Many global events like the Rugby World Cup, an international trade fair, etc., are conducted in areas near us, but few of us usually take into consideration the strategic approaches behind the success or the failure of these events. The purpose of this assessment is to examine strategic approaches with respect to a global event like the Nuremberg Toy Fair in Germany. The report analyses the city of Nuremberg in Germany both internally and externally using such models as the PESTLE and SWOT analysis. The report looks at the internal and external environment surrounding the city of Nuremberg. The report also examines the key success factors (KSF) of holding the event at Nuremberg and future recommendations.
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The Nuremberg toy fair is a mega event held every February in the Nuremberg exhibition center in the city of Nuremberg, Germany. The trade fair is also referred to as Spielwarenmesse International Toy Fair. The attendance of the fair is limited to the major stakeholders of the toy and game industry. Admission is only allowed to people over sixteen years, and the show is opened from 9 am to 5 pm daily until the last day of the exhibition. In the year 2011, the organizers of the event estimated an attendance of 2600 exhibitors from around 64 countries, 76000 visitors from 115 countries, 1 million products inclusive of 70000 new products, and around 2500 journalists (Allen et al. 2005). The fair is gradually becoming popular outside Germany as the international visitors accounted for 54% in the year 2011. The trade fair was started in 1949 and ran for six days each year in the month of February. The fair is prepared by Spielwarenmesse eG, which is a company located in the city of Nuremberg, Germany, specializing in marketing, promotion, and trade fair services to its clients.
A research methodology is a term that comprises a planned process of carrying out research. The methods used to collect information related to this topic were observation and analysis of records related to the topic of assessment.
The records observed and analyzed came from various sources that were of help to me in making sound and conclusive conclusions (Campbell et al. 2004). The area of study is limited to the city of Nuremberg as the trade fair is exhibited in the city. The population targeted by the assessment is the stakeholders of the toy fair Nuremberg. This includes the organizers as well as the visitors. The conclusions and recommendations target the organizers, the local authorities, the exhibitors, the manufacturing companies, and the consumers of the products, games, and toys. The unit of analysis of this assessment is how strategic management approaches can be applied in events like the toy fair Nuremberg in order to make them more successful. The researcher experienced challenges during the assessment (Coulter 2008). The researcher experienced problems where some of the source materials were unavailable or could not give the required information. The time limit was also another problem where the researcher had to work within a specified time frame. The records analyzed and observed were picked randomly from the area of study without following any sampling procedure.
Findings, Results, and analysis
In this section, we will critically examine and analyze the internal and external environment of the host city, Nuremberg. It is also in this section that we will look at stronger points accruing from the city hosting the toy fair (key success factors).
External environment analysis
The external environment can be divided into two broader categories, which include:
- General external environment
- Competitive external environment.
General external environment
These are general factors that determine or affect the success or failure of an event. To help us analyze these factors better, we use the PESTLE analysis.
PESTLE is a short form word that stands for Political, Economic, Social, Technological, Legal, and Environmental factors that should be considered in staging or hosting of an event. The PESTLE analysis is very crucial in the determination of opportunities and the risks of hosting the toy fair in Nuremberg city in Germany (Wheelen & Hunger 2004). The model can also be used to determine the benefits and the disadvantages of hosting the event in the city over the other cities of the world. We can look into the details of the PESTLE analysis by examining each of the factors separately as follows.
This refers to how and to what extent the government interferes with the economy. It also refers to what is happening politically in the city of Nuremberg. Such issues like taxation policy, political stability within the city of Nuremberg affects areas of business such as infrastructure of the economy like roads and rail.
The toy trade fair is organized and managed by a private company, Spielwarenmesse eG; this is a good thing as it reduces the interference of the trade fair by the local politicians who might have vested interests in the trade fair (Yeoman 2003).
Nuremberg ruling council comprises experts who are residents from the town. This ensures that they come up with laws and regulations conducive to good business since they are experts and aware of local problems (Bowdin et al. 2006).
The Nuremberg city council and administration are a stable authority that provides a serene environment to conduct the world’s largest toy fair.
Germany is a very democratic country and is a member of the EU. The democracy provides a conducive environment for the fair to be conducted in Nuremberg. The EU allows free movement of citizens within the member states, hence, the increase of visitors in the previous toy fairs in Nuremberg.
