Business Consultancy Report

‘Pollution Eating Bikes’ expansion into United Kingdom (UK)

Student id: 17452438

Module: Marketing strategy

12/6/2017

Word count: 2421

Table of Contents

1.1 Executive summary ..................................................................................................................2

1.2 Introducing PESTEL Analysis ........................................................................................... 3-4
1.3 PESTEL Analysis of United Kingdom (UK) ..................................................................... 5-9

1.4 Recommendations ................................................................................................................10

References .............................................................................................................................. 11-12

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1.1 Executive Summary

Daan Roosegaarde issued a request to have a business report to identify whether pollution eating
bikes should enter the United Kingdom (UK) market. This report creates a matrix of information
by providing both an analysis of the external environment using the PESTEL (Political,
Economic, Socio-cultural, Technological, Enviroment and Legal) analysis. PESTEL is a useful
strategic tool for analysing the external business environment and to know whether any market is
conducive for investing.
By briefly looking at the past, analyzing current trends and using these to extrapolate into the
future, the report attempts to chart the UK to be a good selection as nearly 60% of the population
are living in regions where the levels of pollution are beyond the allowable limits (Laville,
2017). The report provides a framework for categorizing political, economic and social as the
most impactful factors on the pollution eating bikes as it is expected to bring its own
technological expertise and with the concept to absorb pollution and pump out clean air, the
environmental factor will be taken care. The legal factors are tied to the political ones as
government policy is strongly implemented in the UK.
The continued political stability is greatly valued as this will create a promising business
environment for pollution eating bikes. Moreover the UK government has implemented taxation
policies, incentives and environmental laws to encourage business drivers, promoting bicycle
and alleviating air pollution. The UK has a robust economic environment comparative to other
countries. The UK is a highly developed economic nation with the 6th largest GDP figures in the
world. There has been a significant growth of 28% in the bicycle industry and current economic
climate is favorable. The social-cultural factors are congruent with the notion of pollution eating
bikes due to the factors like health consciousness, attitude towards ecological and innovative
products.
The report concludes that pollution eating bikes should enter the UK market and focus on the
urban areas. The detailed 7 recommendations have been provided, the highest priority are
summarized below:
The support by the UK government for investors, incentives and laws combat pollution.
Favourable economic indicators including growth in bicycle industry, FDI and inflation
The social-cultural factors associated with bicycle shows that it is the best mode of
transportation in the near future.

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1.2 Introducing PESTEL Analysis

According to Alexander (2000), the business environment is changing in a fast pace and
dynamically in which organizations compete with each other. The PESTEL model can have an
important impact on the organization performance and survival in the long term. Basically,
organizations should be more alert to their business environment by piloting regular scanning for
any new venture (Rastogi, 2016, p.2).

The PESTEL model

(Chartered Management Institute, 2013)

• Political

Political factors refer to government’s intervention in the economy and political elements can
have considerable impact on the development of businesses (Kolios and Read, 2013). The
political environment is one of the less foreseeable elements in an organization’s business
environment, (Nava, 2014, p.21). Organizations need to be prepared to manage effects of
government political climate locally and internationally.

• Economic
Business does not operate in a vacuum but rather within a framework of economic forces, (Dias,
2009, p.13). Consequently, it is debated that firms are normally put into the position of

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responding to the state of the economy. Economic factors are likely to consist of the effects of
growth rates, inflation, foreign investment, exchange rates, fiscal policies, economic effects on
the market.

• Social- cultural
People habits and ways of life are continuously changing and businesses have to become
accustomed to the dynamic changing pace in the environment (Baines and Fill, 2014, p.121).
The values, beliefs and attitude are fashioned and accustomed by the society in which people live
in, and their general behaviour, including demography, education, environmental and health
consciousness are influenced by societal and cultural. These behaviors have to be understood
prior to entering any target markets.

