Executive Summary The main aim of writing this management report is to analyse the PESTLE of a multi-national enterprise in the UK which was chosen to be Vodafone. To support this analysis, the different frameworks will be discussed as well and how they are opportunities or threats to the company and how it shapes its environment. Vodafone has many different types of services that they offer other than just mobile phone contracts, they offer their own branded mobile phones which are very cheap starting from 15 dollars which then allows for more people who are less financially stable to be able to enjoy the benefits of having a phone (Vodafone.
co.uk, 2010). Recommendations will also be made in what I think is the best way forward that Vodafone can take to improve their business and move away from on any threats occurring.IntroductionIn this management report, an analysis of the key political, economic, social and technological factors relating to the international business environment of a UK bases multi-national enterprise of my chose, which is Vodafone. Vodafone is known as the worlds leading telecommunications company with a span of 26 countries in which they operate in. Their main headquarters are in Newbury where on the 1st January 1985, they made the very first mobile phone call (Vodafone, 2017). I will also be analysing the different opportunities and threats that are imposed by the PEST factors, on top of that, I will also be making recommendations for Vodafone to consider when discussing the opportunities and threats for them.
What is PESTLE analysis?PESTLE stands for Political, Economic, Social, Technological, Legal and Environmental. It allows for there it be a specific analysis of a whole business environment from different perspectives and to allow the managers to know what exactly is going on in their business and to make decisions that will then improve on any issues that were to occur in the analysis. The PESTLE analysis is especially good for a business that operates globally, it works in the same kind of way as the CAGE Distance Framework when it comes to assessing the business in terms of how it operates and allows for decisions to be made whether it be to expand or keep the business contained in its place. Political Factors As Vodafone is a worldwide company that operates in various other countries with different types of rules and regulations, they will need to be aware of the political factors that could potentially have an effect on the company. One of the main political factors that influence Vodafone is the EU Roaming Regulations which basically mean that their users who are looking to travel outside of the country, depending on the country will be charged by the calls, messages, and data that they use. Vodafone had seen an opportunity in what was considered a disadvantage at the time, what they have decided to do now is to scrap the roaming fees in most of the EU, this meaning that their customers can use their plans in 40 EU countries without having to pay any additional costs. What Vodafone have is roam-free destination list that also includes non- EU states such as Norway and Turkey.
Beyond all these destinations, a £5 charge per day will be applied (Baraniuk, 2017). Although this is a good opportunity for Vodafone as the only other company that is doing what they are doing is Three, this factor has a flaw to it which is a threat. The free roaming is only available to the new contracts that they have available (Baraniuk, 2017), for existing Vodafone customers, they will not be able to enjoy the benefits of the new contracts unless they changed which they may not want to do. This can affect their international business environment as they will have a new influx of customers due to the roam-free aspect of their new contracts but will end up with a possibility of losing their current customers in which they have created a customer- company relationship with. Another political factor that shapes Vodafone’s international business environment is the countries that they operate in, by this I mean that their business in the country will have to depend on the political situation of that area, for example, Vodafone has operations in Turkey where their political status is quite unstable which can pose a threat for Vodafone as they are unable to establish a good foundation for their network to operate on. If Vodafone is putting their efforts into trying to conduct their business in politically unstable countries, then they will begin to lose a lot of money without making any decent profit to make up for it which is not good for any business at all. Also, competitors can capitalise of us Vodafone focusing on unstable countries by simply expanding to countries where their situation is neutral, they can then simply establish their brand and gain a lot of money that Vodafone is not making.
Economic Factors An economic factor that shapes the international business environment of Vodafone is the GDP (Gross Domestic Product), this is a way of measuring a country’s economy (The Balance, 2017), if the country’s GDP is high then it allows for its citizens to have more disposable income to spend on luxuries such as new phones etc. This increase gives Vodafone an opportunity to expand their business in terms of introducing more products and deals for their customers to buy therefore generating them a healthy and consistent profit. This type of profit allows for the company to also expand themselves globally comfortably without having to lose too much money as they are still generating profits. Situations such as Brexit can have an effect on Vodafone as it has an effect on manufacturing, as Vodafone have their own Wi-Fi service that they offer, as they need for the products to be manufactured, trade will be an issue as the UK is leaving the EU and as manufacturing counts towards 10% of the UK economy (ft.com, 2017), that small 10% can easily change the country’s economic status from good to bad which will force Vodafone to change their business strategy. Another economic factor that shapes the international business environment of Vodafone are the interest rates, as Vodafone is a big company they may have borrowed money from the bank from time to time to aid them in their business endeavours, but it will not affect them too badly as they can easily pay the money but when it comes to their customers, the increase can push them back a lot when it comes to spending money on luxuries. With the UK interest rates rising for the first time in ten years from 0.
