When in operation, a business is faced with external and internal factors that influence decisions and the trend of an industry. In Australia, a number of external factors affect businesses operating there in different ways (Fred, 2008). To evaluate the external factors and affect their effects on Pearson International Australia branch, this paper undertakes an S.T.E.E.P. (Social, Technological, Economic, Environment and Political) analysis, Porter’s five forces Model and Competitor’s assessment.
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A business operates in an environment with people who have different cultures, way of doing things, economic and cultural beliefs. A combination of these forms a social environment; in the case of publishers the operating process and quality of books as a result is of great importance. It is important for business coordination be in harmony with the social function of the larger society.
There should be coordination between the values of the company as well as the community. Social norms are considered essential by the business organizations as the purchasing behavior of the customers living in a particular society is dominantly affected by these norms. In the case of Pearson International Australia, branch products offered and the services should be of high quality and responsive to education needs of the people.
Australia has legislation laws that a firm must comply with if it has to undertake business in the country; publishing companies not only need to comply with general legislations but they also have to abide to international quality standards of published material. Companies have to follow the companies’ laws and acts of the international business as well as domestic business.
While working on the global level, the companies have to consider three types of the legal systems including common law, civil law, and theocratic law. The non-compliance with such laws creates critical legal issues for the company, which has an adverse impact on the business performance as well as corporate image of the company. Pearson International Australia branch has minimal influence on the legislations in the country, but is left with no option other than complies with the set legal laws (Haberbeg and Rieple, 2001).
Australia has a monarch kind of government, this does not mean that the country’s political wave is one sided but the resultant is that there is an influence that it has on the business environment. Political environment includes the government systems and judiciary systems, which influence the business of the international organizations.
The political way may determine things such as where the roads are going to be made, who maintains them among other factors. Due to this, the company is required to work according to the government regulations of the foreign countries. Pearson International Australia branch should not take sides in the political scenes of the company; it should as much as possible stay neutral to the system.
The world is under recession out of world financial crisis that hit it at the end of 2007. This has affected the economic growth of countries that in turn affects a business. Economic environment greatly affects the hospitality business.
The interest groups in a particular geographic area have different levels of prosperity and preferences. This is to be considered by Pearson International Australia branch in its business process. This is because the more economically developed nations can be, the helpful it is in making the company achieve its objectives behind attaining direct marketing.
The publishing industry is affected by technological levels in the world; in Australia, the country has developed reliable technological equipments that have assisted the company to print quality materials. On the other side, technology has shifted the demand for written material books to electronic books. Schools as well as individuals have shifted to written materials; though this is offering the company a challenge, the company has diversified its businesses to other sectors of the economy (Hitt, Hoskisson and Ireland, 2003)
Concerns about taking care of Australian environment are in the forefront in government and non-governemental programs. The publishing industry depends on trees and vegetation to get the printing materials, it is the same vegetation the country aims at protecting, this poses a challenge to Pearson International Australia branch; however, it has developed some trees plantations to ensure they have supply of materials.
Porter’s Five forces
In 1980, Porter developed a structure for analyzing the nature and extent of competition within an industry. His argument was that, in every industry, there are at least five competitive forces, which establish the nature of competition within that industry. These five forces are discussed below:
– Threat of new Entrants
– Bargaining Power of Buyers
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– Threat of Substitute products or Substitutes
– Rivalry among Existing competitors
Buyer’s Bargaining Power
The success of a business is dependent with the buyers; they are the customers of a business. They shape the kind of products that a business makes; in the publishing industry, buyers shape the materials and products to be published.
Buyers have the ability to determine which products will move first and which will not. It is through buyers that a company realizes its competitive advantage in the market. The increasing population of the continent have different demands, the demand of certain category of books determine the publishing that the company will have.
Supplier’s Bargaining Power
In the publishing industry, suppliers can be categorized in terms of material suppliers and business suppliers (writers). Australia has a number of suppliers in either category and since Pearson International Australia branch has a good reputation, getting business is easy. To be certain that it gets materials, the company has developed good business relations with the suppliers, and it has also planted plantations of trees to ensure constant supply of raw materials.
