. The Effect of Transport Management on Organizational Performance Among Textile Manufacturing Firms in Kenya. Int. J. Acad. Res. Bus. Soc. Sci. 7, 1015–1031.
Payn, T., Carnus, J.-M., Freer-Smith, P., Kimberley, M., Kollert, W., Liu, S., Orazio, C., Rodriguez, L., Silva, L.N., Wingfield, M.J., 2015. Changes in planted forests and future global implications. For. Ecol. Manag. 352, 57–67.
Posada, J., Toro, C., Barandiaran, I., Oyarzun, D., Stricker, D., de Amicis, R., Pinto, E.B., Eisert, P., Döllner, J., Vallarino, I., 2015. Visual computing as a key enabling technology for industry 4.0 and modern internet. IEEE Comput. Graph. Appl. 35, 26–40.
Rwehumbiza, D.A., 2017. International expansion and unobserved heterogeneity in critical success factors: Empirical evidence from Tanzania and Kenya. Afr. J. Econ. Manag. Stud. 8, 235–252.
Stewart, B., Wild, C.P., 2017. World cancer report 2014. Health (N. Y.).