25% to 0.5% and there being a possibility of it rising twice as more in the next three years (BBC News, 2017), the consumer spending amount will have to reduced significantly as they will want to be saving up their money for things that have a bigger priority in their lives such as bills and food, they will want to save up as the high rates will make it more expensive to take out loans in the bank for them to maybe start up a business or buy a car.Social Factors A social factor that can shape the international business environment of Vodafone is the demand by consumers, by this, it is meant that whenever there is a trend, the public are very drawn to it and there then becomes a demand in that particular trending product. For example, there was a high demand for iPhones compared to Samsung phones, more phone companies released deals which included iPhones such as free upfront costs if you get it on a contract etc. These types of demands can be a very good opportunity for Vodafone as they can capitalise off of these types of social changes in the world, they will have to be very vigilant as these types of changes happen very rapidly, one day something is popular then the next week it is out of fashion, this can also be a threat as they will not always be aware of when a trend is coming to an end and if they overbuy on stock and then the trend was to die then they would have lost a lot of money which they can not gain back at all.Another social factor that shapes the international business environment of Vodafone is globalisation in terms of the cultural aspect.
This is that there are many different types of cultures in the world and there are certain things that will work in some countries that may not work in others. For example, North Korea does not have a lot of internet access due to the heavy censorship imposed on its citizens, so Vodafone would not be able to establish their business there as the population will not take to the brand very well as opposed to a western country such as Australia who are used to the use of internet everyday so will benefit from using Vodafone and the services that they offer. Technological FactorsA technological factor that can shape the international business environment of Vodafone is that there are always changes in technology such as the public using their Wi-Fi less often and now use their mobile data (the U.S., 2017) or their mobile phones more instead of their landlines.
This shapes the business environment as it Vodafone can then use this opportunity to come out with a lot of mobile data deals to give to their customers along with contracts that are quite affordable with good quality phones such as iPhones. This is a great opportunity for Vodafone as they can then start to develop new types of technology that they feel that their consumers can benefit from, this gives them a great advantage ahead of their competitors as they will be the first point of call for their customers to go to when it comes to getting a new mobile phone contract or data plan.CAGE Distance FrameworkThe CAGE (Cultural Administrative, Geographic and Economic) Framework is a way of offering businesses a way to evaluate countries in terms of the distance between them all. It is meant that the distances are the cultural and economic differences between them. It is measured by a table which the company can then apply their thoughts to, to then come to a decision. It can help to shape the international business environment of Vodafone as it allows for them to analyse as to where they can establish their business next whether it be in Nigeria or Australia.
Vodafone have used the CAGE framework in order to help them expand to India, they were able to decide as India is where telecommunication is very high, and their government supports it (UK Essays, 2015), once all this information is found out, it is easier for Vodafone to decide whether or not they will expand their business into their chosen country and this case it is India. The table is a way of measuring the pros and cons of globalising the company, whether or not it is going to benefit the business or not. Recommendations The threats that had arisen from some of the PEST analysis’ such as the new EU Roaming benefits only applying to new Vodafone customers, this can be fixed by simply giving their existing customers discounts if they were to upgrade themselves to a new contract such as the Vodafone Red deal which is £25 a month, they can then give the customer a discount which would reduce the price to £21.25, this is a really good incentive that can keep the existing customers but also have more individuals using their new contract deals. Another recommendation is when the economy has a low GDP, even though they cannot control it, what Vodafone can do is to offer cheaper deals and contract to their existing customers which are more recession-friendly, this can then allow for their customers to prefer Vodafone over any other telecommuting company when they have the disposable income to splurge on luxury items. This is less about generating profits for the business but rather a good customer-business relationship to make the consumer loyal to the brand.As Vodafone cannot keep up with the fast-changing trends they need to be smart with what trend they choose to follow up on, for example, if the public are changing over to using flip up phones suddenly then Vodafone can get a stock of different kinds of flip up phones, but they should limit the amount of stock that they are buying as that trend could die at any time.
If any stock is still left, then it will not be too big of a loss for them.In order for Vodafone to gain more customers and profit, they should look into a new strategy such as the Blue Ocean Strategy. The Blue Ocean Strategy is basically a way of creating a new market of your own that you can tap into. For example, Canon had introduced picture copying for their customers (Blue ocean strategy, 2017), Vodafone can find a way to tap into their own market by setting something up that their competitors have not yet done therefore giving them an advantage in the telecommunications market. ConclusionIn Conclusion, I have analysed in detail about the PESTLE factors of Vodafone and how it shapes its international business environment and also some of the strategies and if it applies to Vodafone. The findings present more opportunities than threats, the threats that were found were then explained on how they could be improved in the recommendations. They were also strategies such as the CAGE distance framework and the blue ocean strategy that was discussed in how they can help Vodafone move forward.
