Fluent Essays

The purpose of this assignment is to practice the first step in the case analysis process - the SWOT analysis. One of the key elements to a successful case study analysis is the ability to review a company's internal strengths (S) and weaknesses (W) as well as the external opportunities (O) and threats (T) that the company and industry may face. A SWOT analysis cannot be completed until qualitative and quantitative research has been performed.  Basically, you want to remove any subjectiveness to the process.   This week we will focus on Opportunities and Threats. An excellent tool that can be used to identify opportunities and threats is the PESTEL analysis.   A PESTEL Analysis is a strategic framework used to evaluate the external environment of a business by breaking down the opportunities and threats into Political, Economic, Social, Technological, Environmental, and Legal factors. The assignment for this week is as follows: 1. Review the videos on performing a PESTEL analysis 1.  Open and read the Fork River Brewing Company case study. 2.  Use the Week 3 Assignment PESTLE Analysis and complete a PESTEL analysis for the Fork River Brewing company. 3.  Upload the completed Week 3 assignment. W16365 FORKED RIVER BREWING CO.: CRAFT BEER ENTREPRENEURSHIP IN AN EVOLVING INDUSTRY Max Stallkamp and Professors Larry Plummer and Andreas Schotter wrote this case solely to provide material for class discussion. The authors do not intend to illustrate either effective or ineffective handling of a managerial situation. The authors may have disguised certain names and other identifying information to protect confidentiality. This publication may not be transmitted, photocopied, digitized or otherwise reproduced in any form or by any means without the permission of the copyright holder. Reproduction of this material is not covered under authorization by any reproduction rights organization. To order copies or request permission to reproduce materials, contact Ivey Publishing, Ivey Business School, Western University, London, Ontario, Canada, N6G 0N1; (t) 519.661.3208; (e) [email protected]; www.iveycases.com. Copyright © 2016, Richard Ivey School of Business Foundation Version: 2016-06-20 On January 4, 2016, Dave Reed, Andrew Peters, and Steve Nazarian—the co-founders of Forked River Brewing Company (Forked River), a small brewery in London, Ontario—revisited the company’s original business plan from 2012. Over the course of only four years, the trio went from home brewing enthusiasts to owners of a thriving, award-winning craft brewery. Now Forked River’s various beers were offered in pubs, restaurants, and retail stores across the province of Ontario. In the past year alone, the company had expanded its production capacity by 50 per cent, hired an additional full-time brewmaster, and added a retail outlet to the brewing facility. The three founders were happy with their entrepreneurial success so far, having met or exceeded most of their original goals. However, business had recently become more complicated, with changes to the Ontario retail liquor laws, increasing non-brewing administrative work, and looming decisions about the product portfolio and distribution strategy. Forked River had gone far beyond the start-up phase. Now, Reed, Peters, and Nazarian wondered whether the company was still on the right track, or if a new strategic plan was needed to ensure its long-term success in the fast-changing craft beer industry. FORKED RIVER BREWING COMPANY Forked River was incorporated in September 2012. The name was a play on the city of London, the hometown of the three founders and the location of the brewery, because the heart of the city was where the local Thames River split into several side arms. The brewery was established in a commercial area on the east side of London, in a section of low-rise buildings nestled together with several other unrelated businesses. Though located in an industrial area, away from the retail and restaurant areas frequented by its customers, the location allowed the company to keep overhead costs low while maintaining some expansion options. As Reed stated, “From the beginning, we wanted to make sure our business was not dependent on external financing, and that it was scalable.” In other cities, some craft breweries had chosen to set up in central locations and iconic buildings to attract retail customers and to sell the beer directly in their own brew pubs. However, Forked River’s location was conceived purely as a production site. Reed had personally designed and built most of the brewing equipment, drawing on his engineering skills