Germany is ruled by a coalition government, which may lead to more time being taken in decision making due to the differences in political goals between the coalition partners, which may adversely affect the trade fair. The differences in opinions between the leaders may also lead to bureaucracy in decision making, which may also have adverse effects on the trade fair.
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Nuremberg is the second-largest city in the state of Bavaria and the thirteenth-largest municipality in Germany. Nuremberg has benefited a lot from the EU Eastern expansion due to its strategic location within the European economic region.
Nuremberg is well connected by a network of motorways, which connect the city to almost all routes of the compass. The city has a dynamic traffic guidance system that offers simple access to the city during the main events like the toy fair. The main railway station of Nuremberg city, which was refurbished recently, is connected to the national and international networks of EC, IC, and ICE trains, therefore, providing elaborate transport facilities to the visitors during the toy trade fair.
Nuremberg has a population of about 2.5 million people and the working population of about 300000 people. This helps to solve the problem associated with labor shortages in hosting an event like a toy fair.
The recent economic meltdown in Europe is likely to have a negative effect on the toy fair held in Nuremberg. This is because of the austerity measures being implemented by various economies around Europe, which increase taxes and the reduction of salaries leading to the reduction of disposable income by the citizens of Europe. This may lead to a reduction of visitors during the trade fair.
Social and cultural factors
Changes in social trends like population growth and cultural issues affect the hosting of a major event like a toy fair. Nuremberg has had a steady population growth compared to other cities in the world that record negative population growth. This makes it an ideal city to host such an event as the international toy fair. This is because the population is evenly distributed, hence, a steady supply of consumers throughout.
Nuremberg is perceived to be a safe city as terror threats are minimal and have an elaborate security system. This makes it a good city to host such an event as the visitors are assured of their security.
Germans are said to be lovers of leisure and entertainment. Nuremberg is, therefore, the best city to host an event that the main issue is leisure and entertainment as there is a ready market for the products.
This involves technological changes that may affect the hosting of such an event as the international toy fair in Nuremberg. Nuremberg is the third city in Germany for patent applications. This explains how the city is technologically advanced (Johnson et al. 2008).
The city is internet-connected, leading to reduced communication costs. This saves money to exhibitors as well as visitors.
The city is well automated with the use of high-speed trains offering efficient transportation to both the exhibitors and the visitors.
Nuremberg has a research and innovation center that helps the city come up with innovations, which are of help to the city. This also helps the city to cope with emerging technologies around the world. The city is, therefore, suitable to host the toy fair, which exhibits high levels of technology.
These are the legal environment around Nuremberg city, which may affect the hosting of the toy fair in it. This ranges from discrimination laws, consumer protection laws, employment laws, competition laws as well as health and safety laws.
Human rights are strongly emphasized in the city of Nuremberg, and violation of human rights is a serious crime. The city is, therefore, a good destination to host the toy fair as it may lead to many visitors as their rights are assured.
These are climate and ecological factors like the weather, climate, and climate changes that may affect the international toy fair held in Nuremberg.
The presence of Nuremberg Reichwald, which is one of the largest forests in Germany, and also the presence of river Pegnitz in the vicinity of Nuremberg city, provide a natural environment conducive to host an event like the international trade fair in the city (Goldblatt 2002).
The city has also implemented programs aimed at promoting energy saving as well as environmentally friendly generation techniques. This enables the city to avert harmful climate changes like global warming, which may have adverse effects on the toy trade fair.
The competitive external environment
In this section, we will analyze the competitive environment using such approaches as:
- SWOT analysis
- Porters 5 forces analysis
- Anasoffs matrix
- Porters generic strategies
Albert Humphrey, who used data from Fortune 500 companies, developed the SWOT analysis in the 1960s. The word SWOT is an acronym, which stands for Strengths, Weaknesses, Opportunities, and Threats. The analysis is used to scan the internal and external environment surrounding the hosting of an event. The internal factors can be categorized into strengths, weaknesses, and other external factors as opportunities and threats.
Nuremberg city enjoys favorable access to the transportation network since it is connected to the international transport network. This serves as a competitive advantage to the city as it can access many visitors across Europe (Evans 2002). The fact that Nuremberg is the only city that hosts the toy fair is itself a strength since it has no competitor. Nuremberg has a monopoly advantage in hosting the trade fair as the trade fair cannot be hosted in any other city.
