Blogpost Part 3 covers the main findings derived from the analysis, how they may impact Avoca’s business and what steps they need to consider in order to meet these challenges into the future.
Blogpost Part 1 gives a high level overview of the sectoral analysis conducted to date on the business environment of Avoca Handweavers
Blogpost Part 2 highlights the main points of the PESTLE analysis undertaken, and then guides you through a more detailed PESTLE analysis of the external business environment of Avoca _________________________________________________________________________
We’ve seen the high level view of the sector in which Avoca operates in blogpost 1 of this series. We also looked at the highlights of of a detailed PESTLE analysis in blogpost 2. In this third and final blogpost of the series, we look at where Avoca may need to focus on now in terms of meeting the current and future challenges of the business in the business environment in which it operates.
From the application and analysis of the SWOT, PESTLE, Porters 5 Forces and various other models used, it is evident that Avoca will need to address a number of aspects around the the external environment of their business.
They need to budget for any increase in VAT on the services sector as although lobbying through industry groups can help there is no certainty the tax rate of 9% will be maintained into the future.
The same applies for business and service rates which will rise in the near future as the effect of the recent Local Government Reform Act 2014 will mean the local government bodies and not the Irish Government, will need to raise more revenue to fund day to day operations.
Avoca, like other businesses in retail today, will need to recognize the key drivers for change, especially in the technological areas. Greater investment in I.T. will need to be made in order to meet the future needs, requirements and expectations of their customers and suppliers.
Innovations in mobile point of sale and other 1 touch payment solutions means Avoca and the rest of the retail sector need to start now to scale up their Ecommerce capabilities in order to substantially future proof their business.
Another key area that Avoca needs to be more focused upon is the existing legal structure of the company. If Avoca plan to scale the business and grow, then greater clarity around its legal construct is needed if they are to try and raise finances from private equity funds or venture capitalists.
A major driver for change is the resurgence of the commercial property market in Dublin. Avoca have some upwards only leases and the profits they have been using to expand the business organically may be soaked up once more in higher rents and rates. They will need to prepare for this key driver by perhaps decoupling or divesting part of the overall business in order to minimize exposure to risk.
Sources: [ONLINE] Available at: http://www.environ.ie/en/LocalGovernment/LocalGovernmentAdministration/RHLegislation/FileDownLoad,35715,en.pdf. [Accessed 12 April 2014].