and experience from building high-grade home This document is authorized for use only by ROBERT WAHL ([email protected]). Copying or posting is an infringement of copyright. Please contact [email protected] or 800-988-0886 for additional copies. mailto:[email protected] http://www.iveycases.com/ Page 2 9B16M102 brew equipment. In addition to reducing the cost of the brewing equipment, this ensured that the equipment was tailored to the needs of Forked River. Because the main production bottleneck was the number of fermentation tanks, production capacity could be expanded simply by adding more tanks. In 2015 alone, Forked River more than doubled its production capacity this way. Moreover, the company leased additional space nearby for cellaring and aging beer in wood barrels, a process that would not only refine the beers but would also allow them to be sold for a premium. The expansion space served as an expanded on-site retail outlet as well. When the brewing operations first started, Reed was the only full-time employee. Forked River was completely self-financed. Reed provided 80 per cent of the capital and owned a proportional majority share. Peters and Nazarian owned the remaining shares and initially maintained their outside jobs, working only part time in the brewery. As the operation ramped up in 2013, all three worked full time in the business as salaried employees. To keep costs low, the founders delayed hiring additional full-time staff. Consequently, they performed all required tasks: installing, maintaining, and cleaning equipment; buying ingredients; brewing and bottling beer; marketing; and delivery of the final product. It was not until 2015 that Forked River hired additional staff, including a full-time brewmaster, a delivery driver, and retail associates. By January 2016, Forked River had 10 employees (eight full-time and two part-time staff), including the founders. Peters still focused primarily on brewing, while Nazarian split his time between brewing, packaging, and cellaring. Reed devoted the majority of his time to sales and business development. Reed’s original business plan forecasted sales of $167,0001 in the first year, with $147,000 coming from sales to general pubs and restaurants, and the rest from sales to pubs and restaurants that promoted craft beer. In particular, the plan projected $114,000 in sales of half-barrel kegs (each priced at $220), and $33,000 in sales of quarter-barrel kegs (each priced at $120). The projected gross margins for each half- barrel and quarter-barrel keg were 76 per cent and 77 per cent, respectively. By comparison, sales of bottled beer were projected to be $6,000 in the first year, with bottles priced at $3 each and gross margins of 55 per cent per bottle. Forked River had been profitable since mid-2013 (see Exhibit 1), and the founders began paying themselves modest salaries by late 2013, reinvesting a significant portion of the proceeds back into the business. The three founders had a strong sense of independence, and thus were hesitant to accept outside financing. For them, the main purpose of the brewery was to produce great beer, while allowing them to maintain a modest lifestyle. As Reed noted, “I made more money fresh out of engineering school than I make now.” THE FOUNDERS The three founders of Forked River were long-time residents of London, all three having graduated from the University of Western Ontario. It was their shared interest in craft beer and home brewing that brought them together in the mid-2000s. Dave Reed, an engineer, had previously held various positions in research and development (R&D) in the automotive, beverage, and hearing aid industries. He developed his interest for craft beer when he was on an international work assignment in the United Kingdom, where he discovered the great variety of beer available outside of Canada. Since 2004, he had been brewing his own beer. As a trained engineer, he had 1 All currency amount are in Canadian dollars unless otherwise specified; US$1 = CA$1.40 on January 4, 2016. This document is authorized for use only by ROBERT WAHL ([email protected]). Copying or posting is an infringement of copyright. Please contact [email protected] or 800-988-0886 for additional copies. Page 3 9B16M102 gone to great lengths to design and build a sophisticated “commercial-grade” brewing system in the basement of his home. Andrew Peters obtained an undergraduate and master’s degree in microbiology and immunology from the University of Western Ontario, and then worked as a scientist in the biotechnology sector. In his spare time, he brewed beer at home, winning