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If you were starting a new bookshop at your local shopping mall, how would each element of the general environment apply to your business?
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The book selling business has started facing new challenges with the advent of the internet and its massive usage proliferation among domestic customers. The internet has enabled readers to access their favourite books at the click of a mouse button or even to purchase books by ordering them on the internet, via the e-commerce model. Thus for a time the massive book sales generated through e-commerce companies, combined with the surge in free e-books available on online portals, caused a crisis for conventional brick-and-mortar bookstores which was more than a 300 billion dollar industry in Australia until the early 2000s (Nancy, 2009). However, recently there has been a revival of interest in books bought from physical stores and bookstores have been revived as an attractive and ambient location in itself, similar to coffee shops. Some bookstores have come up with innovations such as organizing regular book launches by famous authors and holding debates and intellectual discussions in order to draw in more footfalls. This essay will examine how a bookstore opened at a local shopping mall in Australia will perform based on the external business environment (Aaker & McLoughlin, 2010).
The PESTEL analysis would help us in understanding the general environment characteristics peculiar to a particular country or location, and what direct impact or implication it is likely to have on the business being studied and analyzed. It would analyze the potential and the future of the business based on 6 distinct parameters – Political, Economic, Social, Technological, Environmental, and Legal (Parsons & MacLaran, 2009). The PESTEL analysis for the proposed bookstore would be as follows –
Political: The political aspects of Australia that impact upon the brick-and-mortar bookstore industry cannot be pinned down to a few simple points because as the bookstore industry is based on an intellectual business, it has the potential to be influenced by a wide and complex range of political factors. Intellectual businesses like bookstores have the potential to become the victims of political battles as the governments may decide on political factors whether to ban the sale of certain books. Moreover, books by certain authors may come under the target of ideological activists, causing tremendous losses to the business. However, in Australia, these factors are not too dire as the Government is committed to ensuring freedom of expression which is essential for the bookstore business (Germov & Poole, 2015).
Economic: Bookstores are also dependent on positive economic indicators and high consumer spending power as usually, it is customers with substantial disposable income who can spend on buying books, which is classified as a non-essential commodity. On this parameter too, the general environment can be considered to be broadly positive, as Australia is experiencing an economic recovery from the recession and consumer disposable income is rising (McLean, 2012).
Social: Social characteristics of the target market are also very important for the brick-and-mortar bookstore industry. Social aspects favorable to the industry include a good reading culture among the population, the leverage exercised by popular authors on the society, as well as the general literary and educational level of the society. Where a strong intellectual reading culture and a highly literate society is established, bookstores can thrive. Moreover, as bookstores provide an aspect of social status associated with erudition and intellectualism, this is also a social aspect that has a heavy impact. Australia would provide a suitable social context for all these parameters as it has a highly educated population with a literacy rate of almost 99% and almost 40% of the adult working population having completed some form of post-high school education. Moreover, the urban areas of Australia also boast a highly erudite and strong reading culture as reflected by the large library memberships and large numbers of book sales from online platforms (Germov & Poole, 2015).