The Importance of Making Viable Investment Decisions

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The increase in competition in business has over the years prompted most businesses to implement alternative strategies that would enable them to survive in the market. Notably, the ability to make viable investment decisions is one of the significant drivers of any firm’s financial systems. Sound ventures aid in implementing organized institutional plans that are important in creating shareholders value and wealth (PwC n.p). Regardless of the methods employed in the process, the primary goal of these decisions is to expand the available resources and securing a better and successful future for the institution. Considerably, many companies around the world have constantly depicted globalization as one of the most viable techniques of expanding their operations and fetching new market (Oates n.p). Such decisions require proper market and industry analysis that may help the management to assess both the benefits and risks. Equally, enterprises need to understand the emerging trends in business and how they affect the operations of their firms both internally and externally (Rare Design n.p). In developed nations such as the United Kingdom, the use of new methods of production and marketing define the profitability and penetration of any company. Essentially, Arts Alliance decision to invest in the rights to the Lamb's rum brand should be evaluated effectively and all the available challenges examined. Through this, the company will not only limit the available risks but also reduce any likelihood of liquidation in future. As such, this study will evaluate the importance of making viable investment decisions through the analysis of different factors that promote market growth including the current economic conditions, expected future scenarios and any latest undertaking that change the methods of operations.

Current U.K Economic Conditions

As one of the most developed countries in the globe, the United Kingdom has over the years experienced favorable economic conditions that promote business development across the different sectors. The state has recently implemented specific decisions including Brexit that affected both trade and political segments (Partington n.p). However, it showed confidence in recovering from financial crisis that it suffered over the last five years. Notably, the country showed slow economic growth in 2017 due to the growing rate of inflation that reduce household spending abilities (Heritage.org n.p). However, the situation is different in 2018 with the rate expected to reduce to an average of 1.5% with high uncertainty due to the ongoing trade negotiations (PwC n.p). Relevant institutions including the bank of England have since developed mechanisms that will help in increasing investments in the domestic market and promoting exports to boost the nations GDP (Heritage.org n.p). The sterling pound is also expected to exchange steadily against other major currencies including the U.S dollar and Euro. Considering these data, the United Kingdom can be described as a stable economy with high growth prospects that may favor investment decisions of any firm.

 The global trends also depict changing economic conditions both in developed and developing countries. Considerably, the demographics of different states are expected to change significantly with an overall average of 20% growth rate expected over the next two decades. However, emerging markets are expected to have a higher rate of 24% that will be seven times faster than in the European states. Other factors expected to change international trade strategies include urbanization, life expectancy and the availability of essential resources. Moreover, more opportunities may arise from some of the emergent challenges facing the international markets including increasing population, climate change, and integrated business processes.

 The U.K consumer market has also recorded constant growth over the last two decades with the consumer confidence rising to 103 in the index. In comparison with other European markets, the United Kingdom performance is better shaped as most of the shoppers enjoy the low energy and fuel costs. This helps in redirecting their spending to non-food commodities such as vacations, phones, and locomotives. Equally, as opposed to other developed nations, shoppers in the UK are mostly concerned with specific aspects such as increasing food prices, utility bills and the general state of the economy

UK FMCG Market

The fast-moving consumer goods market in the united kingdom has over the years been linked to constant changes and the increase in the level of innovation that define how most companies in the industry operate. Essentially, the market is highly competitive as each enterprise develop mechanisms that will enable them to motivate and encourage their customers to increase consumption of their products. Some of the FMCG firms operating in the U.K include Coca-Cola, Procter, and Gamble, Nestle and Kellogg’s. The advancement in technology over the last two decades in the country has affected this industry in different ways (Stevens n.p). Considering the purchase patterns of their clients, most of these firms have over the years intensified their online marketing and product selling strategies.

Many people in the United Kingdom have resolved to use some of the available technologies including mobile phones and computers to purchase their products as opposed to physically visiting retail stores. Online transactions in the country have been increasing partly due to its convenience, the changing demographics, and economic growth. According to PwC the internet transactions in the industry are expected to rise to an average of 68% by 2021 thus depicting growth among companies (n.p). As one of these institutions, Lamb’s has also intensified its internet marketing abilities with most of its products advertised on its website. The entity also uses social media platforms such as Facebook and tweeter as additional marketing tools to enable it to increase its competitive strategies. Since the digital channels provide a promising growth in sales of the various products, many institutions use this experience to customize their commodities (Stevens n.p). Additionally, other entities are using paid search in the different retail sites to help increase awareness of their products on the shelves.

 Customer behavior in the FMCG market in the U.K also differs greatly to other European countries. Buyers have different visit patterns throughout the year with an average pick of 17 items. This means that any time a shopper visits any FMCG retail store they purchase more than 10 commodities particularly in the middle of the year. Most of the sales in the industry are made in periods between April and August where an average of 19.2 households visit the businesses (Consumer Confidence Report n.p). Since the market is highly competitive, most firms make high sales from promotional sales rather than constant prizing. However, this strategy is mostly used in a specific period of the year preferably between October and December (Watkins n.p). Most of the organizations that engage in high promotion deal with goods such as soft drinks, health and beauty, and confectionery. On average 34% of all companies in the FMCG industry in the UK engage in persuasive marketing approaches annually (Watkins n.p).