numerous awards—including a gold medal in the national home brew competition. Like the other founders, Peters felt great satisfaction in working for himself with a product he loved. Steve Nazarian graduated from the University of Western Ontario with a Ph.D. in microbiology and immunology and worked in the biotechnology sector in scientific and managerial roles. Like the other founders, he was an avid home brewer, whose beers were received very well in several home brew competitions. Nazarian could often be found working late in the brewery, setting up some of the speciality brews. Although all three men enjoyed making beer, they initially saw brewing strictly as a hobby. Reed had considered setting up his own brewery in London as early as 2008 but did not pursue the idea because, as he explained, “I didn’t think of myself as an entrepreneur. I was an engineer at heart and liked working in R&D.” Only later, when he worked in an R&D department in the beverage industry, did he begin to seriously contemplate the possibility of starting his own business. During that time, Southwestern Ontario was experiencing economic difficulties. Reed, Peters, and Nazarian felt that career progression opportunities in their areas of study were becoming more and more limited. It was then that the idea of turning their shared hobby into a business by starting their own brewery became much more serious. As Reed noted, “None of our jobs were safe, so we had to create our own future if we wanted to stay here in London.” In 2011, Reed participated in a provincial skills development program for entrepreneurs, where he wrote his first business plan and conducted an initial market research study. He became convinced that there was significant demand for locally produced craft beer in the London area. He found that although people in the area around Toronto (approximately 2.5 hours driving distance from London) had access to a variety of different local brews from multiple small breweries and brew pubs, Londoners did not enjoy the same opportunity. The local beer market was in the hands of the distributors of a few major global beer producers, including AB-InBev, SAB-Miller, and Heineken International (Heineken). There was no craft brewery within the city of London, and only a single brewery existed within a 100-kilometre radius. Reed sensed the increasing frustration of local bar and pub owners who tried to offer more variety but found it difficult to obtain quality craft beer. Reed was ready to embark on a venture and start his own London-based craft brewery. It was at that point that he asked Peters and Nazarian to join the business. INDUSTRY BACKGROUND The Beer Industry in North America The origins of modern beer were commonly traced to medieval Europe, where beer was produced by many small-scale producers and considered a dietary staple. Only in the 19th century did beer production begin to take on industrial scale, aided by advances in mechanized production techniques, refrigeration, and transportation infrastructure. This document is authorized for use only by ROBERT WAHL ([email protected]). Copying or posting is an infringement of copyright. Please contact [email protected] or 800-988-0886 for additional copies. Page 4 9B16M102 The arrival of prohibition in the United States (1920–1933) and provincial temperance laws in Canada outlawed beer sales in large parts of North America during the early part of the 20th century, which led to a decline in the number of breweries.2 Following the repeal of prohibition legislation and the end of the Great Depression in the late 1930s, the beer industry in North America entered a period of sustained growth in production volume. At the same time, the number of breweries continued to decrease. A few large brewing corporations began to dominate the market by acquiring competitors and investing in large- scale, capital-intensive breweries.3 By 1974, the Canadian market was controlled by four companies (Canadian Breweries, Molson, Labatt Brewing Company Ltd (Labatt), and Moosehead), who together held a 98 per cent market share.4 A side effect of this consolidation was a substantial reduction in consumer choice. Although the large brewers produced different brands of beer, their volume-based business models made serving niche markets commercially unattractive. Some consumers were unsatisfied with what they perceived as bland, standardized products that tasted increasingly alike. In the 1980s, per capita beer sales in North America began to stagnate and eventually decline (see Exhibit 2). This was accompanied by further consolidation in the industry. A wave of