Case Study – PESTLE Analysis

Hawk Leathers Ltd ("Hawk") is based in the UK and employs 60 people in the
manufacture and sale of leather jackets, jeans, suits, and gloves. These are aimed
primarily at motorcyclists, although a few items are sold as fashion garments.

Hawk sells 65% of its output to large retail chains, exports 25% to the USA and Japan,
and sells the remaining 10% to individuals. The 10% individual customers specify their
requirements for a made to measure suit (they are often professional racers whose
suits must be approved by the authorities such as the Auto Cycle Union). The large
retailers have low margins and are very slow to settle their debts.

There are around 10 companies in the UK who make similar products to Hawk, plus
very many other companies who compete with much lower prices and inferior quality.
Hawk's typical selling price for a one-piece suit is £1,000, whereas the low-quality
rivals' suits retail at around £400. As Hawk say in their literature "if you hit the tarmac
(tar road), there's no substitute for a second skin from Hawk". Synthetic materials are
waterproof, unlike leather, but do not currently offer sufficient protection in an accident.

Sales of leathers in the UK are growing rapidly, mainly due to a resurgence (re-
appearance) of biking from more mature riders of large, powerful machines. Such
riders are often wealthy and have family and financial commitments. Currently Hawk,
and its rivals for quality leathers are finding it hard to keep up with demand. The
government is now considering reviewing its emissions policies and bringing in
tougher safety regulations.

Supplies of leather from Asia, Scandinavia and the UK are plentiful, but a key problem
is recruiting and training machinists to stitch and line the garments. Hawk has been
able to invest in modern machinery to help production but the process is still labour
intensive. Hawk has found that the expertise, reputation and skilled labour needed to
succeed in the industry takes years to build up.

Although the industry is fairly traditional, there are some new developments such as an
app for individual customers to browse and specify requirements, and new colours
such as metallic for leathers, and a small but growing demand from non-bikers who are
interested in ‘recreational' and 'club wear' items.

Required:

(a) Analyse the issues facing Hawk's industry using PESTLE analysis.

(b) Based on your analysis, identify the potential opportunities and threats
facing Hawk.