 Companies in the UK FMCG industry also engage in price cuts as one of the promotional methods that can help to lure customers to purchase different products. However, 29% of the shoppers prefer constant purchases in stores that provide goods that equal the value of their money (Consumer Confidence Report n.p). Lamb’s has different beverage brands including alcohol spirits and ram. These drinks are designed for different target customers both in domestic and international markets.

 The ram brand of lamb’s company is categorized into different groups including spiced, navy, palm breeze and classic. Each of these products is designed to fit the needs of the preferences of customers. Of the total sales of the company, golden rum is the most bought product produced by Lamb’s company and thus fetches the institution more capital than the other beverages. Equally, the brand has a higher propensity among the local retailers translating to high demand from the local market. To ensure that the company remains competitive, it has adopted strategic advertising schedules that would enable it to increase awareness of its varieties. Some of the major platforms used for this process include online networks, broadband, banner, organization’s website and paid search. These promotion techniques have not only increased the profitability of the enterprise but also enabled it to reach new markets (Ecommerce News n.p). The adoption of these modern methods of reaching customers shows that lamb’s market penetration tactics have advanced to enable it to increase its efficiency and operational mechanisms.

Future Scenarios

Art alliance values advocate for the championing and supporting the concept of innovation both in business and in the general community. Creative community involvement helps the firm to understand the needs of the community and involving them in designing some of their products (The Arts Alliance n.p). Its involvement with different sectors including tourism, business, education and the government gives the institution a better platform for integrating culture with its methods of operation. Considering that the organization has over 260 members, it should consider partnership as one of the most effective long-term strategies in the acquisition of Lamb’s ram brand. This business model will not only enable the firm to leverage its economies of scale but also diversify any risks available in the market.

 The FMCG is a competitive industry in the United Kingdom and any new entrant has to understand all the prevailing dynamics in the market. Moreover, since lamb’s and art alliance have different management and operational strategies, this business model will enable both companies to understand each other’s techniques to limit any future complexities (Stevens n.p). Equally, through partnership, art alliance will be able to benefit from the gap between knowledge and expertise in its new diligence of operation. Since lamb’s company has the relevant skills in production, distribution, and sales of the ram, it will bring all these skills and information to the enterprise and enhance growth and penetration to new regions.

 The partnership deal will also enable the art alliance to increase its financial ability and overall investment capability. By combining both the resources and market analysis expertise, both institutions will be able to boost their contribution to the business. Equally, the company has over 260 members and therefore it would be easy to expand its customer base and identify their tastes and preferences (The Arts Alliance n.p). Additionally, the business model will reduce additional expenses that art alliance would have incurred in marketing and research on the dynamics of the industry.

 Art alliance should also consider some of the emerging trends in the industry that may define how it operates and its growth prospects. Through the increased use of technology to enhance production, it is important for the company to increase its investment in online marketing, purchasing and customer relations platforms (Rare Design n.p). Furthermore, it should evaluate other developments including the Brexit effect, emphasis on health awareness and customer experiences in the country (Partington n.p). To reduce any challenges that might affect the partnership, art alliance should adopt the systems management approach. This method allows the company to interact freely with the environment and its stakeholders. It, therefore, promotes free interaction in the institution and promotes creativity and innovativeness.

Research Techniques

Before venturing into the business, art alliance should first examine the viability of the market. The company should understand the purchase patterns, customer preferences, the level of competition and any available risks and opportunities. As such, the firm might employ various research techniques including surveys, case analysis, focus groups and quantitative research interviews (Pahwa n.p).

 Marketing survey is one of the most efficient methods used in business research. Since both the Art Alliance and Lamb’s have a large customer base, applying this method will enable the two firms to gather vast information both from their staffs and other shareholders. Additionally, follow-up surveys on customers after purchase will provide the partnership with relevant data on customers preferences and tastes. However, this method can be expensive if the targeted group have no access to the internet thus forcing the institution to approach them physically.

 Art alliance can also use case studies to conduct the market research. This method involves giving one or more member of the target audience samples of the products and to use it for a specified period. The individual will thereafter be under surveillance to enable the business to understand how the client attracts with the product. Additionally, it will also help in assessing customer satisfaction, their attitude towards the commodity and use patterns. Although it is a time-consuming procedure, it will help the enterprise to know the taste and preferences of their clientele (Pahwa n.p). It also allows in-depth data collection that could assist the firm to make informed decisions on the best technique to apply in approaching the market.

 The use of focus groups is also a research technique that can be used by art alliance to evaluate the impact of the lamb’s ram brand in the market (Bryman n.p). This method typically comprises a small group of individuals that are conversant with the dynamics of the industry. One of its benefits includes its ability to provide extensive and well research information that the business can directly implement to improve their mode of operation of the design of their products. However, in other instances, the information might be difficult to analyze since it covers a wide area of the industry.

