. Demographic and Economics
Demographic factors are those traits that influence the behaviors or preferences of consumers. When venturing into businesses most businesses consider the taste and preferences of their target market to maximize on the sales and profits. The economic factors are concerned with monetary value of a company. Alamo Group is influenced to a greater extent by these factors. Some of the demographic factors include income, age, and geographic region.
Income is one crucial demographic factor that dictates the spending habits of a target market. The target market for Alamo Group is that of medium and high-income earners. The brand produces high-end products d that are only affordable to middle and high level class. The machines for agriculture are expensive but not entirely out of reach for the farmers because the company allows anyone to rent them for a specific duration they need them. Additionally, the cost of maintaining and servicing the machines is not low. The fact that the business is able to quickly adapt to technology and innovation makes their products and services valuable to their customers.
Well, not everyone is cut for the farm because it requires a lot of labor and hard work. The age factor is very critical to this business. However, the tools of trade makes it easy and less tedious for those clients involved in various agricultural and safety businesses. The group is able to cater for young people and the elderly because of the diversity in the products and services manufactured at the firm. Additionally, homeowners who largely constitute the elderly require mowing services among others to keep their homes clean. Young people are energetic and very keen on how their homes look like. Therefore, they are a good target for Alamo Group. When selecting a good market for its merchandise, the company is likely to market them to the youthful age bracket. Besides, when people advance in age, especially after they retire, they are likely to stay at their homes. This category is also a significant target market for Alamo.
c) Geographic Region
Another critical demographic factor that is affecting the sales of the Alamo Group is the geographic distribution of its customers. For example, in the U.S region the group makes higher sales because the company can meet the demands of the customers here unlike in other areas. Although the business in Canada is growing, the growth is minimal compared to other regions. Further, the business is entirely well distributed to serve the specific demands of the people within its areas of operation hence making it convenient for both the customer and the firm to make more profits.
The macroeconomic environmental factors such as inflation, interest rate, foreign exchange rate, and economic cycle determine the aggregate demand and investment in any economy. The industry competition culture also determines the strategic position the business chooses in order to gain a competitive advantage. For the Alamo Group, the firm can use the country’s economic factors such as inflation, growth rate, and industry economic factors such as Farm and Construction Machinery growth rate, consumer spending, among others to predict the growth of the business and compare its performance to that of the competitors in the industry. Some of the economic factors affecting this firm include;
a) Government Intervention in the Free Market and Related Industrial Goods
Considering the different countries the Alamo Group operates in, it is evident that government policies in the host countries affect their operations. For instance, with a hope of lowering the production costs, the various governments might choose to subsidize the cost of agricultural machines through partnerships with the firm(s) in the agrarian sector hence reducing the profit margin of the companies. Additionally, the government can influence the currency value of the host country through currency inflation which ultimately lowers the cost of the currency making operations in the nation unbearable for investors.
b) Exchange Rates and Stability of the Host Country Currency
Multinational companies use the currencies of the countries they are situated in. Alamo Group is a multinational corporation with operations in several states, and this makes it susceptible to exchange rate effects. High exchange rate for the local money means the company will spend more to convert the money to dollars, which is an expense to the company. The vice versa is true, which ultimately adds to the profit margins of the corporation. Exchange rate differences also have an impact on job prospects. Falling domestic currency boosts economic growth through making imports costlier but exports cheaper. In such an occurrence, consumers will opt to go for locally produced commodities due to their low prices. Such a scenario is likely to spur growth of Alamo Group and enable it to employ more employees. A strong domestic currency will curtail employment prospects by making lowering the rate at which the economy is growing.
c) Efficiency of Financial Markets
The corporation enters new markets through mergers and acquisitions a strategy that enables the business to lower the impact the financial markets would have assuming the company was to raise capital through the public issuance of shares in the capital market (Erramilli 264). This factor does not affect this business to a greater extent. However, it cannot be ignored nonetheless its subtle impact.
d) Infrastructure Quality in Farm and Construction Machinery Industry
Infrastructure is a critical factor for companies in the farm and construction industry because the machines will require moving from one area to another to help serve different clients within different geographical distributions. For instance, the cost of servicing and maintaining the tools is high in areas where the road network is sparse, and hence the client bears the final costs as the firms transfer these extra costs.
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