ITHE EDEN GARDEN TOOLS COMPANY LTD Ch 5 Analysing the External Environment Umar decided that he should start by assessing the external environment, since this would have a bearing on the company's past marketing activities and the appropriateness of its current activities. He began by identifying sources of information, both internal and external, but quickly rejected the idea of carrying out primary market research because of the cost and the time it would take. After all, the company still had only very limited money to spend - until the venture capitalists injected new funding (assuming that they did), Eden Garden Tools Company Ltd would have to cope on a shoestring. Umar found some published research from Mintel. This comprised three reports: 'Garden Products Retailing' from 2008, 'Gardening - The Consumer' from 2004 and Gardening Review' from 2007. From Datamonitor he found a report from 2009 on gardening and DIY retail futures. In addition, Umar trawled the Internet for information on government legislation and court cases involving gardening supply companies. Internal sources included sales records, levels of late payment and default on invoices, trends in sales of different items in the product portfolio, and discussions with Hugh about the general feel of the market. Umar knew that other sources might be needed - but this gave him enough sources to be able to make a start. Altogether Umar spent just over 7,000 on the published reports, which was a considerable sum from the budget but he got most of the information he needed. He was able to fill in the gaps from the Internet and from the internal sources. At the end of the first week he was able to answer many of the questions embodied in the external audit. The economic-demographic part of the audit was straightforward enough - the newspapers provided plenty of answers, Credit availability was still limited, unemployment still rising, the population would continue to age (a good outcome for Eden Garden Tools, given that older people have more time for gardening and more need for tools for the infirm).The technological audit was also relatively straightforward, since Eden Garden Tools was in fact driving the market to some extent, as the most innovative company in the industry. However, driving the market to some extent, as the most innovative company in the industry. However, new technologies in production and process might come along. Umar's discussions with Mike on the technological aspects indicated that the tree-pruning saw would need some fairly innovative technology, since the battery life would need to be long enough for the saw to be used for most of an eight-hour working day. No particular legal changes came to light, but the new pruning saw would certainly have to meet health and safety regulations. Ecological concerns would probably be helpful for Eden Garden Tools, given the business it is in Ch 6 Analyzing the Internal Environment Having completed his assessment of the external environment, Umar Sayeed turned to the internal environment. This, he knew. would be the crucial one: the company was in for a period of rapid change, with new products and new disciplines coming to the forefront. If everything went well, the company could expect to see some fairly rapid organic growth in the future, which womendamos valles o F6 7 F8 F12 F10 Tavmg comprerea nis assessment or the extemar environment, Umar Sayeea turned to the internal environment. This, he knew, would be the crucial one: the company was in for a period of rapid change, with new products and new disciplines coming to the forefront. If everything went well, the company could expect to see some fairly rapid organic growth in the future, which would mean new roles and responsibilities for existing staff as well as hiring new staff. Umar knew that he would have to consider the internal marketing of the firm and the resources available, as well as looking at the product portfolio and potential life cycle of products. This would involve using internal sales records, interviews with staff, and discussions with Mike about the technical aspects of the products. Umar's analysis of the internal environment turned up one or two surprises. First, an examination of the sales figures showed that the Slick Mower was not selling as well as it should have been sales were still moving upwards, but not as fast as the growth in the market said they should have been. This probably meant that the Slick Mower was heading towards a downturn, becoming obsolete in the face of competition from other mowers. Since the Slick Mower was the company's flagship product and should have been a cash cow, this presented an immediate problem to be solved. Other products in the portfolio were clearly in the maturity stage, but Umar was unable to identify any stars (see Chapter 8). Equally, there were no dogs, and in fact most products had performed fairly consistently during the recession, none standing out as being worse hit than any other, even though sales across the board were somewhat down. Umar's inference from this was that the company needed some new products fairly quickly, and in particular a new version of the 12-year-old Slick Mower was needed as a matter of urgency. Analysis of the company's resources showed that the fixed assets (equipment, machinery, factory space, etc.) were in good shape, but the financial position was poor. This meant that there would be very little in the budget for marketing unless the venture capitalists came on board - leaving Umar with something of a problem. The order book looked moderately healthy, though. Interviews with the staff also revealed something surprising - employees thought the company was somewhat old-fashioned and not especially innovative. This opinion directly contradicted the directors' view of the company and flew in the face of the new vision statement. Obviously the internal marketing had gone badly wrong somewhere 1. How the external environment affects planning? 2. How the internal environment affects planning? 3. What are the key factors in developing a marketing information system? 4. How might an organisation decide the frequency of auditing activities