Latest Conversions Taking Place in the Industry

The United Kingdom FMCG market is one of the fastest growing around the globe and has over the years record different significant changes that have changed how related firms operate. Notably, the country’s increasing population has over the years attracted many international businesses to invest in the nation. Most of these enterprises site the stable economy of the state as another reason for increasing their activities in the domestic market of the U.K. according to the Stevens (n.p) most of the entities in the country have increased their investment in online platforms due to their effectiveness and cost reduction benefits

 Online grocery sales in the U.K account for an average of 7.3% of the total market share in 2016 (Nielsen n.p). Furthermore, the industry has recorded a high level of growth over the last five years making the country the second fastest FMCG growing market in the world after South Korea. However, shoppers in this country recorded the highest purchases than any other state in the world buying an average of 15.4 times annually (Nielsen n.p). This depicts that most of the firms have increased their investment in online marketing and sales methods as compared to the offline outlets.

 The changing demography in the UK and the constant adoption of new technology in the country is constantly changing the face of the FMCG market (UK FMCG magazine n.p). Although it is an effective method of doing business and increasing the average sales, it is important to also have retail outlets that are easily accessible to clients. In considering any type of investment in Britain, a company has to be conversant with the recent developments in the region that may determine the profitability and growth (Oates n.p). Factors such as increased emphasis on proper health and awareness products have increased in the country and therefore firms should develop their strategies to meet the expectations of their potential customers. The continued emphasis of the sales of health and awareness products in the market

Conclusion

Being one of the most developed countries around the globe, the United Kingdom has extensively increased their investment in modern technology. Most companies in the country have also ventured in e-commerce methods as an alternative method of growing their sales and reaching their customers. The move to invest in the lamb’s ram brand by Art Alliance Company is a long-term initiative that could increase the firms understanding of U.Ks FMCG industry. The product has over the years recorded high sales and with a proper marketing plan, could not only increase the customer base of the firm but also enable the business to be more competitive.

Works Cited

Bryman, Alan, and Emma Bell. Business research methods. Oxford University Press, USA, 2015.

Consumer Confidence Report. "Q3 2015 Consumer Confidence Report". Nielsen.Com, 2015, http://www.nielsen.com/us/en/insights/reports/2015/q3-2015-consumer-confidence-report.html. Accessed 12 July 2018.

Ecommerce News. "FMCG In UK: Online 5X Times Bigger Than Offline". Ecommerce News, 2018, https://ecommercenews.eu/fmcg-in-uk-online-5x-times-bigger-than-offline/. Accessed 12 July 2018.

Heritage.org. "United Kingdom Economy: Population, GDP, Inflation, Business, Trade, FDI, Corruption". Heritage.Org, 2018, https://www.heritage.org/index/country/unitedkingdom. Accessed 12 July 2018.

Nielsen. "Q4 2014 Consumer Confidence Report". Nielsen.Com, 2018, http://www.nielsen.com/ke/en/insights/reports/2015/q4-2014-consumer-confidence-report.html. Accessed 12 July 2018.

Oates, James. "Practitioners’ Workshop, October 2015: Promotional Modelling and Forecasting". Lancaster.Ac.Uk, 2018, https://www.lancaster.ac.uk/media/lancaster-university/content-assets/documents/lums/forecasting/presentations/Practitioner-Workshop-Slides-October-2015.pdf. Accessed 12 July 2018.

Pahwa, Aashish. "5 Business Research Methods Every Business Should Implement | Feedough". Feedough, 2017, https://www.feedough.com/business-research-methods/. Accessed 12 July 2018.

Partington, Richard. "UK Economy in 2018: Steady Growth Tempered By Brexit Politics". The Guardian, 2018, https://www.theguardian.com/business/2017/dec/31/uk-economy-in-2018-steady-growth-tempered-by-brexit-politics. Accessed 12 July 2018.

PwC. "UK Economic Outlook". Pwc, 2018, https://www.pwc.co.uk/services/economics-policy/insights/uk-economic-outlook.html. Accessed 12 July 2018.

Rare Design. "5 Key FMCG Consumer Trends for 2018 | Soft Power | UK | Rare Design". Soft Power | UK | Rare Design, 2018, https://www.rare-design.com/single-post/2018/01/09/5-key-FMCG-consumer-trends-for-2018. Accessed 12 July 2018.

Stevens, Ben. "UK Shoppers Buy FMCG Goods Online More Often Than Anywhere Else". Retail Gazette, 2017, https://www.retailgazette.co.uk/blog/2017/06/uk-shoppers-buy-fmcg-goods-online-anywhere-else/. Accessed 12 July 2018.

The Arts Alliance. The Arts Alliance, 2018, https://a3arts.org/about-us/. Accessed 12 July 2018.

UK FMCG magazine. Fmcgmagazine.Co.Uk, 2017, http://fmcgmagazine.co.uk/wp-content/uploads/2017/05/criteo-uk-fmcg-trend-report.pdf. Accessed 12 July 2018.

Watkins, Mike. "Sales Volumes at UK Supermarkets Rise For First Time in Nearly 18 Months". Nielsen.Com, 2015, http://www.nielsen.com/eu/en/press-room/2015/sales-value-uk-markets.html. Accessed 12 July 2018.

September 18, 2023
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