Microsoft Lumia - Pest Analysis by Mitchell Formica

Macro force analysis (Pest Analysis)

Political

Microsoft is impacted by many political factors including government, regional and international levels. Some of the activities that Microsoft take part in can actually be thought of as a political issue. “Most notably, Microsoft has attracted the attention of governments and political parties due to antitrust-related issues. A recent probe by China’s State Administration for Industry and Commerce into the ways Microsoft distributes its Internet Explorer browser and Windows Media Player and sells its Office and Windows software in China can be mentioned as a relevant example of impact of a political factor” (Dudovskiy, 2015).

Economic

Microsoft’s economic factors are based around two things. The first is the global economic crisis of 2008, which caused a huge blow to the world economy. Under the impact of the economic crisis, Nokia’s share price fell sharply which just made a great offer for Microsoft to purchase as a low cost. The second is America’s tertiary industry occupied for about 78 % of GDP, which the contribution of high-tech owned the most, the technology is crucial for the US which is the power source of economic development (Microsoft Corporation’s Strategy, 2015).

Social

Nowadays people are relying more and more so on mobile phones. Microsoft is gearing towards this change by implementing there software upon the phone so that people do not have to use their laptop devices for bigger programs like the office suite. The mobile phone is become more than just a symbol of communication. It is now a multi-functional tool that enhances our day to day lives in many ways. It is also affecting the consumer in psychological ways as well, as we move into more dependence on phones we lose the skill of remembering multiple things or decrease in communication as we look to our phones instead of our peers.

Technological

“Walking in front of others is the only way to survive in the high-tech field and the fierce market competition. High-tech products have rapid upgraded and short life cycle, it inspires higher requires to enterprises’ special application software and ability of continuing to update the hardware configuration. Nokia as a former mobile phone giant obviously hold numerous patents, specialized technical personnel and technical reserves the phone which is an advantage to help Microsoft to develop on smart-phone industry” (Microsoft Corporation’s Strategy, 2015).  

References:

Dudovskiy, J 2015, ‘Microsoft PESTLE Analysis’, Research Methodology, http://research-methodology.net/microsoft-pestel-analysis/.  

‘Microsoft Corporation’s Strategy’ 2015, http://studymoose.com/microsoft-corporations-strategy-essay.

Global Forces and the European Brewing Industry – by Mitchell Formica

The mid 2000’s saw some major shifts in the European brewing industry. At the time, Europe was inundated with drunk-driving accidents and many people were succumbing to health and fitness complications due to excessive alcohol consumption.This led to the government campaigning against the people’s predisposition to drink beer in restaurants and pubs resulting in the on-trade sales of beer (bars and pubs) shifting to off-trade sales (retail). This caused changes in the brewing industry landscape that meant brewers had to re-think their sales, marketing, branding and distribution strategies in reaction to the changing conditions and a significant increase in the import of specialty beers. At the same time, other brewers were producing premium lagers to combat the falling sales in beer products and this was placing further pressures on Heineken’s sales.

This essay uses the Pestel analysis methodology, Porter’s Five Forces and a SWOT analysis to explore how Heineken adapted its business strategies to become the world leading brewing company that it is today.

Pestel Analysis 

Political/Legal

Governments tend to regulate the brewing industry for four reasons. “(a) Taxation; (b) protection of local brewers' interests; (c) market power concerns; (p.349) and (d) health concerns”. (Johan F.M. Swinnen, 2011, Pg. 349). Working against Heineken was the government’s agenda to campaign against alcohol consumption to reduce drink driving incidents and health related problems. To counter this, Heineken had to re-think their marketing and distribution strategies to combat the government’s campaign against alcohol consumption in public places by introducing a premium lager.

Economic

By 2006 Heineken also experienced an 11% increase in the cost of packaging. To reduce costs they took on different markets globally and this helped to increase their economies of scale. They also outsourced beer to other countries, such as China or Brazil, where labour is cheaper and drinking beer was still considered socially acceptable. They also undertook acquisitions, alliances and take overs in order to be more profitable and to compete. (Mark Blee, Richard Whittington, Global Forces and the European Brewing Industry, pg. 90).

Heineken is now the biggest European brewery with three quarters of its sales coming from the region. It has also expanded its sales operations into the Asia Pacific and American markets and this, combined with the increase in imported beers, as evidenced by the graph below, Heineken now has a global market. 

  

Technological/Socio-Cultural/Environmental

All the while, due to social pressures, Heineken’s customer base shifted from restaurants to supermarkets where people could purchase cheaper beers and then consume it at home, abiding by the government’s wishes. Heineken’s growth also relied on its technological advances. One of the company’s four priorities was to accelerate revenue by improving efficiency, accomplished by implementing machinery and robotics.

Heineken has also been affected by environmental changes. “Heineken, the world’s third-biggest brewer, said poor spring weather in Europe led to weak second-quarter revenue and predicted that earnings this year won’t grow as consumers in the region curb spending”. (Clementine Fletcher, Bloomberg, 2013). To reverse this, they used the acquisitions of small businesses to use local beer labels as a means of distributing and expanding sales of Heineken’s beer in other regions.


References:

Clementine Fletcher, Bloomberg, Heineken Sees Weak Europe Beer Consumption Weighing on Sales, august 21, 2013
http://www.bloomberg.com/news/2013-08-21/heineken-expects-annual-profit-in-line-amid-european-struggles.html

Johan F.M Swinnen, 2011, The Economics of Beer, pg. 249 http://www.oxfordscholarship.com.ezproxy.lib.swin.edu.au/view/10.1093/acprof:oso/9780199693801.001.0001/acprof-9780199693801

Mark Blee, Richard Whittington, Global Forces and the European Brewing Industry, pg. 90