• Technology
Technological factors in terms of innovations and developments have major environmental
impact on the way business operate, new industries and for new products. Advance in
information technology, biotechnology and energy preservation are some of the new domains
which have emerged in the recent years (Lancaster and Massingham, 2010, p.400)

• Environment

In the recent years the concerns surrounding environment protection have become progressively
more important as the organisations are emerging into the economic activity putting the
environment into pressure. Globalization is another key element to accelerate this process of
environment destruction (PESTEL Analysis, 2013, p.24). The weather, climate change and
environmental pollution are some of the factors to be look upon.

• Legal

The legal environment refers to the parameters that outline the legal boundaries for a business
operation. This factor takes into consideration all legal aspects such as employment laws, health
and safety laws, labor laws and these factors have impacts on an organization (Trivedi, 2016,
p.385). There are some laws that affect the business environment in some countries where in
others they are not.

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1.3 PESTEL Analysis of United Kingdom (UK)

The following analysis will gear towards the political, economic and social factors since
pollution eating bikes is projected to bring its own technological knowhow and it can positively
impact the environment by having the bicycles that absorb pollution and pump out clean air. As
regards to the legal aspects, these are influenced by the political climate in the UK.

• Political factors
The UK is a constitutional monarchy that is governed and influenced by the parliamentary
system. The UK comprises of Great Britain (England, Wales and Scotland) and Northern Island,
(Directgov, 2012) The UK is a politically stable country and the government is encouraging for
external investors to invest in the UK economy (Nielsen, 2010, p.11). The intellectual property is
well preserved in the UK. However, some of the policies in the UK are influenced to a degree by
the European Union and World level politics (Kolios, 2013). Moreover, the recent Brexit will
have an impact on the European Union in terms economic influence in Europe by imposing trade
barriers and consider UK as a distinct country (Dhingra, 2003).

The UK government offers incentives for foreign investors in the UK to encourage fast growing,
innovative services and products. The UK provides a 10% corporation tax which was 20%
before and no tax is levied on the foreign income invested (Deloitte, 2015). The ‘Cycle to Work’
tax effective scheme is one of the measures to support healthier rides to work and to decrease
environmental pollution and congestion by enhancing bicycle activities. The UK cycling
infrastructure has come a long way, the government constant investment in the National Cycle
Network has developed its infrastructure by 12,600 miles including cycling and walking paths
across the country in urban areas including London (Sustrans, 2002, p.2).

According the figures of World Health Organization (2017) people in the UK are more likely to
die from air pollution than many other countries in Europe as well as the US, Brazil and Mexico,
(May 2017). The UK parliament in 2008, the world’s first climate change act was implemented
to reduce the gas emissions with a target of 80% cut by 2050 (Lockwood, 2013). Moreover, with
the climate change and the high level of air pollution in UK shifted cycling into the foreground
as a means of reducing CO2 emissions. On the other hand, since the implementation of few

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environmental law acts, some of these acts were not fully executed due to low political and
investors’ engagement (Lockwood, 2013).

The political climate is stable for pollution eating bikes to enter the UK as the government is
taking bold initiatives and working towards its improvement. The government has portrayed
their political philosophy as congruent with the key principles of the environmental movement
(Godfrey, 2012, p.2). The actions by to UK government to promote business and protect the
environment have benefited extensive political support was hailed by political parties,
environmentalists, trade union and business, (Tempest, 2007).

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• Economic factors
According to a research on UK’s bicycle industry conducted by Alexander Grous, the bicycle
industry is equivalent to 2.9 billion pounds due to a growth in sales by 28% since 2009. In spite
of, the adverse economic recession, there has been no major impact on the bicycle industry
(Nielson, 2010, p.3). The increasing sales trend of the bicycle is in London where there is
significant air pollution level. Despite this growth, the frequency of bicycle industry falls behind
other European countries such as Germany, Denmark and Netherlands (Fotios and Castleton,
2015).

The procedure for setting up a company in the UK is identical for the local citizens and foreign
investors. There is no restriction on the free flow of capital and no approval mechanisms exist for
foreign investment (Deloitte, 2015). The Brexit decision has resulted to lower currency exchange
rates and devaluation of the pound which have attracted foreign investors to the UK (Expatica,
2016). However, the International Monetary Fund (2017) analysis on the UK’s currency
exchange shows that a free-floating model that exist in UK can result to dynamic complex
situation between market forces and economic conditions.

