January 10th, 2018
Carte Blanche Ltd – Opportunities and Threats in the External Environment
Evaluation of CBG’s environment reveals various opportunities that the entity can tap into to expand its brands. One of these opportunities is the great potential presented by social media for the company to communicate its brand attributes and receive feedback from its customers on the areas it needs to better its brands. Social media platforms and associated Web 2.0 aspects have revitalized the way information is generated, and shared to influence customer purchase intentions (Mangold & Faulds 2009). The advantage of this opportunity is that, by the virtue that customers will be the ones promoting the brand through word-of-mouth, brand promotion could prove less costly than when the entity is engaged in promotion activities in the mass and print media (Wright et al. 2010). The disadvantage (threat) presented by this opportunity is that such social media could rapidly disseminate a negative brand image just as they can help promote the entity’s brand. For instance, legal risks such as misuse of the entity’s brands in the social media platforms could spread rapidly in a short period (Landau & Hawkins 2010). To alleviate this the entity thus needs to establish a strategy that allows it shape the communications that take place in the social media platforms (Mangold & Faulds 2009).
A second opportunity that exists for CBG is establishing brands targeted to the emerging and developing countries. Such expansion would for instance shield the entity’s performance against country-specific macroeconomic shocks. Further, such markets could offer increased high season periods due to the different seasons that various cultures celebrate. Currently, CBG brands whose prices range from £2.50 for a “Tatty Teddy ‘Special Friends’ photo mouse mat” to the £12.50 “Large My Blue Nose Friends Jingle figurine” (CBG 2011e), are, however, more oriented towards a premium market. With competition from companies such as American Greetings and Clinton cards PLC who have higher resource base with publicly traded financing options (Clinton Cards PLC 2010; American Greetings 2010).
Threats that CBG faces in its markets include those arising from competitor rivalry, adverse economic conditions, dependence on seasonal holidays, substitutes for its products and technological challenges. With respect to competitor rivalry, high competitor rivalry limits the extent to which the entity can increase its prices to meet its targets. In the UK, for instance, the industry for greeting cards is characterized by a multitude of players including Clintons cards PLC, Hallmark Cards and UK Greetings (Max Publishing 2010b; Clinton Cards PLC 2010). Such high numbers of competitors mean that CBG needs to price its brands competitively on a continuous basis, a factor that may affect the revenues adversely. Secondly, CBG’s threat arises from adverse economic environment. The effects of such a threat are evident by the price cuts that the entity had to implement in its pricing strategy to attract clients in the recent financial crisis even in seasons considered optimal (CBG 2010e). Additionally, CBG also suffers from its business being oriented towards key seasonal events such as Valentine’s Day, Christmas, and the Mother’s day. Whenever the performance in such seasons is suboptimal, the entity would become susceptible to posting poor performance.
Another threat posed by the environment relates to environmental issues. With the clamour for environmentally friendlier methods of doing business, CBG’s business is constantly necessitated to establish ways that effectively minimize its adverse impacts to the environment. Other threats arise from substitute ways that have come up with technological advancements that provide people with alternative ways to express their wishes to their family and friends during different seasons. To exemplify this, is the effect of social media that allows individuals to imbue their messages with photos, movies, and audio files, with freely available functionalities. Finally, the cards and gifting industry, requiring ample supply of skilled workforce (Clinton Cards PLC 2010; American Greetings 2010), necessitates CBG to review its staffing practices on a continuous basis to attract, motivate and sustain skilled and qualified personnel. Such a need may mean providing high salaries that drains the resources available to develop new brands. Go to part 5 here.