Strategic Recommendations For Ripcurl's Expansion: PESTEL And Porter's Five Forces Essay.

Overview of Ripcurl

Question:

Discuss About The Strategic Management Business Policy?

Ripcurl was established in 1969 by Brian Singer and Doug Warbrick. Ripcurl is one of the largest surfing companies. It is a famous Australian manufacturer of surfboards and wetsuits. The company has stores in Australia, South America, North America, Europe, Asia, Africa and Middle East. Ripcurl is a private company and has competition from public companies such as Billabong and U.S Quicksilver. The Australian Institute for Commercialisation (AIC) was also involved with Ripcurl to search new material and innovations which can improve the performance of heating elements. It also results in reducing heat loss and low power battery consumptions (Anderson, et. al. 2015). The AIC introduced private companies to Ripcurl which provides technology in automotive, giftware and safety product industries. These companies also provide direct technology in new markets. It provides equipment, technology and knowledge to develop a new product. The company is also in talks with Techfast to enhance range of wet suit product. In this report, PESTEL analysis and porter’s five force analysis of Ripcurl is discussed. Issue found in products of the company is analysed. Strategic recommendations are also explained to focus on the expansion of company.

The PESTEL analysis scans the external environment. A company operates in the external macro environment. PESTEL stands for Political, Economic, Social, Technological, Legal and Legal factors. These factors have important role in the value creation of company. A business usually does not have control on these factors and are assumed as opportunities.

Opportunity: The opportunity of Ripcurl in the market is growing demand and new markets. The income level of the company is at constant increase, which can be helpful in the global markets. There are so many local surfing companies in the market, the company can acquire these companies and can expand market share (Berg, et. al. 2015).

Threat: The threat in the market for Ripcurl is changing prices and increased cost of raw materials. Cash flow is also problem for the company which can be result of low prices.

Political factors: The political factors show the complete support from the government. It can be evaluated from the redefined trade barriers and import duties which are effective to Ripcurl. The government made export procedure much easier. The rate of import duty is also reduced subsequently. The government has also made regulations to protect domestic clothing industry. It is also trying to reduce waste which is being produced from electrical products. World Trade Organisation’s bilateral trade agreements have affected Ripcurl (Snyder, 2014). All the businesses are required to submit financial reports to International financial reporting standards.

PESTEL Analysis of Ripcurl

Economic factors: The society spends more income on the products which promote physical activity. The improved standard of living has resulted in increasing purchasing power of the population. It also has increased popularity of surfing and skateboards. The majority of the revenue of Ripcurl is collected from other regions, so it is influenced by the fluctuations in currency. The company has created new markets and earns higher income from the global point of view (Jones, 2015).

Social factors: The brand awareness of the company is influenced by the increasing popularity of surfing and skateboards. The taste of the customers depends on their traditional and cultures. Like people in Australia prefer faded colours and people of US like to buy bright colours. The demand for clothing shows that eco-friendly products are more preferred. Ripcurl fulfils such demand (Ross, 2016).  The company also has non-profit organisation which is committed to enhance the quality of life for the community of board riders by supporting education and health projects.

Technological factors: The technological trend is significant in clothing industry. Ripcurl is using technology to achieve exposure in industry. Television and internet has helped in gaining exposure and attracting customers in surfing and skateboarding. E-commerce has helped in simplifying logistical and organisational difficulties while operating global business (Wilkinson, Wood & Demirbag, 2014).

Environmental factors: Consumers prefer to buy more of eco-friendly products. They focus on the source of materials, where it is sourced and whether the production process has any negative impacts on the environment.

Legal factor: Ripcurl ensures to complete all legal proceedings such as protecting intellectual property right issues such as logo of brand, name and trademark (Park,Campbell & Bremmer, 2014).

The competition is high in the clothing industry. There are big competitors in the market such as Billabong, Millers, Bonds and quicksilver. The threat of new entries is high because it requires less investment to enter in industry. The buyer bargaining in the market is high because of the various alternatives available in the market. Porters five forces used to better understand Ripcurl’s global expansion strategy.

Competition: Since 1970, there was growing popularity of surfing and then Ripcurl, Billabong and Quicksilver were prominent players in the market for surfing. These companies have still established their brand image in surfing subculture. In the 1990s the company started to pursue international exposure by making available backpacks, wetsuits and watches to gain market share.

Political Factors

New entrants: New companies are entering in the industry as the demand for surfing apparels is going strong. For example Abercrombie & Fitch and Hollister have moved into manufacturing surfing clothes. Afrends is one of the small brand, has gained popularity among young surfers (Soederberg, 2016).

