New Balance Business In Belgium
In this report, I will be looking into the external business environment in Belgium and opening up a New Balance store where we will be able to structure a new store operation within the country. New Balance is a sporting brand which manufactures and sells merchandise such as footwear and clothing wear for various sporting activities. The company has established a name for itself while maintaining a unique brand attracting customers of all ages as well as professional sporting athletes and teams. The company was founded 112 years ago in 1906, and the retail business is run by the CEO Robert Dimartini in the United States (Newbalance.co.uk, 2018). What I would like to set up in Belgium is a store selling merchandise of New Balance to open the variety of choices for the customers in Belgium. Seeing as this is a unique and historical brand that hasn't set up a store in Belgium, it will be a huge success and opportunity for the Corporation as their customers are going to recognise the brand. New Balance offers a large variety of different items such as their football collection or just their ‘casual look’ goods, which will attract different customers who are looking to buy either clothing or footwear. The brand has been around for over 100 years, therefore, has built a trust and bond with the public releasing new items every season.
The reason of choosing New Balance as my company
New balance is in the field of sports which is one of my main hobbies and is what i enjoy talking about. New balance have developed into a brand which has collabed with many of my favorite athletes and football teams that have intrigued me and many other supporters. As and Arsenal fan, when i see players from the team i support wearing their brand, for example, Aaron Ramsey and how well they perform with them makes me want to learn and research about it more Cycling is the traditional sport in the country and their most popular cycle race is Tour of Flanders (Thebulletin.be, 2018). Cycling is also a very desirable and more a general way for the population to use for transport. Hence why the company must adapt to the preferred taste to the nation. They can do this by starting up a new collection on cycling to attract more people into buying their products and noticing it more. Despite the fact, cycling is the countries traditional sport, its most popular sport is football (Wood, 2018). Having one of the most exciting football players on the planet such as Eden Hazard and Kevin De Bruyne. The advantages of using celebrity endorsement for a brand is that they will be able to engage their own followers and fans through their social media accounts. An example of this is when Ronaldo signed for the leading sports brand, Nike. Where between 2016 June and 2017 June, Cristiano Ronaldo posted 580 posts through his social media accounts which generated 927 million interactions Forbes reported. Estimations calculated that each post the professional athlete had posted, it produced $1.6 million in value for Ronaldo’s sponsors (Christou, 2018). The influences they will bring to the brand will help boost sales and attract more customers. This will mean they will bring a lot more popularity and views from the country if they are advertising and wearing the brands clothing. New balance can use this to their advantage by advertising with these athletes specifically. The company started selling merchandise such as footwear and clothing for athletes to optimise their performance. A way this can promote the company is when athletes who are analysing the brand and its performance enjoys wearing the product. This is vital because if someone does not like the outcome they would not want to promote the company to others. People who can help promote the brand New Balance in Belgium could be athletes who people look up to in their nation to such as big stars within their national team as mentioned Eden Hazard and Kevin De Bruyne. When followers and fans of these influenced sportsmen are noticed wearing the logo, by the views it will bring more awareness to the brand. However, there will be considerable competition such as Nike and Adidas that are already two big competitors, with Adidas being the biggest manufacturer in Europe and Nike being the biggest manufacturer in the world within the sporting business. Making it more difficult for New Balance to compete into signing these headliners. Teams that have already been sponsored by New Balance such as Liverpool Football Club have attracted many viewers when watching the team play wearing the New Balance Liverpool jersey which has influenced many people watching games in England. That is what New balance will need to do in Belgium to engage the public by hopefully sponsor their national teams. Customers will want to buy something that their football club is wearing or their favourite athlete is wearing. CHARTS, FINANCIALS, & STATISTICS Income statement 2017 2016 2015 2014 2013 2012 2011 2010 Revenues $4.5B 0.7 $3.8B $3.72B $3.3B $2.74B $2.4B $2.04B $1,79B (Privco.com, 2018) In this graph it shows me that New Balance has made $1,79B in the year 2010 and the latest records show that in 2017 the revenue of the business was a value of $4,5B which means over the course of 7 years they have made a increase of $2,71B. Although in a global content they have struggled with competing with their competitors this did not affect them on making a profit. In a global content the company is a growing business as New Balance now hit a revenue of $4.5 billion (Harris, 2018). According to the financial chart, New Balance had their greatest increase in revenue in 2017. The company had a revenue of $3.8B in 2016 however their numbers increased rapidly by $0.7B by 2017. Employees 2017 2016 2015 2014 2013 2012 2011 2010 Total number of employees 7,500 6,759 5,227 5,000 4,215 4,175 4,140 4,080 (Privco.com, 2018) In this modern era, employment is vital for a corporation to exceed. This is mainly because they can use their own skills and expertise to help progress the company they work for. New Balance have done this well by employing 7,500 people up until the year of 2017. PESTLE Belgium Political environment Belgium has a population of 11,498,519 in 2018 (google) being the 12th largest country in europe by population. (Nag, 2018) The amount of people who can work and are available to working in the country will be due to the population, therefore making the people important to the economy. (Worthington and Britton, 2018) Belgium is a developed country being ranked highly in exporting meaning its GDP unfailingly high, also reflecting how it’s unemployment rates are importantly low, being under average in the EU. This helps the business as it means more people are likely to buy merchandise and quality clothing because they can afford it. (Nationsencyclopedia.com, 2018)
Economic and financial environment (Tradingeconomics.com, 2018)
