External Environment Analysis. The business of providing specialized construction material sales (with a specific focus on the sales of roofing tiles) is a moderately complicated business that has several operations to manage. This section of analysis will detail the overall economic climate and interest rate environment. Management feels that this analysis is often overlooked by many businesses, and as Titan Roof Tiles is in the manufacturing and distribution business – changes in interest rates and the political/economic environment can impact the costs of doing business. Currently, the economic condition in the United States is moderate. The high cost of oil coupled with the sub prime and real estate market issues have led many economists to believe that the economy will remain to have sluggish growth. However, Titan Roof Tiles, Inc. will be able to maintain economically stable operations as the low cost and environmentally friendly nature of the Company’s flagship roof tile product line will be in demand among consumers that need roofing repairs. Inflation is another concern for the Company. As the inflation rate decreases, the purchasing power parity of the American dollar decreases in relation to other currencies. This may pose a significant risk to the Company should rampant inflation, much like the inflation experienced in the late 1970s, occur again. This event may significantly weaken the Company’s ability to develop profitable ongoing relationships with companies that operate internationally. However, the federal banking system has done an excellent job of ensuring that inflation is kept under control. While this is a concern for Management, it is not expected that rampant inflation will occur anytime in the foreseeable future.
External Environment Analysis. The business of toys and sporting oriented merchandise is a complex business that has significantly difficult operations to manage. This section of analysis will detail the overall economic climate and interest rate environment. Management feels that this analysis is often overlooked by many businesses, and as Real Man Design is in the toy and sporting products business – changes in interest rates and the political/economic environment can impact the costs of doing business. Currently, the outlook of the US economy is moderate. Unemployment rates have declined while asset prices have risen substantially. Interest rates have remained low despite substantial increases in economic productivity and rises in asset values. As such, people have more money to spend on discretionary goods. Inflation is somewhat of a concern for the Company. As the inflation rate decreases, the purchasing power parity of the American dollar decreases in relation to other currencies. This may pose a significant risk to the Company should rampant inflation, much like the inflation experienced in the late 1970s, occur again. This event would significant weaken the Company’s ability to borrow funds, but also would severely impact the gross margins of the business. Real Man Design, Inc. intends to do a significant amount of business with overseas suppliers and vendors. Recent economic reports released by the US Federal Reserve indicate that inflation may be on the rise as the unemployment of the US has decreased over the last two years.
External Environment Analysis. Due to intense competition, bakeries must look for ways to differentiate their place of business from others in order to achieve and maintain a competitive advantage. Management feels that by maintaining strong ties to the local economy and having a franchised bakery that specifically provides pretzels, the business will be able to develop a market for its products quickly in its targeted Reno market. Currently, the economic outlook in the United States is moderate. The collapse of the real estate market, the issues regarding sub prime mortgage loans, increasing oil prices, and other deleterious economic changes have led many economists to believe that the economy is heading for a period of continued sluggish growth. However, this should have a limited impact on the Company’s ability to generate sales of food and beverages from its franchised Auntie Anne’s location. A primary concern for the Company is its ability to price its services affordably during times of economic recession or spikes of oil prices. As of May 2011, the price of oil and its associated refined energy products have reached a multiyear high and have retracted back towards more normalized pricing. As oil prices increase again in the future, the Company may experience significantly higher energy costs. Also, this is a concern for the business as higher oil prices often translates into lower discretionary income among the Company’s targeted demographics.