Suppliers’ power: Ripcurl is a well-known international brand. To keep economies of scale, the company outsource it’s manufacturing unit to small companies. The company has sourcing division in North Korea to provide it’s products to Singapore and New Zealand. They have no bargaining power.

Consumer power: The consumers do not have enough bargaining power due to the size of population. Usually consumers prefer to buy products that would be cheaper than the existing ones.

Product substitutes: According to the survey and findings, Nike has overtaken lead from Ripcurl as the best choice of youth. Many rival brands have also attained popularity such as Billabong and Quicksilver (Schaltegger, Burritt & Petersen, 2017). Females prefer to buy disposable fashion with cheaper prices. The brands such as Country Road and Colorado are substitutes for Ripcurl, but they are different in quality and style.

Confusing price is the issue of Ripcurl. The company lacks a clear pricing strategy. The company offers lower prices when it’s compared to competitors like Billabong and Quiksilver.  As, a result the profit margin of company is low for competing with rivals. As a result, the high rate of loans and interests create burden for the company. So the low prices fixed by company creates problem to buy raw materials at increased prices. It is also problem for the company to maintain standard of products through innovations. Maintaining low standard can lack brand image. The innovations are done to gain competitive advantage (Dyck, 2017). Acquiring local companies are also sometimes problem for the company. Sometimes these local companies are not capable to produce as per requirement. Their technology is quite old and cannot compel to the requirements of customers.

The company needs to set a clear pricing strategy in such a way that it can save profit margin appropriately. It can distinct company from other competitors. The prices should be fix in such a way that cost of raw material is quite low than the cost of product. It increases revenue of company. The local companies should be acquired only after checking the relevancy and working system.

The company uses strategies such as Porter’s generic strategy to avoid problems, attain competitive advantage and to be successful in future.   

Economic Factors

Emerging youth label: Ripcurl need to acquire emerging youth labels such as Nixon watches, DC Shoes, RVCA, Rossignol Skis, Dakine and Mrs Palmers surf gear to increase market share. As, Youth tend to buy more products. Most part of population is youngsters. It can help in increasing sales of company. The business can incorporate business operations by funding new retail stores and buying existing chains. It should be relevant. It not only expands the market but also helps in attaining new technologies and methods. Techniques differentiate products from other companies and helps in building new products (McKenna, 2017).

Resistant to change: Ripcurl should focus on the resistance to change to run activities and operations successfully. The workers do not like to adopt new changes and technologies as it increases their burden of work, so they avoid making any changes in the process. The managers and top management should maintain a reciprocal relationship with employees to resolve their problems and issues. Resistance to change can actually bring efficiency and specialisation to an organisation (Buono, 2015). To facilitate goals of the company it continues to invest in global platforms and concentrates on customer centricity.

Space to grow: The demand for surf style products is expected to remain strong despite the trembles in the market.  Ripcurl should use the unique leadership style to influence employees in the company. It helps to handle the grievance and complaints of customers. The company should try to be first to introduce and produce new products and technology. The company should take all the necessary measures to improve service and provide satisfaction to customers. Ripcurl has established craft association along with authentic nature of the surf products. This way the company can increase number of customers (Albert & Beatty, 2014). More efforts to reconnect customers can also involve focusing on design and style of clothing different from local markets.  Advertisement and promotional strategies should also be focused to increase sales and profitability in the future.

Focus on the strategies: The single important thing done by company is putting customers at centre. The company tries innovative ways to attract audience. Ripcurl should focus on the business and corporate level strategies to maximize revenue and outputs of the company. It helps to maintain sustainability within the organisation. The company should also make attractive strategies to connect and link with customers and local companies with dignity. These strategies also provide estimation and understanding of doing business effectively. It must also create valuable and non-place competitive strategy by creating strong core competencies, which helps to survive operations in future. Technology is also helpful to remove global shopping barriers (Christopher, Laasch & Roberts, 2016).

Social Factors

Conclusion

From this report it can be concluded that Ripcurl is an established Australian company. The company has issues in the form of price and acquiring local companies. It was determined by the threat and opportunities available in the market. These issues are analysed from PESTEL analysis and Porter five forces. These issues can be resolved by emerging in youth label, resistant to change and by focusing on strategies. The company can solve the issue of acquiring local companies by focusing on the strategies used by them (Wheelen & Hunger, 2017). The price issue can be resolved by resistance to change and giving space to grow. All these recommendations not only help to resolve issues of company but also help to gain competitive advantage and expansion of business.

References

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