The political environment in Belgium in context of the elections in the country lies at worrying positions for the business environment. Despite the coalition formed in 2003 between the socialist parties and the liberal democratic parties, tensions have still rocked the electoral process in the country. The 2007-2008 political crises in the country set the highest levels of political tension that have been experienced by the country in its 178years of existence (Degraeve 2006). Despite the duration that it took, the crisis greatly interfered with the business environment in the country and it is anticipated that the same problems are still bound to haunt the Primark Company in the future. On the other hand, the state has simplified both the business registration and operational procedures using its e-deposit electronic office. Primark is therefore expected to enjoy an easy regulatory system that is easy to work with (Young 2003).
Economic
With a corporate tax of 34 for the statutory tax rate, the business at Belgium is bound to expend much in this sector (Morrison and Conaway 2006). The total tax rate on the other hand is relatively softer and economical for Primark since they are only expected to pay 5.3 as total tax rate. The VAT of 21 is also a big blow to the companys profit levels (Morrison and Conaway 2006). Being the first country to undergo industrialization, the country has diversified its industrial and commercial base hence providing a conducive environment for the company. The inflation rate though is currently at 4.5 a figure which rose from last years 1.3 (WATERFORD Today 2009).
Social
Belgium has a population of 10,414,336 with most of its population being the younger generation (Thompson 2009). 66.3 of the total population falls between the ages 15-64 years which presents the company with a good market to supply its fashion to. Although the low population growth rate of 0.094 poses a challenge for the company since it will be having a relatively stable market that will not grow (Thompson 2009).
Technological
Finally, the technological environment in the country is well developed due to the several universities and various research institutes. The computer usage in the country is also high with IT penetrating deep into the businesses. E-commerce for Primark is therefore effective in its new market (Van 2003).
Portors diamond for Primark Company in Belgium
Competitive Rivalry
With the market having 520 companies dealing in textiles and clothing industry very many competitors are present in the market (Young 2003). Consumer loyalty is expected to be very low in the situation but this turns out to be different in the market. The consumers are particular of their suppliers and have loyalty unless any change in the quality and cost they receive.
Supplier Power
The Belgium environment has a moderate number of suppliers who are large in size. Similar products are relatively supplied in the market with the fashion almost being at the same level. Substitution of products is also possible but at a very minimal level. This can therefore be deducted to mean that Primark experiences a neutral supply power.
Buyer Power
The region is characterized with a large number of large supermarkets and outlets which carry very large orders as entities. Price is therefore a highly sensitive issue to the buyers since they have higher levels of substitution rates. In overall, the market has a high buyer power.
Threat of Substitution
The customers are not able to substitute the products they get from the Primark Company. By this, the customers are not capable of making domestic arrangements to acquire the clothing (Vanstraelen 2003). They are obligated to shop from the suppliers. The threat of substitution is therefore humbled to almost insignificant figures.
Threat of New Entry
The clothing industry requires experience for survival. As a matter of fact, the entry is met with heavy expenses which can only be reduced by the large economies of scale that Primark Company has so far acquired in the market. The cost benefits available for the company make it unshakable at the entry of new suppliers in the market (Degraeve 2006).
The buy power and competitive rivalry are therefore the main worries for the Primark Company in the new Belgium market.
Economic
With a corporate tax of 34 for the statutory tax rate, the business at Belgium is bound to expend much in this sector (Morrison and Conaway 2006). The total tax rate on the other hand is relatively softer and economical for Primark since they are only expected to pay 5.3 as total tax rate. The VAT of 21 is also a big blow to the companys profit levels (Morrison and Conaway 2006). Being the first country to undergo industrialization, the country has diversified its industrial and commercial base hence providing a conducive environment for the company. The inflation rate though is currently at 4.5 a figure which rose from last years 1.3 (WATERFORD Today 2009).
Social
Belgium has a population of 10,414,336 with most of its population being the younger generation (Thompson 2009). 66.3 of the total population falls between the ages 15-64 years which presents the company with a good market to supply its fashion to. Although the low population growth rate of 0.094 poses a challenge for the company since it will be having a relatively stable market that will not grow (Thompson 2009).
Technological
Finally, the technological environment in the country is well developed due to the several universities and various research institutes. The computer usage in the country is also high with IT penetrating deep into the businesses. E-commerce for Primark is therefore effective in its new market (Van 2003).
Portors diamond for Primark Company in Belgium
Competitive Rivalry
With the market having 520 companies dealing in textiles and clothing industry very many competitors are present in the market (Young 2003). Consumer loyalty is expected to be very low in the situation but this turns out to be different in the market. The consumers are particular of their suppliers and have loyalty unless any change in the quality and cost they receive.
Supplier Power
The Belgium environment has a moderate number of suppliers who are large in size. Similar products are relatively supplied in the market with the fashion almost being at the same level. Substitution of products is also possible but at a very minimal level. This can therefore be deducted to mean that Primark experiences a neutral supply power.
Buyer Power
The region is characterized with a large number of large supermarkets and outlets which carry very large orders as entities. Price is therefore a highly sensitive issue to the buyers since they have higher levels of substitution rates. In overall, the market has a high buyer power.
Threat of Substitution
The customers are not able to substitute the products they get from the Primark Company. By this, the customers are not capable of making domestic arrangements to acquire the clothing (Vanstraelen 2003). They are obligated to shop from the suppliers. The threat of substitution is therefore humbled to almost insignificant figures.
Threat of New Entry
The clothing industry requires experience for survival. As a matter of fact, the entry is met with heavy expenses which can only be reduced by the large economies of scale that Primark Company has so far acquired in the market. The cost benefits available for the company make it unshakable at the entry of new suppliers in the market (Degraeve 2006).
The buy power and competitive rivalry are therefore the main worries for the Primark Company in the new Belgium market.
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