Armani: Study Of Business Environment, Stakeholder Analysis Matrix, And PESTEL Analysis

History of Armani

Discuss about the Essay for Study of Business Environment?

Giorgio Armani S.p.A is a famous Italian style house that was founded by Giorgio Armani. Armani is a private company that designs, manufactures, distributes and sells ready to wear, leather goods, shoes, eye wears, cosmetic, home decorations and jewelries. Being a successful fashion brand in the world Armani’s new mission is to claim 20% of the smart phone and ipad –using yuppie crowd by motivating them to download Armani accessories applications (Stankeviciute 2012). They are also planning to launch a new set of accessories for metro-sexual and gay males. Currently Armani is a prestigious shopping destination with an objective to capture the rich customers of the market (Potvin 2012). However, the authority of the company has decided to take a long-term objective to transform the brand into a luxury shopping center where every member of the society can buy fashion accessories.

Different types of organizations such as Wal-Mart that leads to a string of hypermarkets, mark down unit stores and grocery stores targets customers who look for low price products and accessories (Pope and Pope 2015). Purpose of Wal-Mart is to keep the prices of their products as low as possible. Another organization like Lamborghini which is a luxury sports car manufacturer company, serves to manufacture high price cars. Purpose of their organization is to sell cars to the rich customer base of the market.

Being a responsible fashion company, Armani not only focuses to gain maximum profit, but also balances its objectives and interests with their stakeholders (Giacosa 2015). Consumers, suppliers, employees and collaborators are the key stakeholders of Armani. The company has taken two objectives that are fulfilling the social expectations of the stakeholders .They are working towards reducing the environmental impact.. Action of Armani towards their stakeholder is mentioned below,

Dimension of Context	Stakeholder of reference	Behavior of Armani
Environment	Environment	·         They are using raw material for their products that has a low negative impact on the locality and workers. ·         Optimize the utilization of resources used in construction and distribution. ( energy, water) ·         They regularly enhance their creative and productive models by using cradle to cradle logics.
Social	Social places, employees and customers	·         Authority of Armani respects the communities of workers, suppliers and employees. ·         Act in accordance with the rules and regulations released by ILO. ·         Armani ensures that they provide qualitative satisfactory products to their customers.
Media	Media	·         Armani places their customers at the centre. ·         The company uses social Medias and World Wide Web to communicate with the customers. ·         Authority of the company avoids anything related to green washing and “ethical washing” campaigns.
Artistic	Art and culture	·         The management of the company gives equal importance to the different culture, landscape and territory of the customers.

Table 1: Process followed by Armani to satisfy their stakeholders

(Source: Cherny and Agnes 2016)

Stakeholder analysis is done by the organizations to develop a helpful rendezvous plan. A very popular technique of stakeholder analysis is Stakeholder Matrix. Here stakeholders are plot in two variables.

Figure 1: Stakeholder Matrix for Armani

(Source: Culasso and Mazzoleni 2012)

Box A: Stakeholders who sit in this box have a high degree of authority on the company. For Armani, customers and culture of the locality will fit in this box (Solaimani, Guldemond and Bouwman 2013). This implies that Armani needs to establish strongrelationship with their customers.

Stakeholders of Armani

Box B: These stakeholders are very important for the company as they are essential part of their success but haslow influence. For example, a new product of Armani might be beneficial for marginalized groups like indigenous people, youth and seniors but they have less contribution tothis development (Arrigo 2013).

Box C: These stakeholders have high influence who can affect a company directly. In Armani, financial administrators play this role of important stakeholders. They can exercise considerable discretion over funding disbursements (Kozlowski et al2015). Therefore, it can be said that these stakeholders are the sources of significant risk and they will need careful monitoring and management.

Box D: Stakeholders in this box have low or no contribution over a company. Therefore, they do not need monitoring (Caniato et al. 2012).

Free economies and command economies are two extreme points in the in the field of economic activity. The preliminary difference between the free and command economies is the divisional process that the labor or factors of production follow. There is also a major difference between these markets, that is the pricing strategy is different for the two markets (Bellina 2014). The free economy is subject to unplanned activities, and it can be characterized by the feature of it independent nature. No central authority controls the free market; therefore, the price is determined solely by the interaction of demand and supply of goods and services. On the other hand, a command economy is organized and managed by government officials who also own the factors of production.

In the free market, the economy enjoys certain advantage of private ownership of the factors of production. The companies operating in such a market are also subject to voluntary exchanges (Gindt and Potvin 2013).

The main disadvantage of this type of economy is, ads there is minimum level of government intervention sometimes the pricing of the product is not appropriate.

The companies operating in the command market enjoys the advantage of planned allocation of resources also guided by a central authority. Moreover, under this type of market structure, the governments own all the resources like land, labor and capital. Therefore, the company just has to take the responsibility of efficient and effective production.

