PEST Analysis of Orange Company - Case Study Example

PEST Analysis of Orange Company Name: Course: Tutor: Date: PEST Analysis of Orange Company Introduction The orange company was established in 28th April 1994 and its main aim was to change and to improve the way people communicate among themselves and organizations. The company serves more than 175 million customers in five continents and it is ranked third mobile operator in Europe but the leading broadband internet service provider. By 2010, T-Mobile UK and Orange UK were the largest telecommunications company with their brand name of Everything Everywhere (Elnora 2009, 45). The company has gained worldwide reputation and good image as one of the worlds most creative, innovative, media and public relations firm. The company sells broadband internet, tariffs, mobile phones, modems and has introduced electronic money transfer service (Arkadi & Bruce 2008, 223). The company operates in UK, Kenya, France, Spain, Mali, Switzerland, Equatorial Guinea, Senegal, Guinea, Romania, and Slovakia. Its revenues dropped to 45.9 billion euros in 2009 compared to 46.8 billion euros in 2008 and 46.6 billion euros in 2007 (Elnora 2009, 46). The joint venture between the Orange Company and T-Mobile in UK is one of the incredible achievements in that it made the company to be one of the leading companies in UK (Rossi 2001, 60). The company is among the top ranked companies in the telecommunication industry, which has expanded its network to five continents serving over 175 million customers. It is the leading supplier of broadband internet services and a third operator in the (Zerk 2006, 34). The Orange World provides entertainment and information services available in the mobile phones such as video, games, websites (facebook), music, and sports. The website mobile internet can be easily accessed at a lower rates or charges (Arkadi & Bruce 2008, 226). PEST Analysis of the Orange Company PEST stands for political, economic, social, and technological factors. These are the external factors, which are beyond the company’s control (Elnora 2009, 47). They are environmental factors classified as macro environmental factors. These factors can affect the business operations either positively or negatively and are important in strategic management when making decisions (Zerk 2006, 35). Political analysis Political analysis is crucial for the success or failure of the company. If there is political instability in the market, region, or country of operation, the company may close down due to risks associated with uncertainty. The company’s expansion to other regions may be affected by the unstable political environment in those countries (Rossi 2001, 61). By entering into a joint venture with T-Mobile in 2010, it means that, both companies would share the assets and liabilities of the new entity 50/50. Both companies are required to maintain all the corporate laws related to the mergers and equity such as sales of goods Act of 1979 and general condition 23 that governs and control all telecommunication companies (Rossi 2001, 62). If the political environment is favorable, the company will operate without fear of loosing its assets and customers incase of its closure (Arkadi & Bruce 2008, 230) Economic analysis The financial crisis of 2009 affected the company’s returns negatively. There was a drop of its returns to 45.9 (2009) from 46.8 (2008) billion euros. The company’s annual report said that, the trend was relatively health based on the unfavorable economic conditions. The mobile customers increased by 8.8% in Europe and 16.5% in other regions of the world. There was 44.4% increase in broadband customer and a constant dividend per share in of 1.40 euros in 2008 and 2009 (Zerk 2006, 36). Social analysis Orange company especially in developed countries has ensured balanced employment opportunities about gender. This means that, the company is gender sensitive and it promotes justice and fairness to all without fear or favor (Rossi 2001, 63). The credibility of the scientific reports is not up to date. The orange company has been called a tower of doom. More men are employed than women in less developed countries are. The less number of women employed in less developed countries shows how women are discriminated (Elnora 2009, 48). Environmental analysis The company is concern about the environment conservation. After realizing the mobile phone recycling, it came up with a strategy to reduce the emission of green house gas by 20% and to minimize energy consumption by 15% by the year 2020 (Arkadi & Bruce 2008, 231). The company has launched environmental energy action plans and policies. The action plans includes educating the public on the importance of conserving the environment and the green environment action plan in Europe. The range of green products offered reflects how the consumers are concern about personal environment effect. The company has been engaging in planting trees in all countries where they operate their business. This will reduce global warming and to ensure environment is conducive for living and to reduce pollution (Zerk 2006, 38). Technological analysis Due to the company’s creativity and innovation and the evolving nature of the internet and phone service provision; it has increased the market share and become the market leader in the telecommunication industry. This has been enhanced by the creation of television and radio in the mobile phone. The signing of the contract with Microsoft as its collaborator for the latest windows 