On this graph it shows how much of the population is affected due to the unemployment rates. Looking at the full year the country saw its highest unemployment of the term in october 2017 as the unemployment rates were high as 6.6% and their lowest at 6% from march 2018 to june of that year. Currently the rate of unemployment has gradually increased as they have gone back as high at 6.5% however currently at 6.3%. Overall the issue doesn't seem to be to significant and this is a positive to the country and businesses because if unemployment rates are high there wouldn't be a circulation of customers wanting or able to spend. Customers will be able to spend on more luxury items when they have a good income. (Tradingeconomics.com, 2018) People who New Balance want to attract the most are students or the public aged 15-24 as the brand will like to match with their look and taste. On the graph it shows us the the unemployment rate for the age group 15-24 is higher than the ages of 25-49 and 50-64. A virtue of this is younger customers have more of an interest and a hobby to sports and that being the case are more likely to wear sports brand. This creates it furthermore vital to make it more appealing to them. However if the unemployment rate is higher for student or the younger population in belgium, New Balance need to make it more appealing to them or have cheaper discounts for students as they wont have as much money than the other age groups. (Statista, 2018) The currency they use in belgium is the euros, therefore when a organisation from another nation wants to set up their business in another country they need to be aware that when they are investing in the new store they want to set up in belgium that the exchange rates will affect them as the value of the money changes. For $1 you will get 0.884199EUR. (Xe.com, 2018) Socio- cultural environment The languages they speak in belgium is mainly based on their neighbours on each side of their border. Unlike other countries who have formed their own identity of having their own language belgium have failed to do, so they share the language of the germans, french and dutch making the nation divided on what is their main language. This may affect New Balance when they want to advertise their business as some viewers. (Sumner, 2018)
Technological environment
In belgium the foreign trade system it is important to see how well the country is doing within importing and exporting. Technology plays a huge part in this because the better technology they have the more products they can produce and the faster they will be able to export them. For the business it is smart to see what the country are well at exporting as the business can use this to their advantage. In belgium they import raw metals and semi finished materials where they are processed and to finalise those materials before re-exporting them. (Lawyersbelgium.com, 2018) Tradingeconomics.com, 2018). Currently in belgium the imports to belgium have increased by 2.1% to EUR, 30,420.1 million in September of 2018. Belgium need to import what they cannot produce which is ‘mainly machinery and equipment, chemicals, diamonds, pharmaceuticals, foodstuffs, transportation equipment and oil products.’From the machinery equipment they import they can use this to their advantage to upgrade their technology (Tradingeconomics.com, 2018). With the material they export. it can help them with the construction of the business as they can use their own material which is cheaper. Legal environment Hurdles of opening the store could be that not many people have heard of the company most probably because of the fact a store has not been opened as yet but you can change this by making advertisements. however big brands have already grabbed sponsorships for Belgium superstars and it will take time and developed marketing skills to engage the customers to New Balance.
Ecological environment (Weather-and-climate.com, 2018)
In belgium the weather is fairly average. How the business can use the forecast data to their advantage is if New Balance notice the climate changing they can change the type of clothing they put out on the shop floor because customers are more likely to buy something they would like to wear then and related to the weather. For example in the graph it shows the weather is quite cold throughout january to april they may want to display and manufacture warm clothing such as thermal jackets or hoodies and they need it to be due to sell buy that time. However when the weather is warm as it would be throughout may to august they would want to promote their items such as short or shirts. Porter's 5 forces Industry rivalry Due to the fact New Balance sell products that many of their competitors sell, they will need to find better ways and different technology to outcast their competitors. Their main rivals are the likes of nike and adidas who are the two most popular sporting brands in europe. The issues that hold with rivalry is that you will have to share profits between each other. This is one of the disadvantages to a company as this will mean their overall profits will be subtracted by their competitors. There are currently no New Balance stores in Belgium, however, the closest stores they have to Belgium are within the border of France and within the border of the Netherlands. Although a store has not been yet to be opened in Belgium, the country is well aware of their products and the brand itself. This is due to the fact in Belgium they provide department stores, for example, Sports Direct that sells concessions such as New Balance and other Brands. (Threat of)
New entrants
The threat of new entrants are that new brands may have better quality and better products. The more new entrants there are the less profit will go around to other competitors. In New Balance, the market for selling sporting merchandise is relatively easy as their are less barriers therefore it will be a threat to the current businesses. Overall a business that attracts more investors or the amount to invest into a business is less costly will bring in more new entrants. (Bargaining Power of) Customers Customers bargaining power has a big affect onto New Balance because they have a choice of choosing other brands depending on what price suits them. For new balance to adapt to this problem, they can reduce the prices of products that have not sold. For example the company can put offers on 50% off. New Balances prices are fairly lower than their usual competitors nike and adidas.the most popular shoes in New Balance is the ‘New Balance 247’ (Sports shoe reviews, 2018), Which goes for the price for on average £60 (Bargaining Power of) Suppliers New Balance will need to find a storage area to place all their storage that cannot be placed in the store. This will help with the company to not run out of stock when a certain product is in demand. Also as New Balance do not have a manufacturing facility in Belgium, they will need to imports it from their main manufacturers which are China and the US where majority of these goods are made, specifically 70% of their shoes (Allamericanreviews.com, 2018). The best way to prevent themselves from overspending on tariffs is to make larger orders at once to be transported rather than smallest batches coming in. This is because if you have more batches coming into the country rather than fewer deliveries, you will be charged multiple times for your tariff. If there is less suppliers for a company, it will be held or used against them. This is because the less suppliers selling their goods to you or you have a lack of finding suppliers, you will have less power while negotiating prices as you will not have a choice if you do not have other options. (Threat of) Substitutes A threat of a substitute is other brands or goods that consumers can buy from. Essentially this does not have to be the exact product you are selling but may have similar benefits. (Wilkinson, 2018)
Conclusion
In conclusion New Balance have a big opportunity to run a successful business in Belgium as the company has healthy yet mineral competition due to the sizes of brands and have a well run and controlled environment to set up your business helped by the political advantages of the country