A lack of competition from other cities can serve as a weakness as the organizers can offer the visitors low standard services that might lead to the reduction of visitors in future fairs in Nuremberg. Due to the lack of competition, the city might also take a long to react to changes in the strategic environment leading to loss of visitors in the future.
Analysis of the external environment may lead to the discovery of new opportunities, which might bring in extra profits and growth of the trade fair. Nuremberg is strategically located in the EU set up and should use the opportunity to attract more visitors to its toy trade fair.
Alterations in the external environment present threats to the host city, and, therefore, the city should always anticipate future changes in the environment. Some of the threats may include new regulations, change in consumer tastes, and increased international trade barriers. Nuremberg should always be ready with threats to ensure it remains the favorite host city of the trade fair.
Porters’ five forces tool
This is a simple but influential tool that helps someone to understand where the power over a competitor lies in a business setting. The tool helps you to understand the situation you are in and the position you aspire to be in the future (Tarlow 2002). The tool is of great importance to Nuremberg as it will help it edge its competitors who might emerge in the future. The analysis comprises five important forces that establish a competitive power in a business setting:
The analysis here concentrates on how influential the suppliers are in control of the prices. The more the suppliers, the more strength you have. Nuremberg should aim at attracting as many exhibitors as possible as this will make it easier for the organizers to control the toy trade fair.
Here the emphasis is on the strength of the buyers, and it is strong for them to drive the prices down. It should be the aim of the Nuremberg trade fair to attract as many visitors as possible as this will ensure that the visitors cannot dictate terms and conditions.
The fewer the competitors in any business, the better it can compete with its rivals. Nuremberg has no competitors in hosting the toy international fair but should not rejoice for this as other towns may wish to host the event.
Threat of substitution
This examines the ability of other towns and cities to host the trade fair. It should be the aim of the management of the Nuremberg toy trade fair to ensure that ease of substitution is not viable, as this would ensure Nuremberg is always powerful.
Threat of new entry
Power is affected by the capacity of new players entering your market. The organizers of the Nuremberg toy trade fair should organize it using high standards that it is impossible for another city to host an event similar to the Nuremberg toy trade fair.
Internal environment analysis
The internal environment comprises factors that can be able to control in a business setting. It involves an analysis of human, physical, financial, and intangible resources in a business.
Nuremberg city contains a population of about 2.5 million people. This offers ready and adequate labor in the city. The large population provides both the skilled and semi-skilled labor ready work during toy fair in the city. However, most people in Germany are older, which makes it hard to have dynamic and youthful workers for the trade fair.
Nuremberg city is more developed in terms of infrastructure like modern roads and rails, which are connected to the international transport system providing access to potential visitors and the organizers of the toy trade fair, should use this advantage to reach as many visitors as possible.
Nuremberg is a small city compared to other cities in Germany like Munich; this makes it have fewer finances. This is a challenge to the organizers of the toy fair due to financial constraints.
Inadequate accommodation facilities, like hotels and lounges, lead to the limitation of the invited guests to the Nuremberg international trade fair.
Key success factors
A key success factor is a performance area that is critical in achieving a high output or yield in a business set up. In our case study, some of the key success factors are good leadership, efficient communication system, and culture, embracing new technology, peace, and stability of the Nuremberg city. It is important for Nuremberg city to create a clean and friendly environment that is conducive to visitors. The maintenance of a stable government in Nuremberg is a success factor as it creates a serene environment for conducting business.
Analysis of recommendations and conclusion
The recommendations of the assessment can be summarized by analyzing the Ansoff matrix. The matrix was developed by Igor Ansoff. It focuses on the firm’s present and prospective products, markets and customers. The matrix considers various ways of growth using existing products and the latest products in the current market and potential markets. Though matrix provides four growth strategies, the applicable one in our case study is product development and diversification.
Nuremberg should adopt the strategy of product development where the organizers will come up with new products targeting the existing market. The organizers can come up with entertainment as a strategy targeting the various categories of visitors. Nuremberg can also consider holding the event twice a year to make more profits.
