analysis is a concept in marketing principles. In addition, the concept is used
by companies as a framework or tool to track the macro-environmental which is
external marketing environment in which they are running or is planning to
launch a new project, product or service. There are lots of strategic analysis
tools are available to business, but some are more common. The most commonly
used and detailed analysis of environment is PESTEL analysis. This is a bird’s
eye view of business practices. Besides that, managers and strategy builders
prefer to use this analysis to search their current market. It also helps to
anticipate the future direction of the organization. Furthermore, PESTEL
analysis can help the business to reduce the impact or effect of the threats to
the organization, providing an easy-to-use and simple framework for the
analysis, the most important is it enables the company to do analysis before
entering both nationally and globally. PESTLE
analysis stands for five factors, including Political, Economic, Social,
Technological, Environmental and Legal.
P stands for
political factor. Political factors dominate the current political situation in
the country. It also reads about the impact of global political conditions on
countries and business. In this step, ask questions: “What kind of government
leadership is affecting the decision making of a company?” This can includes
taxes laws and tariff, government policies, entry mode regulations, taxes laws
and tariff, health and safety regulations.
Political stability is also an indicator of economic
stability. A country is politically stable and enjoying a high growth will have
a business friendly environment. If a political instability, it can create
insecurity in the company. Especially in a country such as China, where a large
part of supply chain like Vivo, any kind of political or military damage can
cause interruption to the business of Vivo, which can lead to financial losses.
Such interruptions may undermine the operations of Vivo or its business
partners. In some areas, geopolitical conflicts, terrorist attacks or political
discordance are always more likely. This will also adversely affect Vivo’s
operating results and financial revenues. By this way, political factors can have
a direct and indirect impact on Vivo’s business and profit. Furthermore, Vivo
faces political pressure in Myanmar and Pakistan countries, its political
environment is unstable, and its governance structure tends to change
frequently. This is not, of course, a major cause for concern as the Vivo has
more or less incorporated political instability into its strategic
E stands for economic factor. Economic factors involve all
the determinants of the economy and the country that have a direct impact on
the company and resonate with the long term effects. It also the factors that
can summarize the market trends. For example, an increasing in the inflation of
any economy would affect the price of the company’s product and services. In
addition, this will affect the purchasing power of consumers and change the
mode of supply and demand in the economy. Economic factors include inflation
rate, interest rate, the foreign exchange rate, disposable income of buyers,
unemployment rates and so on. Therefore, companies analyze this factor based on
the environment. This helps to create a strategy that is consistent with
Most of the China people and across Asia have level of income
far less than those people in developed countries or high unemployment rate
such as China and India. As a result, people cannot afford the advanced latest
phone from international brands such as Apple and Samsung. Vivo appeared in
China as their home grown brand and offering the latest smartphones at
reasonable prices. Apple’s I-phone and other Android brands have higher selling
prices compared to Vivo with similar characteristics. Thus, consumer able to
buy a smartphone with low price which has similar features to international
brands. China itself has a large market for selling phones with low prices and
with better features, while demand for cheap smartphones in other Asian
countries shows that Vivo’s social factors are very positive.
S for social factor. The countries are vary from each other.
Every country has a unique attitudes. These attitudes have an impact on the
business. Then, social factors may ultimately affect the sales of products or
services of companies. Social factors including the social lifestyle,
distribution of wealth, the cultural implications and the gender and connected
Social and cultural factors are also of great significance in
the international business environment. Changes that have taken place at the
socio-cultural level can reduce the demand for certain products and services
and increase the demand for other products and services. Just as in the case of
social media, a few things have changed with the advent of it. If social trends
change, they will bring about more changes. Social and cultural forces affect
how people choose and buy. Consumer’s purchasing power are strongly influenced
by socio-cultural factors. This also affects how brand markets themselves. Vivo
has spending a lot of money on marketing. From market to market, Vivo has
created strategies that suit the local cultures and tastes.
T stands for technology factors. Technology
is progressing continuously. The advancement has a great impact on the
business. Carrying out environmental analysis of these factors will help the
company keep abreast of the changes. Technology changes every minute, and the
innovation of technology may affect the operations of the industry. The way of
company to communicate with target market, the way of producing goods and
services depends on the technnolgy factors. This is why companies must always
keep in touch. Businesses should consolidate when needed. Then, technological
factors will business to understand how the consumers respond to trends.