The UK's inflation rate is 2.9%, the highest in the last five years in as the price of petrol has
increased (BBC, 2017). According to the Office for National Statistics report shows that the rise
in inflation is due to the increase of global oil prices during these recent months by 1.2%.
Consequently, this has caused import of the oil prices more expensive in the UK (The Guardian,
2017). With the rise in the inflation rate, the transportation costs have increased which is
encouraging the British for alternative mode of transport and many swap cars for bikes.
Nevertheless, the rise in inflation will also increase the price of other commodities.

The UK has a strong economy and the remarkable economic climate is favorable to allow
pollution eating bike to enter the bicycle industry in the UK. Pollution eating bike will benefit
from the expansion of the bicycle industry, business easing for foreign investors, currency post
Brexit vote and the current inflation rate. However, winter in UK is very cold and evening is
darker which major constraints are for cycling during these times. The snow makes the routes
impractical (McWilliams, 2010, p.6).

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• Social-cultural factors

The growing awareness on health issues and rising focus on attaining a good health are changing
the lifestyle philosophy in the UK and has resulted to an increase across the consumer health
market in the UK (Grous, 2012, p.2). With the concept of ‘Bike-sharing’ and ‘On your Bike’, the
engagement of the British have increased in the numbers of large scale organised cycling events
across the UK to promote health consciousness. Following a study of more than 250,000 people
in the UK regarding cycle at work, this is interconnected with around 45% lower risk of
developing cardiovascular disease and cancer compared to travelling by public transport or other
vehicles. On the other hand, by 2050 in the UK with the lack of exercise and unhealthy eating
habits could result to more than 40% of the population could be obese (ATT survey, 2015).

According to The Nielsen Global Survey of Consumer (2016) reveals that the consummation
trends in the UK is opting for more eco-friendly products even though their higher price. The
growing occurrence to pay more for environmentally-friendly styles of products is due to aspects
as the alarming pollution level in UK and greater accessibility of ecological products (Nielsen,
2016). The UK is an economically strong country which has broad access to innovative products
and technological advancements. In a survey in 2012 people in the UK regarding their attitude
towards technology, 28% of respondents reported they were prepared to pay for style and
technology (Statista, 2016). However, the technological development in UK is still slow in
contrast to the United States of America.

According to TRA analysis, cycle in UK has significantly increased the last five years, the road
traffic statistics reveals that more than 3 million miles have been cycled in 2016 representing an
increase of 23% compared to the recent years.

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.
Source: UK Road Traffic Statistics (RTA) 2016

To note that cycle has increased in the urban areas, more specifically in London where the cycle
journeys have increased for more than 60% in 2015 compared to 2005 (Travel in London
Report9, 2016). The patterns in the UK have shown a remarkable interest of the younger
population for cycling activities (Nielsen, 2010 p9). Whereas, in the urban areas the importance
for cycling is gender neutral encapsulating a wider groups of different ages, gender and
multicultural. However, according the police recorded crime data in UK; there in a general
increase in the bicycle theft during the recent years whereas other forms of acquisitive crimes
have decreased (Sidebottom, 2016)

The socio-cultural factors support the entrance of pollution eating bikes in the UK. This shift to
health consciousness, awareness to the environment protection and the demands in new
technology are worthy for pollution eating bikes to tap the UK market.

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1.4 Recommendations

By critically analyzing the business environment factors facing the UK, this business report
recommends that pollution eating bikes should enter the UK market very soon in the endeavor to
spread out the new concept due to the following:

1. The government of UK is promoting environmental incentives, initiatives in terms of

regulations to combat air pollution and tax rebate for new technological development.

2. The bicycle industry has been growing by 28% and this trend is bound to increase in the
future to be a determining factor for pollution eating bikes to enter the UK market

3. Taking into consideration the current economic factors such as inflation and foreign
direct investment, an affordable cost model will allow every potential buyer to access the
new product.

