PESTLE Analysis Of UGG Australia's Diversification Plan In India

Discuss About The Journal Emerging Knowledge Emerging Markets.

UGG also known as UGG Australia is a well reputed American company which aims at selling footwear, bags, clothing, outwears, home appliances and other many goods. It is also a sub division of Deckers Brands which is headquartered in Goleta, California (UGG, 2018). It has also an ecommerce division which is situated in Flagstaff, Arizona. The company was founded in 1978 by Brian and Smith with a yearly revenue of $1.8 billion. The major focus of the brand is on the delivering the luxury products and services to the potential customers.  UGG Australia has planned to serve across the global network as well because the products offered by the company are quite comfortable, fashionable and attainable. UGG Australia is the world’s largest purveyor of A- grade sheepskin (Conley & van Acker, 2011).

Here, the report will include the PESTLE analysis of the UGG Australia which is planning to diversify its business operations in India. PESTLE analysis is also commonly known as PEST analysis which is referred to the concept of the marketing principles. In addition to this, this analysis is widely used by large number of organizations in order to track the challenges that has been faced by the environment which they are operating a new business or new product in a new market. PESTLE analysis include 6major categories such as political, economic, social, technological, legal and environmental. PESTLE analysis emphasis on the whole scenario of the environment from different perspective which one can easily track while envisaging on any particular plan (Subic, Shabani, Hedayati & Crossin, 2012).

India being in the largest democracies in the entire world, is ran on a federal form of government. The political factors include government policies, interest of politician’s, and the ideas shared by numerous political parties. As an outcome, the business environment in India is highly affected. In addition to this, if UGG Australia plans to enter a new market to expand its business operations in India, it will create a better opportunity for the people living in India. The footwear industry in India has a huge growth in terms of profits (Asher  & Novosad, 2017).The people living in India are engaged in shopping and they prefer more luxury brands as compared to others. The major income of the people in India are invested in buying the luxurious products and services (Nuruzzaman, 2012).

Economic Factors

There are very few competitors in the market which will create difficulties for the company. The footwear market in India is in a rapid growth because of the growing demands of retail industry and its products. UGG Australia is already a well-established brand in Australia and if it plans to diversify its business operations in India, it will be quite profitable and apart from this, it is very easy to enter the new Indian market. The rules and regulations in India are highly supported by the government which do not create any hindrances for any company to enter. Moreover, the political factors that may cause obstacles in creating a new market in India are highly negotiable. Thus, the political factors do not highly affect the business (Statistics, 2011).

Economic factors includes interest rates, changes in tax system, economic growth, rate of inflation and exchange rates. The economic condition of India is highly stable and the minimization in licensing, liberalization of foreign capital, establishment of FIBP has made a continuous improvement in the retail industry of India. In the year, 2014, GDP of $5.07 trillion was figured out which turned to be improved from year 2013 i.e. 5% (Jain, Nair  & Jain, 2015). The footwear industry in India is highly segmented among organized segments and unorganized segments. The organized segments refers to 1/3^rd of the entire market which is characterized by main domestic and international global competitors such as Bata, Nike, Liberty, Metro, Adidas and many more. Similarly, unorganized segment includes small cottage industry which is based in manufacturers. The retail footwear industry of the Indian market is growing with high pace and is predicted that it will grow at very high rate. The Indian footwear market is categorized into men, women and kids departments. Currently, the segments of women category is determined under unorganized players however,  the elements like growing numbers of working women and increasing urbanization are predicted to enterprise the overall purchases from the mentioned segments (Lahiri, & Samanta, 2010).

The rural segments of India is still untouched in case of footwear industry in India. There are large number of companies that have repositioned itself and established new particular products. So, it will create an opportunity for the company to enhance its market growth and boost is sales ratio. Apart from this, if the company plans to diversify its business operations in India, it will also create an opportunity for the Indian market to boost the economy which will automatically increase the profits for the company. The demand of the footwear industry in India is very high which will be a sign of strength for the new company to enter the new market. The buying behavior of Indians fluctuates from brands to brands based on the income range of the consumers. The customers of the India prefer buying new brands and once they are satisfied with the brands, they will prefer buying it for long term. In addition to this, the company offers wide variety of products and services which can easily suit the living standard of the Indian people. The variations in the footwear is highly preferable by the Indians because they believe that wearing luxury brands will reflect their image and this make them easily convinced to invest in footwear. The company will earn a huge profit in terms of sales and revenue if it plans to enter the new market i.e. India because it is predicted that the economic condition of the India will be growing rapidly by 2025 and this will build an opportunity for the retail market (Kiran & Jhamb, 2011).

Social Factors

The social factors denotes the changes that take place due to changes in trends and culture that will affect the environment in an adverse way. For an example, the growing rate of population has become the major reason for the rise of pension costs and growth of the employment of grownup workers. India’s population is considered to be 1.2 billion and 70% of the people are between the ages of 15 to 65 which denotes that growth for any new industry or new product in the Indian market is very high (Agarwal, Lube, Mitgang,  Mohanty   & Bloom, 2016).If it comes to footwear industry, the range i.e. people between the age of 15-65 are highly involved in buying footwear which will again be a positive sign for the company to rise its sales percentages in India. The variation of the social factors includes education, work attitudes, income ranges and many more.