The main disadvantage of this system is the centralized structure. Sometimes the government may under price the products.

To look at the specific requirements of the question, it will be perfect to conduct the PESTEL analysis of Armani. The PESTEL analysis is basically a market analytical tool or framework that is used to analyze the effects of macro environmental factors that may impact on the organization.

Stakeholder analysis matrix

Political:

The basic political factor that affects Armani is its stretch; it has recently expanded its business into the Asia Pacific market. Again in Shanghai, China Armani has built an Emporio Armani store and planning to open up 30 more stores in that region in the recent years (Dimitrakopoulou 2015). It has also expanded its business to luxury hotel sector, for this it has partnered with Dubai developers.

Economic:

As Armani is the sole owner of the brand, it has the advantage that it has no debt due in the market. Armani group is in a constant process of growth, it has increased its sales by 15% than that of in the 2012. It has also boosted up its net worth by 1.2 billion dollars. Most of the growth factors of the company come from China, in China the sales increased by one third of the total sales.

Social:

Armani is the organization, which has the capability of fetching favor from the wealthiest and most influential figures in the society. In the context of corporate social responsibility, the perfumes manufactured by the company may contain certain chemicals that can be hazardous (Kennedy 2013).

Technological:

The organization is currently using most advanced technologies like nano technology and online sales.

Environmental:

The company produces organic products, which are friendly with the environment. However, the company is also concerned with their products that are using animal furs as PETA is keeping an eye on the company.

Legal:

According to the rules and regulations of Italy, Armani has agreed to use enhanced technology and materials to reduce carbon emission from their factories. Besides, per hour payment for workers has increased from $6.55 to $7.12 due to change of employment rules in Europe. Armani is also forced to follow this payment structure which have affected their revenue slightly.

If there is a fall in the general income tax level, the cash in hand of the individual’s will rise.

Therefore, with the excess cash in hands people, there will be an increase in the purchasing power of the individual (Dosi et al. 2015). Thus, they will buy more when there is a fall in the income tax.

If the value of pound rise, people in foreign country will find the products of Armani cheaper, they will buy more with the appreciated currency.

In the rate of interest falls investment will decrease as result cash holding tendency will decrease, therefore there may be an increase in the demand for Armani (Dosi et al,. 2015).

Benefits and constrains of Armani in different economy

Increase in unemployment will definitely reduce the demand for Armani products. As increased unemployment reduces the income of the society, demand falls.

An increase in the government expenditure decreases the money supply in the economy and therefore reduces the demand for luxury goods like Armani products.

The government related regulations like competition-based policies may affect the businessof Armani. The popular brands like Armani generallyoperates in a monopoly market. However, as the buyers are less the government’s policy based on the market will not affect the business of the company largely (Wilensky 2015). Anew competitor might enter, and the company has built a good reputationenough to compete with any other luxurious brands.

Market structure is known as the relation of different rudiments binding buyers, sellers including agents and goods together. Those rudiments are number of agents and buyers or sellers, buying and selling power of agents and their potential to influence prices, potential conflict among agents, manufacture level, competition level, differentiation in case of product quality, ease of entry in the market and  exit from the market (Baldwin and Scott 2013). Agents of acompany influence the pricing decision of that company. For example, if a market has strong competition and the competitor companies have already gained strong brand loyalty then a new company will not decide to compete by setting higher prices (Chung and Chuwonganant 2014). Pricing decisions of a business is determined by considering all the influences and strengths of the market structure elements and adjusting their internal product pricing decisions accordingly.  

There are varieties of market forces that are important to improve the performances of a company. However, customer responsiveness, information demand and cost pressure are three market forces that primarily affects the performances of an organization.

Quickness in responding and serving to the customers will help an organization to gain competitive advantage over their rivals. Many companies are eager to collect payments from their customers for purchasing any product or services (Allais et al,. 2015). However, when those customers want to return those products they have to wait months. Armani has made their marks in case of customer services, as their customers do not have to wait to change or return any product.

Increasing emphasis on information demand needs that higher authority of all levels help to expand information and communication technology capabilities. They also work to make sure that information and communication is made available to those employees who need it on a regular basis.

Leaders of Armani are continuously applying global transformation and process improvement efforts to increase efficiency and productivity. This will help the company to improve overall performances by reducing cost pressures.

Business environment of Armani is divided in two parts which are internal business environment and external business environments. Those two business environments of Armani can be described using SWOT analysis. Strengths and weaknesses of Armani are their internal business environment where opportunity and threats is their external business environment.