4. To alleviate pollution in the polluted areas, to reduce congestion and for safer roads, the
pollution eating bikes is poised to expand into an essential transportation system in the
UK for the coming years.

5. In this era of globalization, the new technological concept of pollution eating bikes is
seen to emerge as a long term solution for today’s global urban problems such as
pollution in the city like London.

6. The demography in the UK of different surveys have shown an increased population

directing towards bicycle as their means of transport for work and keeping in good
health.

7. The UK is a developed economy with an approach for new technology. Build more
innovative, creative and technology products for the people of UK in regards to brand
equity and loyalty.

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References:

BBC News. UK inflation rate rises to 2.9%. (online) Available from:

http://www.bbc.com/news/business-41238822 (Accessed 29th November 2017)

Dhingra S., Ottaviano G., Sampson T. and Reenen J.V (2003) The impact of Brexit on foreign
investment in the UK. 8-10 The London school of economics and political science

Chartered Management Institute (2016), Environmental scanning Trends Affecting the World of
Work in 2018, ISBN 0-85946-441-5

Deloitte (2015) Reach, Relevance and Reliability, Report on Taxation and Investment in the UK
Dias, L. P (2009) Introduction to business. McGraw-Hill Higher Education
Dr. Gupta, A. (2013) Environmental and pest analysis: An approach to external business
environment. Merit Research Journal of Art, Social Science and Humanities Vol. 1 (2)

Fotios, S. Castleton, F. (2015) Lighting for cycling in the UK—A review. Sage Journal (online),
vol.47, (3) p2. Available from: http://journals.sagepub.com/doi/full/10.1177/1477153515609391
(Accessed 26th November 2017).

Godfrey, R. (2012) The Political Aspects of Environmentalism in the UK. Institution of

Environmental Sciences 2-3

Kolios, A. and Read, G. (2013) A Political, Economic, Social, Technology, Legal and
Environmental (PESTLE) Approach for Risk Identification of the Tidal Industry in the United
Kingdom. Journal of Energy Management. 3-23

Lancaster, G. and Massingham, L. (2011) Essentials of Marketing Management. Routledge

Laville, S. (2017) Nearly 40 million people live in UK areas with illegal air pollution. The
Guardian https://www.theguardian.com/enviro nment/2017/apr/22/nearly-40-million-people-
live-in-uk-areas-with-illegal-air-pollution (Accessed on 29th November 2017)

Lockwood, M. (2013) The political sustainability of climate policy: The case of the UK Climate
Change Act.

McWilliam G. (2010) The British cycling economy. Gross cycling product report, 4-17

May, PJ. (2017)The Pharmaceutical Journal, online | DOI: 10.1211/PJ.2017.20202821

http://www.pharmaceutical-journal.com/news-and-analysis/news-in-brief/uk-air-pollution-
deaths-are-public-health-crisis/20202821.article (Assessed on 29th November 2017)

Nielsen (2016) Global consumer confidence reflects uneven trends around the world. Report. 3rd
edition

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Overview on the UK system of government 2012 (online). Available from:
http://webarchive.nationalarchives.gov.uk/20121003074658/http://www.direct.gov.uk/en/Govern
mentcitizensandrights/UKgovernment/Centralgovernmentandthemonarchy/DG_073438
(Accessed on 04th December 2017)

Rastogi, N. and Trivedi, MK. (2016) PESTEL technique – a tool to identify external risks in
construction projects. International Research Journal of Engineering and Technology. 01 (3), 2-
5
Rosamond, B. (2016) Brexit and the problem of European disintegration. Journal of
Contemporary European Research. 12 (4), 4-5

Sidebottom, A. (2016) Bicycle theft. Crime overview. ISSN 2050-4853, 2-5

Swift S., Green. M, Hillage.J, Nafilyan.V (2016) Impact of the Cycle to Work Scheme. Evidence
Report. 509, 11-16

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