Analyzing Business Environments for Manufacturing SMEs

This assignment requires students to analyze the business environment for micro and small manufacturing enterprises in Uganda using various tools such as Porter's Five Forces model and PESTLE analysis. Students will evaluate the external influences on these businesses, including market competition, technological advancements, global trends, and government policies. They will also examine the impact of these factors on the companies' strategic decisions, growth potential, and social responsibility.

Analysis of Business
Environment

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................3
TASK...............................................................................................................................................3
1. Evaluation of macro environment wherein Facebook Inc. operates.......................................3
2. An investigation of the micro environment whereby Facebook Inc. operates........................6
3. Investigation of internal environment of Facebook Inc........................................................10
4. Identification of strengths, weaknesses, opportunities and threats of Facebook Inc............11
CONCLUSION..............................................................................................................................13
REFERENCES..............................................................................................................................15

INTRODUCTION
Business environment is dynamic in nature and in this, all companies of every sector are
included. It is of two types i.e. micro and macro environment and these both give a major impact
on company when they change. Thus, micro includes close factors that affect the ability of
enterprise to provide services to its customers like company themselves, suppliers, marketing
intermediaries, customer marketplace and the public. On the other hand, macro environment
considers these as external and uncontrollable factors which influence the decision making,
performance and strategies for example competitors, modification in interest rate, cultural taste
or government rules. For identifying these factors, PESTLE and SWOT analysis are the best
ways (Boons and Lüdeke-Freund, 2013). Furthermore, this assignment is based on the case study
of Facebook Inc. In this report, pestle analysis is conducted by organisation to minimise the
impact of external factors. Apart from this, porter's five forces model is implemented for
investigating the micro environment of given company. As well it through light on SWOT
analysis which is conducted for identifying internal factor.
TASK
1. Evaluation of macro environment wherein Facebook Inc. used to operate
Facebook is a type of social networking site founded in 2004 on 4th February (Belás and
et. al., 2015). Founder of same company is Mark Zuckerberg, Eduardo Saverin, Andrew
McCollum, Dustin Moskovitz and Chris Hughes. As well social media includes WhatsApp,
Messenger, Instagram, Oculus and Facebook. Now a days, people are more found of such apps
because it helps in connecting people across the world. Besides this, it assists in sharing
important information and data because no other person can see what is sharing on. For using
such social media App, there is the requirement of registration on this with respective mobile
number through which individuals have to contact others (Chen, Chiang and Storey, 2012).
Facebook is one of the top social media marketing companies. From a survey, it has been
recovered that they comprises of vast man – power and a computation quantity is 25, 105 in
December 2017. Moreover, their income ratio was reported as US$15.934 billion in December
2017.
Macro analysis concept should be understood by Facebook Inc. For analysing all these
factors, PESTLE is the best tool which includes political, economic, social, technological,
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environmental and legal factors. Through this, given firm can recognise several external factors
and after that work according to that. So they can minimise negative impact and grab positive
elements as well apply in their day to day business activities. Description of PESTEL is given
below:-
Illustration 1: PESTEL Analysis
(Source: Pestle analysis, 2017)
Political Factor: In developed countries, political factors are stable which bring
opportunities for Facebook Inc. to continuously modify its business in these markets. As well
every nation having their own political circumstances so as per these rules and regulation given
enterprise have to provide their services (Cuervo‐Cazurra, 2011). For mention undertaking, legal
bodies are displaying their concern by providing security to users related to their personalised
data which they are sharing with the use of social media. Main motive of doing such thing is to
reduce the stress level of individuals and providing them security that data sharing by them is
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secured as well as safe and there is no chance of leakage. In this entire process, government is
playing an important role in keeping the images and personal details of person secured and safe.
Apart from this, many people create face accounts, hack personalised information, leaking MMS
and videos many more non legal activities are going on. For such unethical practices, higher
authorities of every company are taking major action like several rules and regulations are
