PEST Analysis - Bethesda US (Inludes Recommendations)

download PEST Analysis - Bethesda US (Inludes Recommendations)

of 16

description

Bethesda is a restaurant in US and this will give a basic information on how Bethesda is operating in.

Transcript of PEST Analysis - Bethesda US (Inludes Recommendations)

PEST Analysis: Bethesda Blues & Jazz Restauranthttp://www.bethesdabluesjazz.com/ Maryland, USA

The Bethesda Theatre, built in 1938 and opened as one of the era's Art Deco cinema palaces, has come back to life! With an $8 million renovation, this National Historic Register Property is the region's #1 Live Music Supper Club!This music club named Bethesda Blues & Jazz Restaurant is a small concert hall serving excellent food and drink and has been operating as a restaurant successfully since March 2013. It features 300 seats for dinner and 200 additional performance seats, which are made available when the dinner seats are sold out. Restaurant guests are able to see their favourite artists in an intimate, elegant, and acoustically superb setting. Bethesda Blues and Jazz also boasts a beautiful new 40 ft. bar and lounge area.The concept of the restaurant is not known in the UK market and the owner is looking at expanding the business into the UK market and is asking you to analyse the business environment in the UK and in USA using PEST analysis tool, and provide suggestions for that expansion.

A brief description of its business, identifying its key markets and products:

A brief description of the sector it operates in (e.g. food retailing)

List your organizations main competitors:

What is your organisations main objective:(you may find it helpful to look at your organisation's mission or vision statement)

Do you think your organisation is successful?(what evidence do you have to support your view? e.g. sales, profits etc)

PEST AnalysisPolitical (and Legal) - VictoriaPolitical change includes the more obvious aspects such as changes in governments, the effects of economic integration in the European Union, expansion of the European Union, shifts in world power, political conflicts and resulting international tension. As well as specific legislation and regulation, as part of a PEST analysis it is important to consider possible changes in legislation and regulation. Such changes tend to follow a pattern of consultation; indeed it is possible for organisations to influence legislation. As regards regulation, it is important in a PEST analysis to include the impact of new and likely new legislation on how an organisation operates. However, it is also important to consider wider implications such as on competitors. It is not unusual for regulation to have major and totally unforeseen effects that were totally unintended. For example, look how the UK brewing and pub retail business has changed in the last decade, partly as a result of new regulation which was intended to increase competition in the sector.

Important questions to ask are:

Are there any proposed legislation or recent regulations which may have important implications for your organisation?

If there are, will they be advantageous, disadvantageous or neutral for your organisation? The key here is to consider the implications for your main competitors.

Do the current causes of political tension in the world have significant implications for your organisation or/and your sector?

Are there any political changes which may open up new markets in the future i.e. the eastward enlargement of the European Union?

Is the political environment in your major markets favourable to your organisation and is it likely to change and how?

Legal and Political factors:

-Health and safety -Revenue/Income tax-Employment regulations-Consumer protection-Privacy policies-Smoking policy in public places -Age restriction for alcohol consumption-Regulations on number of people that can be hosted-Restriction on drug consumption

Recommendations:-Improve knowledge about laws and policies So that penalties and fines do not apply. This can be done through reading from books and the government's website

-Get an accountant and a lawyer onboard An accountant knows exactly when the business has to pay for VAT and can check the accounting statements.

-Keep safely customers information If personal details about customers is given away, then the business commits a crime. In order to keep the information safe, the business should have a protected database on computers. Perhaps hire a professional to set it up.

-Create an area for smoking not to lose potential customers Customers who smoke are more likely to choose place where they can do it. Bygiving them a place where they can smoke free, the business attracts more customers and also differentiates.

-Food hygiene

-Ask for ID to young people ordering alcoholic beverages Waiters and members of staff should ask for ID of customers that look very young. It is annoying for the customers but at least the business does not risk to break a law.

USA Government official website: www.usa.gov (date of access: 27/02/14)

Esquire, best bars in America website: www.esquire.com (date of access 27/02/14)

Economic Justin & AlexEconomic cycles affect nearly all organizations but some will be affected earlier in a cycle than others and some will be much more affected by changes in the economy than others. Also different geographic markets will be affected by global cycles at different times and to different extents. Important questions to ask are:

Is your sector affected early or late in the business cycle?

