BIZ202 The Business Environment: Dunlop Tires Environmental Scan Report
Instructions:
Choose an Australian or international business which is well known in the industry and still in operation. Write a report identifying and analysing any relevant information about the microenvironment factors of the chosen organisation incorporating the following:
- Identify micro environmental factors that influence the chosen business specifically. These factors may include but are not limited to consumer behaviour, competitor analysis, social, suppliers, intermediaries, new entrants, and public opinion.
- Analyse their impact on the business that may be in terms of but not limited to changes in business performance, structure, policies, profitability, value-adding attributes, growth, and market share.
- Propose solutions to challenges to counter prevailing/potential risks.
Executive Summary
Dunlop Tires is a known international name in the tire manufacturing category of the automobile industry. The company is a prominent player in the Australian tire industry. The company has been analysed in light of micro-environmental analysis where consumer behaviour, competitive landscape, and other micro-level aspects have been considered. Challenges and their solutions have been presented. It has been noted that imports of tires are increasing, and the company may face tougher competition in the coming years. Consumers like competitive pricing and value for their money. Therefore, the company should make changes in light of these findings of micro environmental analysis.
Introduction
Dunlop Tires is a known and leading name in the tires industry, and it has considerable market presence in Australia as well. It has been selling tires for decades, and its innovation and trendsetting in the industry are remarkable. The company has been chosen for microenvironment analysis, and environmental factors have been identified. It is revealed that these factors affect the business of the company. Based on the review, challenges have been noted, and solutions have been presented. The aim of this paper is to analyse a successful company in its industry so that the importance of microenvironmental analysis can be highlighted. It has been shown that any successful company also has to be careful about environmental factors. It should bring changes in its business strategy, in a result of these effects. Dunlop Tires has to be responsive to microenvironmental changes to sustain its growth and success in the industry.
Discussion
The paper has accessed secondary sources on the information of the tire industry in Australia where Dunlop Tires is a notable name. Secondary research has helped to identify various factors from the environment which are affecting the business of the company. In the result, the company is feeling or may feel the need to bring solutions to the challenges emerging from microenvironmental factors. In the following, headings of discussion are going to be presented.
Identification and Analysis of Micro Environmental Factors:
The consumer behaviour in the tire industry of Australia reveals two prominent realities. First, vehicle motorization is increasing in the country, but people want less running cost of vehicles. Second, there is an increase in cost-effective tire sales in the country. A competitive analysis shows that replacement of tires is going to increase because significant automobile manufacturers are leaving the country. Reliance on imported tires may increase because of the emergence of replacement of tires and due to the desire to buy less costly tires. Thus, suppliers and intermediaries may decide to focus on imports, which are mainly made from China and Thailand to Australia. There is less chance of new entry into the industry because the growth rate of the industry is slow. There is a modest growth rate in the automobile sector as car sales are not increasing fast. So far as public opinion is concerned, customers want value for money they spend, and they are also price-conscious because competitive pricing is favourable for them. Other opinions include factors related to the location and brand image of the company (Wood, 2015).
These identified factors from the microenvironment of the tire industry of Australia have been affecting the industry and players including Dunlop Tires. For example, the company may not boast of its historical presence in the industry because people demand competitive pricing. They are not brand-conscious, but they value their money as their priority (Ridley, 2019). Dunlop Tires are not low-quality ones, and they give value to customers, but modest sales in the automobile industry may cause problems. Imports of tires are increasing and it may affect Dunlop Tires and can force it to change its policy. The company has an excellent strategic connection with suppliers and parties to selling its products, and it has a broader product range as well. However, it has to be competitive further so that customers can take it as a priority.
Challenges and Solutions:
Some of the challenges need urgent attention because they may affect the company. There is research evidence regarding Dunlop Tires that it has to be responsive to changes in the market. It is again the situation now where the shift is towards imported tires into Australia (McGovern, 2007). Moreover, significant manufacturers in the car industry, i.e., Ford, Toyota, and Holden are not going to be produced in the country. It leads to a decrease in demand for tires from Australian operations. People are conscious of the running costs of cars, and they are travelling fewer miles despite low fuel prices. Therefore, the company has to understand that these changes are going to affect its business again. Competitors are presenting fierce competition, and Dunlop Tires may not freely make strategies to be in the industry. These challenges show that continuous growth and expansion in business is vital, and all factors from consumer behaviour to competitors’ approach are essential (Ibisworld, 2019).
Based on these challenges, some solutions have been proposed here. First, the company has to bring changes in supplier and supply chain side of the business where it has to develop close ties with major players in China and Thailand. It is not unusual and challenging for Dunlop Tires to partner and to share supply chain activities as its products are sold through this business model. At this point, China has become a world manufacturer of almost every product, including tires; the company should engage with suppliers there. Chinese investors have their stakes in Australia, and both countries are close to each other. Therefore, the company should work in this regard.
Moreover, manufacturing facilities in Australia may be shifted to Thailand or China so that low prices can be possible. There are not many issues of concern related to consumer behaviour as they do have a positive opinion of the company and its products. However, the company has to bring changes in its product range.
Conclusion
The paper concludes that Dunlop Tires Australia is a known name in the industry, but micro environmental factors are affecting the industry. Consequently, Dunlop Australia might have to be affected by these changes in the industry. Microenvironment analysis has helped to look into various factors like consumer behaviour and competitive landscape in the industry. The paper notes that imported tires are increasing in Australia, and automobile manufacturing sector has been shrinking. However, car sales are modest, and they support sales of tires. Based on these environmental factors at the micro-level, the paper recommends taking some strategic changes. It may partner or make relationships with tire manufacturers in China and Thailand. Options of outsourcing may be possible as well. It has to capitalize on opportunities emerging in neighbouring economies of Australia so that its competitiveness remains high in Australian tires market.
References
Ibisworld. (2019). Tyre Retailing – Australia Market Research Report. Retrieved September 25, 2019, from https://www.ibisworld.com.au/industry-trends/market-research-reports/retail-trade/motor-vehicle-parts-retailing/tyre-retailing.html
McGovern, T. (2007). Why do successful companies fail? A case study of the decline of Dunlop. Business History, 49 (6), 886-907.
Ridley, S. (2019). What Australians Want When Buying Tyres. Retrieved September 25, 2019, from https://www.tyrepower.com.au/news/what-australians-want-when-buying-tyres/#sthash.W6ES2CYu.dpbs
Wood, L. (2015). Australia Tyre Market Forecast and Opportunities, 2020. Retrieved September 25, 2019, from https://www.prnewswire.com/news-releases/australia-tyre-market-forecast-and-opportunities-2020-300132840.html
