Aaron Kular Unit 1 – The Business Environment M3
M3 –Analyse how political, legal and social factors have impacted on the two contrasting
organisations.
As Kellogg’s have recently entered the Chinese markets with their cereals and their Pringles
brand, social factors have impacted them as they have differed from the markets they
currently operate in. As the Chinese are different consumers, their needs for flavours are
different. If Kellogg's continue to supply the Chinese markets with existing flavours from
markets such as the UK and the US, they will fail to sustain sales which would mean they
could no longer continue to operate within China. In 2008, Kellogg’s did this and they failed
to produce a profit, so they had to terminate their business within China. Kellogg's are
aware of this, so it has impacted them as in 2012 they modified their business activities by
creating new Chinese flavours for their Pringles brand for their re-launch into China such as
shrimp, aromatic crispy chicken and crab. “China’s snack food market alone is expected to
reach an estimated $12 billion by the year end, up 44% from 2008”(online.wsj,2012). The
growth in the snack food market will help drive demand upwards for Kellogg's, especially as
new flavours have been creates to tailor towards the needs of Chinese consumers.
The NHS is affected by trends within social environments such as the increase in the usage
of health neglecting activities. In “2009, 58.5 billion cigarettes were consumed” (the-tma,
2009), which cost the NHS “£2.7 Billion” (ash, 2014) in costs for treatment of diseases
caused by smoking. This impacted the NHS as the costs were extremely large and they
would not be able to sustain the amount in the future. Due to this, the NHS changed their
business activities by introducing smoking campaigns which costs “£88.2 million” (ash,
2014). These ranged from TV advertisements to posters and leaflets. This has positively
affected the NHS as approximately £380 million is being saved by the NHS due to a
reduction in cigarette consumption as a consequence to the advertisements.
Legal factors that have affected Kellogg's such as patents require Kellogg’s and their
competitors to not copy ideas from each other. Kellogg’s spent “£206 million in 2012”
(Kellogg's, 2012) on research and development for their products which has increased by 7%
from the previous year. Kellogg’s have been impacted by patents as they know competitors
can’t copy their ideas so they are more likely to invest into the development of new ones.
Kellogg's have changed their business activities as they have been increasing their budget
for research and development each year from 2009. Sales have consequently increased
from £12,397 million in 2010 to £14,197 million in 2012 as Kellogg’s may have developed
certain brands and products which are not available by other competitors due to law.
Customers have had no choice but to purchase form Kellogg’s for the unique brands and
products.
The barriers China creates to prevent non-Chinese businesses establishing themselves
within china is a political factor that impacts upon Kellogg’s. A “CCC” standard is required by
businesses within China which enables them to sell products within the market. As China
creates barriers for non-Chinese businesses, they find it very hard and long to acquire one.
This has affected Kellogg's as they cannot establish themselves in China as a single
organisation as they will find it very hard to qualify for the CCC standard which allowing
them to sell products within China. It is also a long process acquiring the standard so if
Kellogg's were to apply, counterfeit Kellogg’s cereals may enter the Chinese markets which
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M3 –Analyse how political, legal and social factors have impacted on the two contrasting
organisations.
As Kellogg’s have recently entered the Chinese markets with their cereals and their Pringles
brand, social factors have impacted them as they have differed from the markets they
currently operate in. As the Chinese are different consumers, their needs for flavours are
different. If Kellogg's continue to supply the Chinese markets with existing flavours from
markets such as the UK and the US, they will fail to sustain sales which would mean they
could no longer continue to operate within China. In 2008, Kellogg’s did this and they failed
to produce a profit, so they had to terminate their business within China. Kellogg's are
aware of this, so it has impacted them as in 2012 they modified their business activities by
creating new Chinese flavours for their Pringles brand for their re-launch into China such as
shrimp, aromatic crispy chicken and crab. “China’s snack food market alone is expected to
reach an estimated $12 billion by the year end, up 44% from 2008”(online.wsj,2012). The
growth in the snack food market will help drive demand upwards for Kellogg's, especially as
new flavours have been creates to tailor towards the needs of Chinese consumers.
The NHS is affected by trends within social environments such as the increase in the usage
of health neglecting activities. In “2009, 58.5 billion cigarettes were consumed” (the-tma,
2009), which cost the NHS “£2.7 Billion” (ash, 2014) in costs for treatment of diseases
caused by smoking. This impacted the NHS as the costs were extremely large and they
would not be able to sustain the amount in the future. Due to this, the NHS changed their
business activities by introducing smoking campaigns which costs “£88.2 million” (ash,
2014). These ranged from TV advertisements to posters and leaflets. This has positively
affected the NHS as approximately £380 million is being saved by the NHS due to a
reduction in cigarette consumption as a consequence to the advertisements.
Legal factors that have affected Kellogg's such as patents require Kellogg’s and their
competitors to not copy ideas from each other. Kellogg’s spent “£206 million in 2012”
(Kellogg's, 2012) on research and development for their products which has increased by 7%
from the previous year. Kellogg’s have been impacted by patents as they know competitors
can’t copy their ideas so they are more likely to invest into the development of new ones.
Kellogg's have changed their business activities as they have been increasing their budget
for research and development each year from 2009. Sales have consequently increased
from £12,397 million in 2010 to £14,197 million in 2012 as Kellogg’s may have developed
certain brands and products which are not available by other competitors due to law.
Customers have had no choice but to purchase form Kellogg’s for the unique brands and
products.
The barriers China creates to prevent non-Chinese businesses establishing themselves
within china is a political factor that impacts upon Kellogg’s. A “CCC” standard is required by
businesses within China which enables them to sell products within the market. As China
creates barriers for non-Chinese businesses, they find it very hard and long to acquire one.
This has affected Kellogg's as they cannot establish themselves in China as a single
organisation as they will find it very hard to qualify for the CCC standard which allowing
them to sell products within China. It is also a long process acquiring the standard so if
Kellogg's were to apply, counterfeit Kellogg’s cereals may enter the Chinese markets which
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