7 Phone will make the company become unique by being innovative and producing high quality products (Rossi 2001, 64). The stiff competition from other firms and the introduction of Skype has destabilized Orange Company. The Skype offers high quality services at a lower cost and has videophone services offered freely and it is connected to the internet. This is a challenge to the company to become innovative and come up with a new product to counter Skype (Zerk 2006, 39). For the company to remain competitive, it became the first mobile phone operator in UK to come up with High Definition Voice operating service in August 2010. The company sponsors the Orange Innovation Award that has helped advertised its commitment in innovation to its customer’s quality products. The continuous improvement in technology within the company has helped it to retain its customers and to attract more due to its quality products (Arkadi & Bruce 2008, 232). Target market The target market of orange company is broad. The company is expanding very rapidly to almost all continents in the world. The company targets both individual mobile phone users and business organizations all over the world. Europe and UK are the largest markets in the world and other countries are Kenya, France, Spain, the United Kingdom, Mali, Switzerland, Equatorial Guinea, Senegal, Guinea, Romania, and Slovakia. The Orange Company is targeting all countries in the world given that; it is the leading firm in the telecommunication industry globally (Rossi 2001, 65). Its advancement in technology is one of the factors that are boosting its penetration into other markets in the region where its operations have not reached. The company seeks to offer creative and comprehensive solutions to business organizations and individuals using the services it provides based on its brands and policy service. This means that, the target market is viable due to the expansion of internet services and technology in all countries (Zerk 2006, 40). Most people prefer home broadband networks and the company provides them, which targets people at home. The mobile phone services provided by the company targets all the people who are able and willing to use their high quality services (Rossi 2001, 67). The company therefore targets all people irrespective of gender, nation, race, age, religion, level of income, status, and level of education (Zerk 2006, 44). Conclusion Orange company is one of the largest telecommunication service providers in Europe, United Kingdom and other countries in five continents. It has gain competitive advantage and customer loyalty due to its continuous innovation and creativity. The number of customers has increased significantly due to the company’s quality and reliable services and strong brand image. Despite the company’s successes, it has faced continuous challenges such as healthy concerns, which have been portrait as a health threat and the negative media attention (Arkadi & Bruce 2008, 232). In the telecommunication industry, there is stiff competition and rivalry; for instance, other companies provide high quality services at a relatively low cost. The company has been engaging in social responsibility and to ensure products are manufactured, distributed, and disposed in the right way to conserve the environment. The company will gain competitive advantage based on it technological advancement (Rossi 2001, 69). Recommendations The company should expand to newer markets especially in Africa and Asia where there is no much competition. Consumers always like to test what is new in the market; hence, this can present an opportunity to the company to venture into newer markets. The Orange Company should explore the new markets before its competitors venture. With the expanded market, the customer’s increases leading to increased revenues or returns (Elnora 2009, 49). The company should consider innovation and creativity to be a pillar to its success. This can be achieved by ensuring that, it’s key efforts are either maintained or improved to gain competitive advantage (Zerk 2006, 46). The company should participate more actively in social responsibility to build trust and loyalty from the customers and the potential customers. This will increase the loyalty and identity because of giving back to the society as a way of appreciation (Arkadi & Bruce 2008, 233). The company should focus on the environment conservation because it has been a serious issue, a challenge, a threat, and a major cause of global warming. By engaging, they in social responsibility will reduce resistance and stringent regulations from the government (Zerk 2006, 43). Reference: BBC 8 September 2009, T-Mobile and Orange in UK merger. BBC News. http://news.bbc.co.uk/1/hi/business/8243226.stm. Retrieved December 2, 2010 http://www.theorangecompany.com/home.html. Retrieved December 6, 2010 Arkadi, K. & Bruce, P. 2008. The Orange Code: How ING Direct Succeeded by Being a Rebel with a Cause. New York: John Wiley and Sons. Pp. 223-233. Elnora S., Michael, S., Greg, M., Bradley, B., and Vincent, W. 2009. Marketing real people real decision, First European edition. London, Financial Times Press Orangerockcorps.co.uk. pp. 45-49. Rossi, A. 2001. Caring and Doing for Others: Social Responsibility in the Domains of Family, Work, and Community, Chicago, IL, University of Chicago Press. Pp. 60-69 Zerk, J. 2006. Multinationals and Corporate Social Responsibility: Limitations and Opportunities in International Law. Cambridge, Cambridge University Press. Pp. 34-46. Read More