How far is your sector affected by changes in economic prosperity? Note some activities may even benefit from recession or be little affected e.g. budget food products, whereas others, such as luxury holidays and business travel, may be very badly hit.

Is your organization represented in different geographic markets? (Often organizations choose a strategy of going for globalization to spread the risk).

Also note that in practice each recession tends to have slightly different characteristics, indeed the economic literature identifies business cycles of 5, 10 and 20 years with the longer ones tending to be more extreme. Some economists suggest that there is a 50 year cycle linked to technological change, which tends to be very dramatic particularly in the upturn of the economy.

Other aspects of the economic cycle are the effects on the availability and cost of human resources, something we will return to in later chapters.

Business cycles

During the summer months, many customers go on holiday. This is due to the fact that Bethesda Supper Club is located in a wealthy area, where the demographics have lots of disposable income. During the months of June, July, and August, the current customer base will be away. Therefore, Bethesda needs to add or change a few things. Our recommendations:

1. Purchase acts to attract tourists who have come to Washington on vacation. Local customers leave on holiday. Focus on tourist group during vacation months. Partner with tour services. 2. Advertise in popular tourist attractions or flights GNP trends

Least impacted by recession due to location near Washington. Business is more stable than rest of the country.

Interest ratesInterest rates are significant. Lending is so high. Raise in interest rate equals higher monthly payment, which adds up to a large sum over time. Monthly interest rate $22,500

Money supply Inflation UnemploymentUnemployment is good for them because it means they have a larger choice of staff that become available. Disposable incomeThere is a high rate of disposable income in this location but a low rate of disposing it into businesses.

Recommendations: set up special events and taster sessions to give potential customers an idea of what the experience is like without them having to dispose much income. Offer restaurant out for fundraising evening promote yourself to richer clientele.

Attract bigger names by associating to these with charity events (to make it affordable).

Reducing Debt at Bethesda:We believe Bethesda should attempt to reduce their reliance on debt. At present interest rates are relatively low but if they rise as predicted Bethesda could end up with a gaping hole in their finances. What we propose is that Bethesda attempt to restructure their debt to make them less reliant on interest rates. They could perhaps attempt to turn long-term debts into shorter current liabilities by discussing the debt with their creditors. They could also consider selling assets then leasing them back (This only works if the asset is worth more than the money owed on it). Bethesda could also aim to improve their inventory management, making sure that as little as possible inventory gets wasted.

Energy availability and cost

Negotiate energy costs with different companies. Buy electricity in summer months when its cheapest in order to reduce costs.

Ban, V. (2012). Analysis of the Upscale/Fine Dining Sector in the Restaurant Industry. Accessed on 4th March. Available at http://scholarsarchive.jwu.edu/cgi/viewcontent.cgi?article=1008&context=mba_student

Bethesdabluesjazz.com. 2014. Bethesda Blues and Jazz Supper Club - Dining. [online] Available at:http://www.bethesdabluesjazz.com/dining.cfm[Accessed: 11 Mar 2014].

Bethesdabluesjazz.com. 2014. Bethesda Blues and Jazz Supper Club - Music Calendar. [online] Available at:http://www.bethesdabluesjazz.com/events.cfm[Accessed: 11 Mar 2014].

Social Hailey & NaomiSocial changes include the effects of demographic patterns, tastes, fashions and even concerns about the environment and healthy living. Some aspects of social change are easy to forecast, at least in the short-term like population size and structure, whereas others such as fashions and concern for the environment can never be more than an educated guess. The big danger for organisations is that things like tastes and fashions can change very quickly and in unpredictable ways.

Questions to ask about your organisation and sector:

Hailey:Point2homes.com (2014) shows demographics of the area on Bethesda Maryland where Bethesda Jazz and Blues is located in. The total population of the area is 107,892.

