Assessment 3 Part 1 Situation Analysis
Student name Jaehong(Brad) Kim
Student ID U3103948
Chosen topic –This Situation analysis is about the dog grooming industry-Topic 3
Gina has been working in a pet care company that deals with mobile dog was for 10 years and has inherited $100,000. As she has garnered experience from her operations over the years, she intends to open a dog grooming business in Canberra. During her job, she has found that the pet care market has been growing over the years and it has huge potential in the country. Therefore, she thinks that this is the best time to open a dog grooming business.
However, before the opening of the business, there is a need to analyze the external environment of the business as this will help her to find the macroeconomic and uncontrollable factors that play an important role in shaping up the industry. She also intends to analyze the competitive environment of the industry which in turn will help her to develop strategies for her new company. (Wu, Mahajan & Balasubramanian, 2003). The paper will thus look into the various aspects of situation analysis that will provide an overview to Gina about the potential of the new business.
The name of the new business will be Pet Groom (PG) and will deal with dog grooming specifically. The business will be set up in 56, David Street, Canberra which is a peaceful locality. As most of the business will be carried out with the help of mobile vans that are equipped with the tools for dog grooming, PG can cater to nooks and corners of the city to a certain extent.
The pet care industry has been one of the most aggressively growing industries of the world. The Euromonitor International Report that published in 2011 stated that the global pet care industry is set to grow in the coming years. Most of the growth will be concentrated in USA and Japan that have been the largest pet care markets of the world. The Asia Pacific has been the emerging market of the industry. (Euromonitor editorial team, 1st June, 2010). In the case of the global pet care industry, the cat care segment has been the biggest and it is expected that it will continue to grow in the future. (Research and markets, 24th March, 2011)
In the case of Australia, there were 8 million households that own a pet according to the figures of 2012. Of them, 4.2 millions owned dogs. The total pet care industry was valued at A$ 7 billion. (Australian pet industry statistics and trends, 2014). The expenditures made by the consumers at each of the state in the country as of 2009 can be stated with the help of the following chart:
Source: Animal Health Alliance, 2010
It can be seen that the pet care industry contributes to a large extent to the economy of the country and this has been brought about by the growth on the awareness of taking care of the pets. The trends in the consumer expenditure patterns as of 2009 can be stated with the help of the following chart:
Source: Animal Health Alliance, 2010
Though grooming does not include particularly in the above chart, it can be stated that the sector has presence in all the components that have been stated in the table. Thus, it can be stated that the grooming industry can be a good proposition for the future given the specifics of the industry. The population of dogs as pets has also increased in the recent years and this serves as a good proposition for PG.
It has to be stated that the growth of the pet care industry has a lot to do with the development of the economy and the globalization of the business environment. With the sustained work pressures of the modern day population, people have lesser time to relax. Pets serve a good way to spend time with and serve as modes of entertainment. In addition to this, the change in the demographics of the global population has played a huge role with the development of the pet industry. The ageing population is lonely and pets serve a good medium for them to spend time with. In the case of Australia too, this has been visible and this is the reason why the pet care industry has gone on from strength to strength. (Euromonitor International, 1st September, 2010).