cross-border mergers and acquisitions led to the creation of large, multinational beer companies. These multinationals owned extensive brand portfolios and began to introduce foreign brands such as Stella Artois to North American customers, thereby establishing a “premium” segment of imported beers. The three largest players were AB-InBev, SAB-Miller, and Heineken. AB-InBev was formed when the Brazil-based Inbev Group acquired American market leader Anheuser-Busch. SAB-Miller resulted from the merger of South African Breweries and Miller of the United States. Heineken was based in the Netherlands and sold across the world. The combined global market share of these three firms was almost 40 per cent in 2014. In September 2015, AB-InBev made a takeover bid for SAB-Miller. The merger was still subject to regulatory approval in several countries as of early 2016. If approved, it would create a global giant with a dominant market position in most countries. In parallel to the increasing consolidation among the major brewers, another trend emerged in the 1980s that would reshape the beer industry in North America: the so-called craft beer movement. Craft beer referred to beer produced in small-scale production by independent breweries that combined traditional brewing methods with innovative recipes. Rejecting the perceived uniformity and bland taste of mass- produced beer, craft brewers created a wide variety of styles and flavours. Craft beer was typically sold at premium prices, sometimes multiples, compared to mass-produced beer. Craft beer drinkers tended to be beer enthusiasts seeking higher levels of quality and variety. The craft beer movement included microbreweries, as well as brew-pubs and restaurant-breweries, which produced beer mainly for in-house consumption. Microbreweries were defined by the U.S.-based Brewers Association as producing less than 17,600 hectolitres of beer per year, which was not considered a commercially viable size by the multinationals. Some craft beer was also produced by so-called contract brewers, who were contracted by craft beer entrepreneurs or brew pubs to brew beer in small batches using the recipes provided. Early craft breweries in the United States included Sierra Nevada Brewing (established in 1980), Samuel Adams (1984), and Bells Brewing (1985). In addition to microbreweries and brew pubs, a vibrant community of home brewers emerged. Home brewers were beer enthusiasts who produced their own beers as a hobby. This community of home brewers was not only a sophisticated market for microbreweries but also spawned many commercial microbreweries, as some home brewers turned their hobby into businesses. The craft 2 Kai Lamertz, William Foster, Diego Coraiola, and Jochem Kroezen, “New Identities from Remnants of the Past: An Examination of the History of Beer Brewing in Ontario and the Recent Emergence of Craft Breweries,” Business History 1, no. 33 (2015): 769–828. 3 Ibid. 4 Ibid. This document is authorized for use only by ROBERT WAHL ([email protected]). Copying or posting is an infringement of copyright. Please contact [email protected] or 800-988-0886 for additional copies. Page 5 9B16M102 beer phenomenon spread quickly across North America, as more and more small breweries and brew pubs were opened (see Exhibit 3). By 2014, craft beer accounted for more than 11 per cent of beer sales in the United States,5 with Canada showing a slightly lower craft beer share.6 Although the increased variety of flavour was perceived well in the market, the craft beer segment was also plagued by varying levels of quality. Moreover, some craft breweries had grown to a national scale, reaching considerable production volumes. In the United States, the Boston Beer Company sold almost 12 million cases of its Samuel Adams brand annually. By comparison, Heineken sold just under 24 million cases of its beer in the U.S. market.7 The large beer producers had also begun to react to the craft beer trend. Many of them launched their own craft beer labels, such as Miller-Coors’ Blue Moon brand.8 These brands were often housed in separate organizational divisions, whose ties to large breweries were not always obvious to consumers.9 Large brewers also acquired independent craft breweries. For example, since 2011, AB-InBev had acquired six craft breweries in the United States, including Goose Island Brewing Company (Illinois), Blue Point Brewing Company (New York), 10 Barrel Brewing Company (Oregon), Elysian Brewing Company (Washington), and Breckenridge Brewery (Colorado).10 Similarly, in Canada, Molson-Coors acquired Granville Island Brewing (British Columbia) and