Nuremberg should use extensive resources within its disposal to reach new visitors across the globe. The transport network of the city gives it the required advantage to market the trade fair to other countries. Diversification is risky as it involves the establishment of a new product as well as a new market. Nuremberg should, therefore, be cautious in the development of new products and markets as this might lead decline in visitors if not handled with care. Diversification can be horizontal where a new product is developed in the current market (David 2003). Concentric diversification involves developing a new product that is related to the current product in the new market. There is also the vertical diversification where Nuremberg closer to its visitors. This involves hosting the trade fair in different parts of the city. Conglomerate diversification can also be used where Nuremberg can come up with new products targeting new visitors.
Porter’s generic strategy framework
Professor Michael Porter developed Porter’s generic strategies framework in the early 1980s. He suggested three common strategies that a business can use to attain competitive advantage (Fitzroy & Hulbert 2005). The generic strategies can be categorized into two broad dimensions, the strategic scope, and the strategic strength. (Jensen 2000 pg 344)
The strategic scope looks at the demand of the business; it analyses the size and the composition of the target market. The strategic strength looks at the supply side of the business. Porter explained the scheme by dividing it into three, i.e., cost leadership, differentiation, and market segmentation or focus.
The strategy entails a business winning a market share by pleasing cost-conscious consumers and customers. This is attained through having the lowest prices in the prospective market. The business should aim at putting a balance between offering the lowest prices and achieving high profitability (Haberberg & Rieple 2001). The firm should, therefore, aim at operating at a lower cost compared to its competitors. For Nuremberg city to achieve this goal, the organizers of the Toy trade fair should come up with a high level of output, e.g., organizing the trade fair twice a year and in different venues within the city. This will ensure that almost all potential visitors and exhibitors would be reached, and the Nuremberg toy trade fair creates a barrier for other cities in Germany to host such an event. This will also ensure that the Nuremberg toy trade fair utilizes the economies of scale well, which may lead to a reduction of entrance charges. (Baker 1976).
Cost leadership can also be achieved if the supply/procurement chain is controlled to ensure there is a low cost. Nuremberg can achieve cost leadership through bulk buying of materials of use during the trade fair, as this will lead to quantity discounts, squeezing of suppliers’ prices (Shone & Parry 2004). Competitive bidding of contracts is also another way to ensure the reduction of operating costs of planning the trade fair. Through these measures, the organizers are assured of low costs that might lead to a reduction in admission charges hence the attraction of more visitors to the trade fair. The use of modernized processes and systems reduces operating costs, e.g., online selling of the entry tickets; this benefit can be passed over to the customers, hence, cost leadership. (Cristol 2000 p. 143).
The organizers of the Nuremberg toy trade fair should be aware of the disadvantage of lower customer loyalty. This is where a customer who is sensitive to prices is likely to switch to a lower charged Toy event in another city.
This involves differentiating one’s products in order to compete successfully. This strategy works well where the customer targeted is not priced sensitive, the market is competitive, the customers have different needs that are under-served, and the business has unique resources and capacities to meet the various needs of the different customers. This could be through patents and the use of trained personnel as well as the use of innovative processes (Haines 2006). The organizers of the Nuremberg international toy fair should be able to offer unique services different from other toy fairs in different cities around the globe. The organizers should also understand the various needs of the visitors before deciding on different products and services to the customers. Training of the officers to run the trade fair is also crucial in making the trade a success. Securing patent rights for some of the innovations is also crucial in ensuring that the products and services offered to the customers are different from those of other trade fairs from other cities around the world (Baker-Miller 1976). The organizers of the trade fair should be provided with adequate resources in order to organize a spectacular event unique from the other events hosted in other cities around the world.
This strategy describes the scope that the business should choose to compete in based on cost leadership or differentiation (Mintzberg 1998). A business can choose to compete in a group of markets having a broader and wide scope or a focused market with a constricted focus. The business will remain in either cost leadership or differentiation competition.
In a narrow focus, the business focuses on a specific targeted market with specific groups with distinct needs (Grant 2002). The choice of low prices or unique products and services will depend on the needs of a specific targeted group and the resources available to the business. Nuremberg city should have a specific exhibition which suits a different group of people, e.g., games and toys designed for Africans to encourage Africa’s participation in the trade fair.
A broad focus emphasis is the same where a business studies the needs of the of a number of customers and then competes either on low cost/prices or differentiation of its products and services. Nuremberg should have an abroad focus on attracting as many visitors as possible (Shandler 2000).
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