As the statistics shown above, it shows how the area is professional and educated. This can be proven first by occupational employment statistics, where professional office workers takes up to 81.9% where blue collar workers, or workers doing physical work take up only 18%. Combined with their education statistics that Graduate Degree takes up more than half of the whole education statistics by 52% shows how the area is well cultured and highly proficient. This therefore shows a positive effect to Bethesda Blues as Ricci (2013)'s Jazz consumption demography matches with the Bethesda Maryland's demography. To prove this, the table is provided below:

Bethesda MarylandJazz Lover Demography

Education No College/High School - 4% College - 50% Graduate School - 46%

Household income 0-30K - 21% 30-60K - 28% 60-100K - 19% 100K - 32%

Age 18-24 - 12% 25-34 - 21% 35-44 - 22% 45-54 - 23% 55-64 - 15% 60+ - 7%

From the table, it shows how much jazz is consumed by college and graduate degree graduates, by 50% and 46% consecutively while 'no college/ high school' graduates only consume Jazz by 4%. This therefore matches with the area demography that there are 52% Graduate degree and 31% Bachelors degree graduates. This demonstrates a more likelihood of the business to be successful in the area of Bethesda Maryland.Also, Jazz consumption is mostly centered around 45-54 of 23% with household income level of 100,000 US dollars per annum. This also matches with the area demography where the age range of 45-54's household income is in average of 150,000 US dollars per annum.

It is also notable that the area's statistics show how the community is into entertainment and food, the percentage of entertainment is 235% as food is 212%, which is above the national average level of consumption. Total Household Expenditure is 229% which shows a very positive sign as this means that the households in the area tends to spend more than the other areas. This may contrast to other rural areas where they tend to save rather than spending money. The lifestyle therefore in Bethesda Maryland is very affluent.

This graph is to compare the "consumption level" difference in Maryland and Kentucky, to show how social factors on consumption may affect on businesses either in a positive or negative way. In the case of Kentucky, the Jazz and Blues concept of restaurant is more unlikely to be successful as people's total house expenditure, consumption on food and entertainment are all below the national average level.

Social media is a good method to evaluate consumers' attitudes and opinions about the company. Facebook webpage of "Bethesda Blues and Jazz Supper Club" provides an easy access of how customers think towards the business. (Facebook, 2014)

From the comments and posts on Facebook page of Bethesda Blues and Jazz, it shows that the customer satisfaction is very high and how the customer values the restaurant as somewhere chic, tender and romantic. The customers' attitudes and opinions do affect the business a lot as this helps the business to evaluate themselves and reposition their target market if needed. With constant updates on today's musicians and upcoming events on SNS page, it helps the customers to be more aware of the business. The company's image however, may need to be kept still as Social media provides a risk of undesired brand image to the public. Facebook. (2014).Bethesda blues & jazz supper club. [online] Retrieved from: https://www.facebook.com/Bethesda.Blues.Jazz [Accessed: 22 Feb 2014].

Point2homes.com. (2014).Bethesda Maryland. demographics & statistics. [online] Retrieved from: http://www.point2homes.com/US/Neighborhood/MD/Bethesda-Demographics.html [Accessed: 22 Feb 2014].

Ricci, M. (2013).All about jazz demographics. [online] Retrieved from: http://www.allaboutjazz.com/php/demographic_counts.php [Accessed: 22 Feb 2014].Social factors listlifestyle trends|Very affluentdemographicsWealthy people in WashingtonHigh density of peopleconsumer attitudes and opinionsmedia viewslaw changes affecting social factorsEmployment law on immigration policies. Complicated process makes the business to recruit less employees from abroad and loses a chance of recruiting cheaper employees.brand, company, technology imageconsumer buying patternsBooking sits are not usually done through print media, only 2% use them. fashion and role modelsmajor events and influencesbuying access and trendsethnic/religious factorsadvertising and publicityethical issuesNaomi:

The popularity of Jazz is generally very low in contemporary times, mainly because the vast majority of children, teenagers and young adults did not grow up or are not growing up with this music genre as a cultural element. This is evidenced by the lack of Jazz music in top music charts for the area.

Therefore Bethesda should expand its music genre and incorporate a variety of genres and allocate these to different events or days of the week. This would attract younger customers.

There is a much larger pool of customers that are interested in high quality restaurants. By improving its restaurant services and food quality, Bethesda can gain a better grasp of customers in this pool and hence attract more numbers.

capitalize on Facebook attention

Many people are interested in learning about the arts in other cultures, particularly music and dance. Bethesda can host cultural events in which it offers shows demonstrating music and/or dance from other countries (e.g. Thailand, Argentina, India).