Technological change is happening faster in
21st century, and much more is happening. There are more new
technologies come and this make the old outdated. Vivo is making it more
competitive by investing in R and manufacturing capabilities. Companies
are investing in technology to build deeper relationships with their customers
and reach a larger customer base. The need to invest in better technology is
growing both in marketing, sales and customer service, which also can affect
the level of competitions among companies.
fact, data and technology now playing a more central role in the business
environment. The brand is gathering data, turning it into actionable
information and using the data to make real time decisions and real time
actions. If a business wants to grow its customer base and to attract and
retain customers, then reliable data can be very rewarding. In marketing,
digital technology and social media are more effective than traditional
methods. Investment technology to provide personalized service brand is winning.
Nowadays, international smartphone brand provide 4G to their customers, same as
Vivo also invest in 4G, thus Vivo able to compete with its competitors. In
addition, not only those people who use I-phone can unlock their phone screens
by fingerprint, but also Vivo users. In order to compete with the local brands
or international brands, Vivo has put more effort in the technology, to provide
best function for the Vivo’s users.
The second E in the PESTEL refers to
environmental factors. The locations will affect the business transactions.
Changes in climate change also can affect the trade. This will directly
influence the response of the customers to specific product or services. These
factors all those that affect or are determined by the surrounding environment.
The aspect of PESTLE is crucial for some industries, especially agriculture,
tourism and others. The people’s attitudes towards the environment,
geographical location, the climate and weather can also influence the operation
of a company.
Sustainable development is now an important
trend for the big business in 21st century. Most of the big and
small business are investing sustainability practices that not only in
controlling the costs but also to create a sustainable brand image. Such an
image can be very beneficial to the business because not only customers but
also government are called to support such business to minimize their carbon
footprint and environmental impact. This is not just about reducing the carbon
footprint of a company, it is about improving the community and protecting the
environment. Some companies with low or no carbon footprints also invest in
sustainability and environment. No matter how big or small of the brands can
reduce their carbon footprint and work hard to protect the environment. Vivo
has been committed to sustainable development from the very beginning and
strengthened its commitment in 2017 to reduce their carbon footprint and also
the environmental impact. In addition, Vivo is working to expand the renewable
energy mix and reduce energy use in the production chain.
The last factor in the PESTEL analysis is
legal factors. Legislation changes from time to time. Many of these changes
influence the business environment. Example, if a regulatory body sets a
regulation on industry, then the laws can affect the economy and industry.
These factors have both internal and external aspects. A certain laws affects
the business environments of a country, and the company maintains a certain
policy for itself. There are some regulation in the legal factors such as
health and safety regulation, advertising standards, equal opportunities,
consumer rights and laws, safety of product and also product labelling. Obviously,
in order to be successful in trading, companies need to know what is legal and
what is not
For companies operating internationally, the
situation can be particularly difficult. Different countries have different
legal structures and different market. Require the international brands to
operate and comply with all these laws in any country. Thus, organization has
to know the set of rule structure in that country. Law and legal troubles can also increase
operating cost. If a brands get caught up in a legal dispute, it can eventually
cause coughs to millions and losses a large amount of money. In this situation,
the law can be a big pain. Companies do their utmost to avoid legal troubles.
In some countries, the necessary regulatory approval may take months and this
can be difficult situation for the business. For instance, local laws and
regulatory restrictions, including labor regulations and trade union agreements
will also make Vivo in trouble. In this way, legal factors have a significant
impact on the business and profitability.
Furthermore, Vivo not only focus to upgrade
the phone system to the latest version but also put more attention on its
product safety. This is to prevent causing harmful to the consumers such as the
phone explode case of Samsung phone Note 7. If the product safety is not the
requirements, the brands might be kick out from that countries or not able to
sell their products in that country. Next is the advertising standards.
Advertising is one of the ways for the company to promote their products or
services through the multimedia. Every country has different advertising standards.
For example, advertisement in China might has little different with
advertisement in Malaysia like the model in the advertisement may wear a short
dress but it is not allowed in the advertisement in Malaysia.
As a conclusion, it is true that industry
factors have an impact on the performance of the company. Environmental
analysis is crucial to determine the role of certain factors in the business.
Moreover, PESTEL analysis allows Vivo to look at external factors. Many
organizations same as Vivo use these tools to effectively predict the company’s
growth. These analyze examines factors like revenue, profitability and business
success. If the Vivo companies wants to make the right decision, then has to
use environmental analysis. As this analysis will bring advantageous to the
company and make it easier when operating the business. Besides that, after the
company completed the PESTEL analysis, the company should be able to use this
to identify the strengths and weakness for SWOT analysis.