As an owner or manager of a business there are many ideas and perspectives that who have to explore. A business is not alone successful through its products or services, but also on how the owner is able to think critically and carefully. The world we live in today is full of many different dimensions. People now have to analyze things on all levels including global, economic, political, and social changes. The society in which we live in is becoming more global than ever before. It is virtually impossible for people to be business owners or even consumers without exploring these views. An Italian restaurant located in Philadelphia must be able to handle global, economic, political, and social changes. Throughout this paper I will show the significance of these issues and the effect they have on a business.
When we think of the economy an important factor is inflation. If the level of inflation continues to rise, the value of the dollar decreases. If the value of the dollar decreases, there is less that one can purchase with one dollar compared to previous years. Many people may not see the significance between inflation and an Italian restaurant, but it is most likely that products will be imported from other countries such as Italy or even Spain. With a dollar that is decreasing in value, it can deter other countries from accepting the United States currency because of its worth. This change in the value of a dollar could also cause prices to rise for the restaurant due to declining value of the dollar. Raising prices may be the only way that businesses could cope with the increasing importing prices. From the decrease in the dollar a small business can be affected through their purchasing powers and in turn will lose costumers.
Aside from the global economic factors that can affect a small Italian family restaurant, there are social trends that can affect the Italian restaurant. In the past, South Philadelphia was known for its high Italian population. Recently, the rise in immigration to South Philadelphia has changed the demographics of the area. Now, South Philadelphia is inhabited by other cultures and backgrounds such as, Vietnamese, Chinese, Cambodian, Puerto Rican, as well as many other backgrounds. Most of these new inhabitants are immigrants from other countries. The change in the demographics can directly affect the Italian restaurant in several ways. There will be a decline in the Italian population and thus the business would need to come up with new strategies to attract customers that they once didn't target. A simple change in the immigration pattern can make a business have to rethink their business strategy.
Another global economic trend that can affect the Italian restaurant are tariffs and quotas. Within the United States there are tariffs and quotas set on goods coming into the United States known as imports. Imports are items that are transported from other countries into the United States. Because, the restaurant is an Italian style restaurant, the owner may need to import certain spices, or foods from Italy to sustain its authenticity. The United States poses taxes on imports which is a tax on goods that can cause retaliation between countries. Imports also cause the costs for the products to be higher which can directly affect the Italian restaurant. If the taxes on the imports are high the restaurant must raise its prices to afford the tariffs on imports in order to continue to make a profit. Similar to the affects from the decrease in the value of the dollar the restaurant can lose its customers and deter future customers because of higher priced goods. Another determining factor that affects imports is quotas. Quotas are limitations on the amounts of imports from a specific country. If the United States imposes a quota on the number of imports from Italy this can also directly affect the restaurant. This quota can put a limit on the amount of services and goods the restaurant can offer to its customers. If the goods and services become limited this causes a decrease in supply while there can be an increase in demand. If demand outweighs supply, the restaurant will lose customers to other restaurants who can better serve the customers. Imports and quotas are only a few of the global factors that can affect a small business.
Aside from the global economic factors that can affect a small Italian family restaurant, there are social trends as that can affect the Italian restaurant also. In the past, South Philadelphia was known for its high Italian population. Recently, the rise in immigration to South Philadelphia has changed the demographics of the area. Now, South Philadelphia is inhabited by other cultures and backgrounds such as, Vietnamese, Chinese, Cambodian, Puerto Rican, as well as many other backgrounds. Most of these new inhabitants are immigrants from other countries. The change in the demographics can directly affect the Italian restaurant in several ways. For instance, in the past the area was majority population consisted of Italians in which the Italians constituted as the primary customer base for the restaurant. Immigrants of a certain background are more likely to eat at a restaurant of their culture rather than another culture because it is an accustomed behavior and a norm for them. If Italians are replaced by people of other backgrounds the Italian restaurant would have to find ways to attract other backgrounds. This task may be very difficult due to the cost of advertising in a large city like Philadelphia, but also very expensive. Therefore, the loss in the loyal customer base can directly decrease the net income for the restaurant. Until the restaurant builds another customer base, it will continue to show a decrease in net income.
Another global social trend that can affect the Italian restaurant is the increase in traveling by Americans. Americans are becoming much more connected to the rest of the world than ever before. As of a result of becoming connected to the rest of the world, more Americans are becoming more sophisticated and experienced with the trends of other countries. Traveling to other countries and experiencing different restaurants in a certain country raises one's expectations when in America. Reason for this is that the person has something to compare the restaurant to. If ones expectations are raised it will be more difficult to please the customer. For instance, an Italian restaurant in Italy will be completely different than an Italian restaurant in South Philadelphia. There are several differences between the Philadelphia ran Italian restaurant and the restaurant located in Italy. One difference can be the authenticity of the restaurant located in Italy. There will always be a more authentic feel to a restaurant located in its home country. Another difference is the customer service. It is a social norm for Italians to treat customers as family and the culture from the Philadelphia restaurant may completely differ from the restaurant in Italy. The difference in the culture of the two restaurants in turn raises the expectations of customers who have been to Italy in the past. Trying to compare to a restaurant in Italy may be costly for the Philadelphia Italian restaurant because it is more difficult because the restaurant is located in America and can also become very costly.
It is no longer the norm to focus on trends in one's own country because there is a substantial increase in globalization throughout the world. Because of globalization, the world appears smaller and smaller each day. Therefore, the United States becomes affected by many other countries and the trends that inhabit other countries. It has become a common trend for entrepreneurs to focus any and all affects that other countries have on ones business. Global trends can affect the business in an economic manner or even a social manner if not acknowledged. Completely identifying all of the global affects and preparing for the affects can constitute a successful business.