Technological Andy & AllyTechnological change covers any technological change in products, processes and distribution channels, for example the growth of the internet and e-commerce. Technological change can be very specific to a particular sector or it could be more general and affect the very fundamentals of how organisations do business. A particular issue as regards technological innovation for a PEST analysis is that it may change the ground rules and open up new markets but also introduce new competitors into existing markets. Andy: Questions to ask about your organisation and sector:

How has the Internet affected your sector and how is it likely to affect it over the next five years?

The Internet has served the hospitality industry very well as it allows restaurants, events, theatres etc. to advertise their business through their own websites offering potential customers information about their establishment. The Internet has affected the hospitality sector in a very positive way. One way is the advancements in tickets. Tickets were made easier to purchase through online companies like Ticketmaster and Hub Stub but in the last five years e-tickets have become more and more popular. e-tickets allow customers to purchase a ticket for an event online and then attain an e-ticket which is the same as a normal ticket however the customer doesnt have to wait for them to be posted and can easily access them on their smart phone. It also saves the environment due to there being no need to post the ticket.

How has the Internet affected your organisation and how is it likely to affect it over the next five years?

The Internet has allowed Bethesda to show what acts they have lined up months in advance through their website. It also allows customers to buy tickets online so they can guarantee entry to see their favourite acts. Through the website you can also view pictures of the venue and you are able to see whats on the menu. There is a facility where you can purchase Bethesda merchandise as well. Customers wont get lost either there is a whole section dedicated to the location of the jazz club which offers in depth directions and a map powered by Google, there is also parking information. All of this helps to attract new customers because it shows off the excellent facilities and acts they offer. The jazz club will only benefit from the Internet in the coming years as it promotes the club and more people will become aware of it.

Are there any significant technological changes specific to your sector likely in the next five years?

The increasing popularity of social networking sites means that more and more businesses will use them to interact with their customers and update them on information about, for example, an event or the company itself. This is relevant to the hospitality and tourism sector due to the fact that the businesses in this sector can promote their company and special events they may be holding. This advertising can come as a relatively cheap alternative to TV adverts or magazine spreads so for Jazz club like Bethesda social media could be a great way to promote their business. It is hard to predict what technological advances will come about in the next five years however a change that could affect a hospitality business such as Bethesda jazz club which is based around music could be audio equipment. Improved audio equipment could generate a better sound and give customers a more enjoyable experience making them more likely to return to the club creating more revenue for Bethesda Jazz club.

smartphone app with even updates update website (better design, easier navigation)

REFERENCESAlly:Who is the Technological Leader in the sector?Bethesda blues and jazz club is not the technological leader in its sector. It is a small club only seating a maximum of 500 people and although it has recently had an 8 million dollar refurbishment it doesnt have the financial backing behind it to increase the seating capacity or to provide anything spectacular in terms of lighting, sound or visual effects. As a jazz club it does tick all the boxes and would be a match for many other jazz clubs, it has ambient lighting to match the music and also provides food to enjoy during the shows. However has a venue it obviously cant compete with the massive arenas and stadiums across America. They cant compete financially or in terms of size with them. This means that the big arenas can take the newest technology advancements whereas the Bethesda Jazz club cannot and then it becomes a viscous circle as they get left behind. However one way in which the Jazz club can compete is on the internet. Their website is as up to date as you could want. It provides contact information, a brief history of the establishment, shows who will be performing at the club and when and it isnt a dull site that bores you within a minute of being on it. So although they cant compete in terms of the show being given they effectively compete on the internet. In this sector there isnt one outright organisation that is ahead of the others, instead most big arenas and stadiums are on equal ground.

Have there be any major technological advances in your sector in the past five years?

In the last 5 years we have seen an increase in the levels of technology. The input of 2100 inch screens into venues across America, mainly stadiums however they have also been installed in arenas too, is one such advancement. This allows everyone in the venue, no matter how far away or how high up they are an ability to see the act. The university of Arizona stadium increases its versatility as a venue by being able to retract the grass (playing area for sports) from the stadium to leave more standing room for concerts. The Qwest field stadium in Seattle has been designed to increase the level of noise thats produced just by the shape of the stands (This actually was built in 2006, but has been used as a template for other stadiums). Finally we are seeing more eco friendly stadiums being built. Next year a stadium will be opened in New York that uses 40000 tonnes of recyclable steel. Also they will use only 30% more energy than the stadium that it is replacing that is half its size and 25% less water, through use of waterless urinals and high efficiency irrigation systems. REFERENCES