Technology has played a significant role in the retail industry. It aims at influencing the product development and also focuses on introduction and establishments of new products by reducing the cost. India has 3G as well as 4G technology which has simplifies the large number of technological projects. In addition to this, India is considered to be one of the strongest IT sector across the world which has promoted the development related to IT sectors and software up gradation (Prasad  & Aithal, 2016).

If the company plans to enter the new market to build its growth opportunities, it will be an advantage in Indian Market. The increasing automation in technology and the updating of automation in business activities has created a sense of higher growth. The people living in India used updated technology which aims at creating a digital platform for the potential customers. The UGG Australia aims at building a digital platform where customers are free to shop online and pay for the products which they prefer to buy. This changes in the technology is highly preferable by the potential customers. The online market of people living in India is increasing on regular basis and due to busy schedule of the life of the people, most of the Indians are restricted to online shopping. If UGG Australia aims at managing the online platform for the Indian market, this will help the company to reduce the manual work rather than focusing on the automation (Handa & Grover, 2012).

The legal factors includes the automation in mobile technology, growing automation and problems in technology. In the current scenario, huge number of legal changes in India have taken place which also include disability discrimination and increment in minimum wages which has created a serious impact on the new business. Being a well renowned company, UGG Australia may face some legal challenges but apart from this, the company will have a sound profits in entered in the Indian market. The legal factors in India has become a serious issue for any new industry to capture a new market and establish new products and services in the market (Fernie & Sparks, 2014).

Technological Factors

The increment in the wages of the employees may create an additional cost to the company which UGG Australia may have to suffer. If the company plans to enter in India, it might cost high labor charges because of the changes in the wages and the effects on the costs of labors (Branthwaite, Chockalingam, Grogan  & Jones, 2013).

Nevertheless, whenever it comes to changes in the environment, the essence of air in India is highly affected by industrialization and urbanization. This has created a major health issues for the people living in India. Thus, as a consequence, several pressure groups has been formed to control such issues. The other environmental factors includes telecommunication services, changes in the climates, process involved in recycling and regulations. The company plans to enter the new market and the environmental factors also has a major impact on the business operations. The company should opt for ecofriendly environment in order to create a green and sustainable environment which will help to increase the number of potential customers as well (Akhter & Equbal, 2012).

Conclusion

Thus, from the above report, it can be summarized that PESTLE analysis is used to measure all the factors that resides in the environment along with all the other elements. There are several factors in the business environment which will be an opportunity for the company while entering into a new market. In addition to this, the company will also be able to share high profitability ratio in the new market trend in the changing market scenario.

References

Agarwal ,A., Lube, A.,  Mitgang, E.,  Mohanty, S.   & Bloom, D.E.(2016).  Population Aging in India: Facts, Issues, and Options.    Retrieved April 20th, 2018 from  https://ftp.iza.org/dp10162.pdf

Akhter, S., & Equbal, I. (2012). Organized retailing in India–Challenges and opportunities. International Journal of Multidisciplinary Research, 2(1), 281-291.

Asher, S. & Novosad, P.(2017). Politics and Local Economic Growth: Evidence from India. American Economic Journal: Applied Economics, 9(1), 229–273.

Branthwaite, H., Chockalingam, N., Grogan, S., & Jones, M. (2013). Footwear choices made by young women and their potential impact on foot health. Journal of health psychology, 18(11), 1422-1431.

Conley, T., & van Acker, E. (2011). Whatever happened to industry policy in Australia. Australian Journal of Political Science, 46(3), 503-517.

Fernie, J., & Sparks, L. (2014). Logistics and retail management: emerging issues and new challenges in the retail supply chain. Kogan page publishers.

Handa, V., & Grover, N. (2012). Retail sector in India: Issues & challenges. International Journal of Multidisciplinary Research, 2(5), 244-264.

Jain, D., Nair, K.S. & Jain, V.(2015). Factors Affecting GDP (Manufacturing, Services, Industry): An Indian Perspective. Annual Research Journal of Symbiosis Centre for Management Studies,3, 38-56.

Kiran, R., & Jhamb, D. (2011). A strategic framework for consumer preferences towards emerging retail formats. Journal of emerging knowledge on emerging markets, 3(1), 25.

Lahiri, I., & Samanta, P. K. (2010). Factors influencing purchase of apparels from organized retail outlets. IUP Journal of Marketing Management, 9(1/2), 73.

Nuruzzaman, A. (2012). Indian Futures Market: An Analysis. Management Insight, 7(2).

Prasad,  K.K. & Aithal, P.S. (2016). The Growth of 4G Technologies in India-Challenges and Opportunities. International Journal of Management, IT and Engineering,6(1), 543-551.

Statistics, A. B. O. (2011). Labor Force Australia. Canberra Australian Bureau of Statistics.

Subic, A., Shabani, B., Hedayati, M., & Crossin, E. (2012). Capability framework for sustainable manufacturing of sports apparel and footwear. Sustainability,  4(9), 2127-2145.

UGG(2018). The story of Australia . Retrieved April 20th, 2018 from   https://www.ugg.com/world-of-ugg-story