Studying the Economic Environment
Studying the Economic Environment
The economic environment consists of factors that influence the consumers buying power. A consumers buying power will depend on many economic trends such as income, prices, savings and credit. Therefore it is important that marketers become aware of these trends that significantly influence the consumers spending patterns and buying behavior. Arnott’s is a multinational company in Australia and many other foreign countries
The major threats, opportunities and trends, the economic environment has posed to the marketers of Arnott’s, are factors that have had significant impact on the stability of the company.
In 2001 Arnott’s experienced its most significant threat to the company especially, to its employees. Arnott’s closed its Burwood manufacturing plant in Melbourne, which resulted in 550 employees loosing their jobs. The most highlighting economic effect to this situation was that the total budgeted cost for the “reconfiguration” exceeded $30 million, in addition causing a reduction in production operations and hence the profitability and capital of the company. Arnott’s marketing managers will have to find its funds from its other invested companies in order to allocate the costs from its reconfiguration decision. It was suggested that the closing of the Arnott’s manufacturing plants were a result to management problems of low profile and persistent labour. As a consequence the company has lost a potential market, consumers in this market will shift their buying behaviour and decisions to other biscuit companies as Arnott’s will no longer be available to them therefore the company will also loose both its profits and its consumers. Another relative threat for the company was the Australian government. The food processing industry has been a target of State and Federal governments who attempt to induce higher exports, which in effect has caused hundreds of dollars and hence in addition a reduction in consumer buying power as exports become limited and prices increase. The outcome was a management system that was a highly formal beaurocratic organization, and in addition, slow and ineffectual. Managers on salaries of $70,000 a year took their instructions from junior employees. This management system clearly could not have delivered the levels of continuous productivity improvement that Campbell applies as a benchmark to their global operations, therefore slow productivity and reduced net profits are significant economic threats for Arnott’s marketers.
Major economic opportunities Arnott’s has faced have been both negative and positive influences.
The most highlighting experience of opportunity for Arnott’s was when...