Trends in the industry
In the case of the Australian industry, recent trends show that the value of the industry has grown. However, on close analysis it can be seen that the volume sales have been below par. In fact it has decreased from the previous years. The companies in the industry have been looking to increase the retail prices of their products and services. It has also been seen that there has been increased awareness related to the health and wellness trends of the pets in the country. This is the reason why many companies have been developing specific products or services that are related to a specific cause. (Pet care in Australia, 2014)
Given the growth in the awareness of the customers in the country, there has been a growth in the demand for the natural products and services related to pet care. Given the growth in the specialization in the industry more and more companies are being set up in the industry. The industry today has become organized and the multinational companies operating in the country have been dominating the sector. According to the figures of 2013, Mars and Nestle Purina Pet Care have been dominating the market and have captured 46% of the market. The domestic companies in the country have also been gearing up to the proposition and have been developing specific products or services. They have been upgrading their offerings to the medium and premium segment. This underlines the fact that the industry has indeed developed economically and the consumers are ready to shell out more to take care of their pets. There has been a distinct trend for the pet lovers of the country to own cats and this signifies that in the coming years, the cat population in the country is going to increase. The dog owners would look to own smaller breeds. (Pet care in Australia, 2014)
Therefore, in the case of PG this can be detrimental situation. However, on close analysis it can be stated that as the cat population is stated to increase, the bigger companies will look to cater more to the cat segment and the dog grooming industry can be neglected. This serves as a good proposition for PG in the coming years. (Pet care in Australia, 2014)
Factors of uncontrollable environment
It has to be stated that the external environment plays an important role in shaping up the strategies of the organizations in any industry. Therefore, it is important to analyze the external environment in this aspect. The analysis of the external environment can be done with the help of the PESTEL analysis which will be done in the following paragraphs.
Political forces (page 55-56)
The Government of the country plays an important role in the development of any industry. Proper rules and regulations have to be developed in terms of the growth of the new businesses and providing them with benefits. In the case of the Australian Government, the rules and regulations are friendly and this helps in the development of new companies. PG can take advantage of the rules and regulations and develop their business. (Australia, 2013).
Economic forces (page 57)
The economic factors provide an overview of the general economic conditions of the market and underlines how the companies can be develop their products and services to be attractive in the market. The economic conditions of Australia are well developed and with the help of proper frameworks the Government has been able to negate the threats of the recession of 2008-09. The per capita GDP of the country is $43,000 and the GDP growth rate as of 2013 has been 2.5%. This means that the general economic conditions of the population are good and this can play an integral role in the development of the pet care industry. This is because the pet care industry is specifically a luxury industry and people will invest in this sector if they earn well. (Australia, 2014). However, the growth of the economic conditions has been the offset by the growth in the cost of living of the population and this may deter them to spend in the luxury sector in the future. (Donnison, 3rd September, 2013).
Sociocultural forces (page 57)
It has been stated in the earlier parts of the paper that the demographics have played a key role in the development of the global pet care industry. Thus, it can be stated that the social factors will play a key role in the development of the pet care industry. As of 2012, 63% of the Australian households owned pets and thus it can be stated that Australia has been a pet loving country. In 2012, 2,241,859 transactions were recorded in the pet industry. Of this, $640,000 was spent in the grooming of the pets. Thus, it can be stated that the grooming of the pets has not yet caught up with the pet lovers of the country and lies in the bottom of the heap in the case of the pet care services. (Angel, 23rd June, 2013). However, it has to be stated that with growing awareness, the grooming business may look up in the future and this will need innovative strategies by PG.
Technological forces (page 58)
The technological aspects of the country are well developed and this has been used by the companies in various industries to develop their products and services. The growth of the technological aspects also makes it easier for the companies to be visible with the help of social marketing and the internet. This can be used by a new company like PG to good effect.
Environmental forces (page 58 – 59)
The pet care industry falls under the purview of maintaining balance in the environment. Australia as a country has been specific about the protection of the environment and thus it can be stated that the conditions are suitable for the development of the industry.
Legal forces (page 59)
In the case of the pet care industry, the legal factors play an important role as proper rules and regulations are necessary in the case of taking care of the animals. The Government of Australia has designated the state Governments to develop individual rules and regulations in tandem with organizations like Animal Welfare League Australia (AWLA). (Laws and Regulations, 2013). The State Governments and AWLA have developed rules and regulations that underline that proper care has to be taken in terms of the pets in the Australian homes. This has developed the propositions for the pet care companies as they provide professional service in this field.