Creemore Springs Brewery (Ontario), while Labatt (a Canadian subsidiary of AB-Inbev) acquired Toronto-based Mill Street Brewery.11 These acquisitions were regarded with suspicion by many craft beer drinkers.12 Some even regarded these acquisitions as attempts to eliminate upstart competitors, so the large brewers could continue to sell their mass-produced beers. The Beer Industry in Ontario The development of the beer industry in Ontario largely mirrored that of the industry in the rest of North America. After a prolonged decline, the number of breweries in Ontario fell to single digits and bottomed out around 1980. The craft beer movement reached the province in 1984, when Jim Brickman opened Brick Brewing Company in Waterloo. Since then, the number of registered breweries had skyrocketed to 176 by 2016 (including brew-pubs).13 The increasing popularity of craft beer in Ontario was also evident in the province’s active home brewing community, which brought together beer enthusiasts and amateur brewers. Niagara College, a public post-secondary institution, even began offering a two-year brewmaster program, which addressed the growing demand for skilled brewers. 5 “National Beer Sales & Production Data,” Brewers Association, accessed June 11, 2016, www.brewersassociation.org/statistics/national-beer-sales-production-data/. 6 “Breweries in Canada: Market Research Report,” IBISWorld, accessed June 11, 2016, www.ibisworld.ca/industry/breweries.html. 7 “Imported, Craft Brews Dominate Growth,” Beverage Industry, (July 2015): 6. 8 Glenn Carroll and Anand Swaminathan, “Why the Microbrewery Movement? Organizational Dynamics of Resource Partitioning in the US Brewing Industry,” American Journal of Sociology, 106, no. 3 (2000): 715–762. 9 Ibid. 10 “AB InBev to Buy Breckenridge, Craft Beer Expansion on a Roll,” Zacks Equity Research, December 29, 2015, accessed June 11, 2016, www.zacks.com/stock/news/202337/ab-inbev-to-buy-breckenridge-craft-beer-expansion-on-a-roll; Devin Leonard, “Can Craft Beer Survive AB InBev?” Bloomberg Businessweek, June 25, 2015, accessed June 11, 2016, www.bloomberg.com/news/features/2015-06-25/can-craft-beer-survive-ab-inbev-. 11 Ross Marowits, “Craft Beer Industry Fears Megabrewers Will Monopolize Taps,” The Globe and Mail, December 3, 2015, accessed June 11, 2016, www.theglobeandmail.com/report-on-business/craft-beer-industry-fears-megabrewers-will- monopolize-taps/article27582661/. 12 Wayne Newton, “Mill Street Sale Paves the Way,” London Free Press, October 13, 2015, accessed June 11, 2016, www.lfpress.com/2015/10/13/mill-street-sale-paves-the-way. 13 “Ontario Brewers Directory,” Ontario Beverage Network, accessed June 11, 2016, www.momandhops.ca/brewery-listing/. This document is authorized for use only by ROBERT WAHL ([email protected]). Copying or posting is an infringement of copyright. Please contact [email protected] or 800-988-0886 for additional copies. Page 6 9B16M102 Production and sale of alcoholic beverages, including beer, were highly regulated in Ontario. Bottled and canned beer together accounted for more than 90 per cent of beer sales (with roughly equal shares), while draft beer accounted for less than 10 per cent. Although brewers were allowed to sell beer directly to consumers from their brewing facility, provincial law restricted retail beer sales to the 651 provincially owned liquor stores, which operated under the Liquor Control Board of Ontario (LCBO) label,14 and to the 448 branches of the Beer Store.15 The Beer Store was a joint venture between Molson Coors Canada, Sleeman Breweries, and Labatt. Although it was originally founded as a consortium of Ontario breweries, the international consolidation of the beer industry transferred the ultimate ownership of the Beer Store to three large foreign brewers: AB-InBev, Molson-Coors Brewing, and Sapporo Breweries of Japan.16 The Beer Store had a monopoly on selling beer in packages of more than six bottles or cans.17 Although the Beer Store sold beer made by other producers (in return for a handling fee), critics accused the store of favouring the owners’ brands, thus making it harder for rival brewers (including craft brewers) to sell their product.18 In response to such criticism, in 2015, the Beer Store announced measures to provide more shelf space for Ontario craft beer, and floated plans to offer ownership stakes to all Ontario-based breweries.19 The effects of these measures were not yet clear in early 2016. Another change to retail beer sales came into effect in December 2015: for the first time, a limited number of grocery stores received licences to sell beer (single bottles and