Strengths: Most of the companies expand their businesses by going into related businesses. Fashion brands expand their businesses by going into correlated businesses like cosmetics. But Armani has jumped into businesses that are linked to fashion but do require an entire different world of skills, infrastructure and operations (Gind and Potvin 2014). The company has invested in furniture (Armani Casa), confectionary (Dolci), flowers (Fiori) and hotel chains in UAE.

Weakness: One and only weakness of Armani is they have no chosen successor or path to succession after Giorgio Armani. Besides, Armani is also the only shareholder of the company.

Opportunity: Fashion products and goods have become more global and popular. Younger generations are growing in previously hard to break in countries like India and China as fashion information is being shared with them via technologies such as the smartphones and the internet. Therefore, Armani has a great opportunity in those countries.

Threats: Chinese organizations are continuously looking for fashion brands in Europe that they can acquire. For example Li and Fung has acquired Cerutti House recently. Therefore, these companies might launch hostile bid for Armani.

Cultural Environment of Armani strongly supports the marketing power of media stars. Founder of the company Giorgio Armani was the first designer who established a long relationship with Hollywood when he designed Richard Gere’s wardrobe for the 1980 film American Gigolo. After that, the company totally adopted the celebrity culture by using Lady Gaga, Ronaldo and others in their celebrity advertisement campaigns.

Globalization has offered lots of advantages to fashion industry and other industries. Due to globalization, different countries are used to produce goods and services they are able to do most efficiently. Globalization has also allowed Armani to manufacture much wider variety of products which has helped them to acquire more customer attraction. Because of globalization, more and more companies are coming forward and providing fierce competition to the existing companies (Lenzen et al,. 2012). Because of the competition, companies are forced to reduce their product prices, Armani had to do the same which has affected their economic growth. The biggest advantage of globalization is the fashion companies can promote their brand in different countries. For example, Armani is now entering Indian and Chinese markets where the demand of fashion accessories where almost nil few years ago.

Armani is also getting benefited by the International trade that is allowing them to improvetheir sales. Due toInternational trade, Armani can offergreater variety of goods to the customers of several countries. International trade is working to promote efficiency in production. They are helping countries to acquire better method of production which in turn keeps the cost down.

British telecom company Vodafone is planning to invest 7,000crore in India between April 2014 and March 2016 to empower their network (Webb 2013). The authority of Vodafone announced that they will spend 10,141 crore to buy small stakeholders in Indian entity which will give them 100 percent control from the 64 percent at present (Webb 2013).  They got their permission from Foreign Investment Promotion Board. They will use 60 percent of that 7,000 crore to enhance their data network. This plan is a part of their Project Spring to increase the speed and capacity of its networks. They also said that another 1.5 billion pounds would be invested in emerging markets like Indian, Africa and Turkey.

Vodafone is providing jobs and high skill career path for more than 54,000  employees across their twelve EU markets. Vodafone is also helping to minimize the serious issue in European countries which is more than 23% of your Europeans are out of work (Nalwaya and Vyas 2014). Vodafone is allowing more than 1400 new graduates, apprentices and paid interns in their European businesses to help them to learn about the skills required in digital economy. Most of them move into permanent employment with Vodafone. This is why more than 98% employees of Vodafone are from European countries.

Chief innovation officer of Vodafone Brazil, Daniel Fuchs is hoping to see UK-headquarter group become firmly rooted in Brazilian market after future rounds of operator consolidation. He is hoping that Vodafone will move for frequencies or something else which is more interesting. However, there are several rumors regarding the consolidation process is going on Brazil and surprisingly in each of those rumors name of Vodafone is present. Recently, it was found that Vodafone is considering to acquire one o the three major Brazilian operators. TIM is their primary target in this case. Vodafone is trying to build a new focus in Brazilian market by buying a network rather than staying as an MVNO.

The policies created by UK government are affecting companies like Vodafone as they are directly influencing their operations. Monetary policies affect money supply, which in turn affects the interest rates, cash, reserve ratio requirements Vodafone. Competition policies aim to keep the market fair and open to all by ensuring that dominant participants of the market undertake the unfair activities (Wallace et al,. 2015). There are different types of market structures like perfect competition, monopoly, monopolistic competition and oligopoly. Policies made by UK government are also affecting these structures of competition. Through their current policy the present government is trying to encourage business efficiency so that UK businesses become competitive international markets which will help to create more jobs. Government is helping the people who cannot find jobs by providing raining via The New Deal rules and regulations. Therefore, companies like Vodafone are getting employees that are more qualified for its company.

The government has also made rules and regulations that prevent any sudden rises in prices. They handle things via the Monetary Policy Committee of the Bank of England that sets interest rates. Raising interest rates makes it more difficult for the companies to borrow money. This policy is not only hurting Vodafone but also crating barriers for other companies too.

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