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Sectoral Analysis of Avoca Handweavers -Part 3 – [3 Part Series]

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.

Avoca,White,Cottage
Source: Flickr

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.

knitted,local,govt,act,reform

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.

Payments collage

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.

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Sources: [ONLINE] Available at:               http://www.environ.ie/en/LocalGovernment/LocalGovernmentAdministration/RHLegislation/FileDownLoad,35715,en.pdf.           [Accessed 12 April 2014].

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3 thoughts on “Sectoral Analysis of Avoca Handweavers -Part 3 – [3 Part Series]”

  1. As one would expect The Avoca findings have a lot in common with our findings and concerns from the Kylemore research i,e, upward only rent reviews, technology requirements etc. From this research we categorised each restaurant or cafe into different categories: Fast Food, Casual and White Table Cloth. Avoca appears to be at the upper end of the Casual but not quite WTC end. From our findings it will find customers trading down and where they have not deserted they are choosing a snack (eg coffee and treat) rather than the full meal. Our findings pointed out that while consumers are eating out as often (which was a surprise to me) they were spending less (which of course was no surprise), hence the treat rather than the meal. The good news is that restaurants appear to have weathered the storm, they are through the worst and growth is expected over the next few years. Restaurants and coffee shops that coped best in the tough times were innovative by adapting their menus and processes in order to meet customer needs and indeed to survive

    Liked by 1 person

  2. Ronan & Team,

    While looking at where the business needs to focus on to meet future challenges, I note that the business as in a relatively niche sector, and while there are no guarantees regarding retention of the 9% VAT rate (is anything guaranteed these days), and there is little doubt that the new Local Government structures will need additional sources of funding, business rates will probably increase as a result – even the household tax which was supposed to go to the councils was “retained” by central government…..and in the current local election campaign the candidates will promise the world — no extra taxes etc. but they will NOT be able to deliver on that promise.

    Greater investment in IT and an efficient and effective on-line sales strategy is a must for any business no matter what they are selling, whether a product or service….whether we like it or not it’s the future in what will soon be a cashless society.

    Following your blogs with interest.
    Déaglán de P.

    Like

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