cans or six-packs), subject to stringent rules on opening hours and minimum pricing.20 Small Ontario breweries with annual production of less than 50,000 hectolitres benefited from a reduced provincial beer-tax rate (26.7 cents per litre compared to 63.2 cents per litre for draft beer; 29.6 cents per litre compared to 79.6 cents per litre for bottled and canned beer), as well as a special provincial tax credit established in 2007.21 Many of Ontario’s breweries were organized in an industry association called the Ontario Craft Brewers (OCB), founded in 2003. In addition to promoting the sale and consumption of craft beer in and outside Ontario, the OCB also published the OCB Brewing Philosophy—a statement agreed upon by OCB members guiding them on small batch brewing, sourcing of local ingredients, and avoiding chemical additives and fillers. OCB members had to produce less than 400,000 hectolitres annually and needed to be independently owned. FORKED RIVER OPERATIONS Products and Pricing Forked River produced a range of sophisticated craft beers, including numerous seasonal and limited edition specialty brews. At the core of the business, however, were two mainstay beers—the Capital Blonde Ale and Riptide Rye Pale Ale, which accounted for the bulk of annual sales and were the most 14 Liquor Control Board of Ontario, LCBO Annual Report 2014–2015, accessed June 11, 2016, www.lcbo.com/content/dam/lcbo/corporate-pages/about/pdf/LCBO_AR14-15-english.pdf. 15 “About Us,” Beer Store, accessed June 11, 2016, www.thebeerstore.ca/about-us. 16 Adrian Morrow, “The Beer Store: Everything You Need to Know about Ontario’s Lucrative Monopoly,” The Globe and Mail, March 3, 2015, accessed June 11, 2016, www.theglobeandmail.com/news/politics/the-beer-store-everything-you-need-to- know-about-ontarios-lucrative-monopoly/article23248112/. 17 Ibid. 18 Ibid. 19 “Beer Store Opens Ownership to all Ontario-Based Brewers,” CBC News—Ottawa, January 7, 2015, accessed June 11, 2016, www.cbc.ca/news/canada/ottawa/beer-store-opens-ownership-to-all-ontario-based-brewers-1.2892251. 20 Adrian Morrow and Marina Strauss, “Beer Sale Roll Out Begins at Ontario Grocery Stores,” The Globe and Mail, December 15, 2015, accessed June 11, 2016, www.theglobeandmail.com/news/national/wynne-buys-six-pack-as-ontario- grocers-begin-selling-beer/article27756802/. 21 “Beer and Wine Tax,” Ontario Ministry of Finance, accessed June 11, 2016, www.fin.gov.on.ca/en/tax/bwt/. This document is authorized for use only by ROBERT WAHL ([email protected]). Copying or posting is an infringement of copyright. Please contact [email protected] or 800-988-0886 for additional copies. Page 7 9B16M102 common products to be sold to draft beer accounts, including bars and restaurants. According to Reed, these beers had an “approachable” flavour that appealed to a broad customer base. In bottled format, these two beers sold at a retail price of $3.50 for 500 millilitres. Capital Blonde Ale and Riptide Rye Pale Ale were produced throughout the year. In contrast to the two mainstays, many of Forked River’s seasonal and specialty beers had strong or unusual flavours, so they were aimed more at craft beer aficionados than at the general beer-drinking population. Examples included a bourbon-barrel-aged imperial stout with 10.2 per cent alcohol per volume and a Belgian sour beer that sold for $12 a bottle. These specialty beers were brewed in small volumes and not available across all retail locations. By early 2016, Forked River’s portfolio included 13 different regular or seasonal brews. In 2015, Mojo, a rhubarb wheat beer, became the company’s third permanent style. Despite their passion for experimentation, the founders made it a point of pride to guarantee consistently high quality. They strongly believed that sales growth should never come at the expense of quality. Although the basics of beer making were simple, maintaining consistent quality and flavour was a complex process, particularly when specialized ingredients were involved. Many other small breweries struggled to achieve consistent quality. Reed, Peters, and Nazarian believed that this was a serious problem for the craft beer industry, but also a potential opportunity for Forked River. Distribution, Sales, and Marketing The founders originally planned for up to 90 per cent of Forked River’s sales to be generated by draft licensee accounts in bars, pubs, and restaurants. Milos’ Craft Beer Emporium, a pub and craft beer trendsetter in downtown London, was among Forked River’s strongest and earliest supporters. Draft beer was generally more profitable than bottled beer. Focusing on draft