Competitor analysis (page 52-53)
As the company will operate in the dog grooming business, competition will come from the companies that operate in the same industry and in the same area. On the analysis of the industry in Canberra, it has been found that there are various companies that operate in the same field. The Aussie Pooch Mobile Dog Wash/Grooming (AP) has been based in Canberra and is a renowned company in the sector. The company uses modern day technologies in its operations and uses mobile vans to go to the houses of the customers much like the proposition of PG. In addition to this, the company also deals with the grooming of the cats. (Yellow Pages, 2014)
Dog’s Best Friend (DBF) is another company that operates in the same sector and provides services to both the cats and dogs lovers of the region. It is PIAA accredited and houses trained professionals in the sector. This is the reason why the company has become a household name in the industry. (Yellow Pages, 2014)
Blue Wheelers (BW) is another company that operates similarly in Canberra. The company also houses trained professionals and has become a well known company in the sector. It has to be noted that all these companies have been operating in the industry for quite some time now and thus have made a name in the market. Thus, for a new company like PG it will be difficult to break into their domain without proper marketing and promotional strategies. (Yellow Pages, 2014)
SWOT analysis (page 67-69)
The management is expert in the field
The company will be based in the heart of Canberra giving them better visibility
The company will use modern day technologies
The company will have trained professionals
The company is new and is not well known
The dog population is set to decrease in the coming years
The services are restricted only to do grooming
The pet care industry is set to flourish
The industry is organized
The customers are aware of the services
There is huge competition in the market
The companies that operate in the market are already well known
It has to be stated that the new company will face serious threats in its operations in the coming years. This can be negated with the help of proper marketing and promotional strategies and development of services that are innovative in nature.
Target markets (Chapter 6)
The target market for the company will be the dog owners of the Canberra to start with who are aware of the grooming aspects of their dogs. It has to be stated that grooming of the dogs make them adorable and also take care of their health. Therefore, the dog owners who are aware of these facets will be targeted by PG.
Trends in consumer/clients behaviours
The consumers in Australia have been exposed to the services of the multinational companies and thus they will demand the best of services from PG. In addition to this, it has to be stated that as the spending in the luxury sector is set to decrease in the coming years, they will look for cheaper services. Thus, it will be better for PG to develop innovative services that are cheaper and effective.
ACT Government Environment and Sustainable Development. (2012). Mobile pet grooming business. Canberra, Australia: Author
Animal Health Aliance. (2010). “Contribution of the pet care industry to the Australian economy. “Australian Companion Animal Council.
Angel, M. (23rd June, 2013). Why Australians love pets. Daily Life. Available at: http://www.dailylife.com.au/lifestyle/why-australians-love-pets-20130621-2on97.html (Accessed on 2nd December, 2014)
Australia. (2014). The World Factbook. Available at: https://www.cia.gov/library/publications/the-world-factbook/geos/as.html (Accessed on 2nd December, 2014)
Australia Government ComLaw (2011). Domestic Animals Act 2000. Canberra, Australia: Author
Australian pet industry statistics and trends. (2014). Pets Australia. Available at: http://petsaustralia.org/pet-industries/industry-statistics/ (Accessed on 2nd December, 2014).
Donnison, J. (3rd September, 2013). Why are Australians worried about the economy? BBC News. Available at: http://www.bbc.co.uk/news/world-asia-23925664 (Accessed on 2nd December, 2014)
Euromonitor Editorial team. (1st June, 2010). Global Pet Care Retail Market Continues Growth. Available at: http://blog.euromonitor.com/2010/06/global-pet-care-retail-market-continues-growth.html (Accessed on 2nd December, 2014)
Euromonitor International. (1st September, 2010). Outlook for the global pet food market.
Laws and Regulations. (2013). Australian Veterinary Association. Available at: http://www.ava.com.au/public-6 (Accessed on 2nd December, 2014)
Pet care in Australia. (2014). Euromonitor International. Available at: http://www.euromonitor.com/pet-care-in-australia/report (Accessed on 2nd December, 2014)
Wu, F., Mahajan, V., & Balasubramanian, S. (2003). An analysis of e-business adoption and its impact on business performance. Journal of the Academy of Marketing Science, 31(4), 425-447.
Yellow Pages. (2014). Available at: http://www.yellowpages.com.au/find/dog-cat-clipping-grooming/greater-canberra-act (Accessed on 2nd December, 2014)
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