Competitive Rivalry in the Industry
Within an industry, there are businesses that compete with one another for the available market share. These businesses either specialize in the production of similar products or differentiated products. In laptops, a number of international companies who specialize in their production, they include Blake Education, Blue Angel Gallery, Borghesi & Adam Publ. Pty. Ltd. Imprint: Brolly, and Brimax Publishing among others (Pearsons Official Website, 2011).
Threat of New Entrants
Pearson International Australia branch faces a challenge to remain competitive amidst of a number of new entrants in the market. In the spirit of facilitating learning, the Australian government has reduced trade and entry barriers so countries can enter the market effectively. However, the threat of new entrants to an industry depends on the number of entry barriers available. The higher the entry barriers, the fewer the number of competitors will be in the industry. These barriers include capital costs of entry, legal constraints, and access to distributing channels. New entrants in the publishing industry are mostly international companies (Wheelen and Hunger, 1998)
Threat of Substitutes
Technology is offering an alternative to publish material, people can get access to materials over the internet, and thus the demand for published materials has reduced. Social networks have also been used as a means of communication a move that was previously done through publishing of materials.
The success of the company depends with the quality and reputation of the writer who contracts it is for business, the sector if faced with a number of writers in the same subject so when somebody who has higher reputation contracts another company, then Persons stands to lose.
There are a number of players in the publishing industry in Australia, the players are both domestic and international companies; the companies compete for business in the country and look for quality writers to contract for their services. The competitors are situated in different sections of the continents and offer different packages; so far the country has not developed a uniform charging or contacting policies thus every individual company has the jurisdiction of its areas.
The materials used by publisher vary in quality and costs, depending with the customer, companies have the level of quality they give to the materials to be produced. Though the competition is high, the company is competing effectively and among the leader in the industry.
One of the impending competitions is likely to come from online libraries and articles, the use and affordability of technology gadgets and software has enforced the growth of online libraries.
The publishing in dusty is losing business to the development, some article, books, periodicals and papers that Pearson International Australia branch used to be contracted to publish have been put in the internet where a buyers only need to pay online and get some rights to the material. The trend is likely to increase, as people get enlightened and the use of computers taking center stage.
Although the future is unpredictable, the publishing industry is likely to be negatively influenced by technology and adoption of electronic economies. In the future, it is expected that people will be doing less of paper work and dealing with electronic materials.
For example, Pearson International Australia branch gets contracts from the government to publish some materials to be distributed in the country; however, there are moves by the government to have e-government and e-justice systems, when this new developments starts to operate, then publishing companies are likely to lose business.
the growth of online education centers is also likely to have a blow to the industry, people only need to buy rights to access materials over the internet; it is the same materials that publishing companies are producing. The growth is likely to have a negative impact on publishing industry growth rate (Porter, 1985)
Pearson International Australia branch is the leading publishing company in the country; however, a number of external factors affect it positively and negatively. Although, the company is benefiting from increase in education levels across the world, technological use in learning has posed a great danger to the future of the company. The publishing industry is faced with existence of substituted from online libraries and materials.
Fred, D.,2008. Strategic Management: Concepts and Cases. New Jersey: Pearson Education
Haberbeg, A. and Rieple, A., 2001.The Strategic Management of Organisations. London: Prentice Hall.
Hitt, M., Hoskisson, R. and Ireland, K.,2003. Strategic Management: Competitiveness and Globalization. South Western: Thomson Learning.
Pearsons Official Website., 2011. Pearson at a glance [online]. Web.
Porter, M., 1985 competitive advantage . New york:The Free Press.
Wheelen, L. and Hunger, J.,1998. Strategic Management and Business Policy: Entering 21st Century Global Society, 5th edition, Reading, Massachusetts and Harlow: Addison Wesley.