beer would eliminate or reduce the complications associated with bottling and storing beer in smaller package sizes. With draft beer, it was also easier to reach some initial volume through direct sales, compared to retailing. Consequently, at first, Reed did not even plan on selling beer through the LCBO. However, when Forked River finally started selling its beer in a small number of LCBO stores and Beer Store locations, sales far exceeded the company’s projections. The number of people coming to the brewery to buy bottled beer on site was much higher than expected. One reason was that the specialty and seasonal beers (including the highly popular Mojo rhubarb wheat beer) were usually sold in bottles only, which considerably boosted on-site sales at the brewery. Another reason was that most draft accounts had limited tap space for any one brand. By late 2015, roughly half of all sales came from draft accounts and the other half from bottles, split evenly between external retail stores and on-site direct sales. Initially, most of these sales were concentrated in and around the city of London. Sales efforts for draft accounts initially focused on “craft beer–friendly” pubs and restaurants that already sold and promoted craft beer. In his business plan, Reed had identified 24 such locations in London. He believed that these establishments would be easier to convince, because they were already familiar with craft brewers and had a customer base that was eager to try new craft beers. Locations that were aggressively defended by the big brewers were initially avoided. Reed believed that superior customer service for draft accounts was a major selling point for Forked River. In his experience, many bars and restaurants had negative experiences in dealing with the Beer Store, which served as the distributor for the major breweries. By cutting out the middle person and delivering their … PESTEL Analysis HOSP4060 Hospitality Design and Execution Seminar ‹#› PESTEL Analysis The PESTEL framework is an analytical tool used to identify key drivers of change in the strategic environment. A PESTEL analysis identifies key external forces that might affect an organization. These forces can create both opportunities and threats for an organization. ‹#› PESTEL Analysis The aim of doing PESTEL is to: Identify current external factors affecting an organization identify external factors that may change in the future Exploit the changes (opportunities) or defend against them (threats) better than competitors would do. ‹#› Political Factors Laws, global issues, legislation, and regulations which may have an affect on your business either immediately or in the future. Political Factors Include: Government Stability Corruption level Regulation / De-regulation Trade Control Tariffs /Taxes Environmental laws Employment laws Health and safety laws ‹#› Economic Factors Taxes, Interest rates, inflation, the stock markets, and consumer confidence all need to be taken into account. Economic Factors Include: Stock market trends Growth rates Interest rates Employment /Unemployment trends Labor costs Credit availability Price fluctuations ‹#› Socio-Cultural Factors The changes in lifestyle and buying trends, media, major events, ethics, advertising and publicity factors. Socio-Cultural Factors Include: Health consciousness Population growth rate Attitudes towards work, leisure, career and retirement. Attitudes towards product quality and customer service. Lifestyles Attitudes toward “green” or “ecological products” Social classes ‹#› Technological Innovations, access to technology, licensing and patents, manufacturing, research funding, global communications. Technological Factors Include: Basic infrastructure level Rate of technological change Technology level in the industry Communication infrastructure Access to newest technology Internet infrastructure and penetratration ‹#› Environmental (Ecological) Environmental issues either locally or globally and their social and political factors. Environmental (Ecological) Factors Include: Weather and weather events Climate change Recycling Air and water pollution ‹#› Legal Legislation which have been proposed and may come into effect and any passed legislation’s. Legal Factors Include: Anti-trust laws Discrimination laws Employment laws Health and safety laws Consumer protection and e-commerce ‹#› HOSP4060 Hospitality Strategy Design and Execution Seminar PESTLE Assessment Read the Fork River Brewing company case study, and from the this, identify the PESTEL factors presented in the case study. Political Economic Socio-Culture Technological Legal Environmental