framed which every individual have to follow while registering on these social media sites.
Facebook is suffering from political factors of China censorship because of this they are not
getting global growth.
Economic Factor: economic conditions gives business growth of Facebook Inc. as well
changes in these factors gives major impact on day to day working of business. There are
several opportunities for given company because of economy: increasing stability, rapid
economic growth, increasing disposable income and many more. Instead of this, main purpose of
conducting this is to finding out ratio of total expenditure in relation of expenditure and income
which is generated after serving customers (Briscoe, Tarique and Schuler, 2012). It has been
analysed from a study that Facebook Inc. had added value to economy which is approximately
15.3 billion dollars to the economic system of Europe and respective firm is providing job
opportunities to several persons who are unemployed. Number of employment provided to
people all over globe is around 232,000 individuals. Apart from this, refereed company is having
opportunity to enhance its market penetration. As well external factors help in expanding access
to Facebook social networking website and social media services. Global operation of same
organisation is expanding with the help of market penetration.
Social Factor: Facebook has a vital impact on society, such a huge effect is, it make
people to come closer, public started to keep in touch, even those people who never met before,
relatives who meets occasionally, friends everyone stay in touch for twenty hours. It has become
a platform where lost family members reunite, no matter in which corner they are. One living
incident happened recently, when John Watson found his daughter on Facebook, for whom he
was looking for twenty years, when he came across her Facebook profile (Ishengoma and
Kappel, 2011). Moreover, a social platform where people are becoming social on portals from
different parts of the world, it is also offering a huge variety of business, which is promoting on
social media, to provide business a hike.
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Economical Factor: Facebook growth depends on countries conditions and factors, for
that it needs to be embrace economic aspects, one of the most crucial thing is GDP (Gross
Domestic Product) rise, which is outlines buying and expenditure power. The quick growth of
company lies on the expending telecommunication and infrastructure inclination of countries’
economies that will aid to penetrate market in stable conditions. It is also supporting countries as
providing benefits on estimated value 15.3 billion dollars value to the European finance and
opened employment opportunities with 232,000 jobs. Facebook app is also worth to countries
and even apps are also offering jobs for people across countries, like bug fixing, maintaining app
server, etc. It was tough to get promote a small business on internet, but Facebook offers an
equal opportunities to organizations whether it is large or small (Dumas, La Rosa, Mendling and
Reijers, 2013). Small businesses are connecting users with it by creating groups. Facebook is
introducing various businesses in new and exciting ways and thus, methodologies which are used
to measure its economic strike are well established. It also has a big impression in stock market,
from the first step when it head to inception in shares, it is giving a hike in stock market value
with social network at a whooping.
Legal Factor: Law brings down restrictions that are used to control social networking
sites. This imposes because of operating smoothly and attract more customers who are using
internet. Legislations means to provide information handling, public security is the major
concern, information stealing from a social media website is a criminal offense, to avoid it, laws
takes under consideration. But, before a few days, Facebook security has become a part of
conspiracy due to discharge of personal data that is an issue of public security. Users data must
be handled carefully and there must not any error (Pestle analysis, 2017). Although, existing
laws are not able to control the behaviour on Facebook. Thus, legislation provoked to prosecute
over social media comments, so social media laws has designed with different framework as
Communication Act, Criminal Justice And Public Order Act were written to control the use of
smartphones. Communication Act describes limits that to communicate with strangers, if an
individual don't want to connect, and no one can use abusive language over social media. If
someone uploads any offensive stuff which harms someone's dignity, then it would be a
punishable crime.
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2. An investigation of the micro environment whereby Facebook Inc. operates
Micro environment is small because it related to the area or in general it can be said that
nearby area of organisation which gives impact on day to day activity. These are also named as
microhabitat. Factors included in this are company itself, suppliers, marketing intermediaries,
customers markets and public. For doing investigation of micro environment company have to
conduct Porter five force model with assistance of this tool they can easily determine their
conditions or level of ability and could smoothly implement particular strategies for improving
its certain parts which require (Commander and Svejnar, 2011). Implementing this model help
Facebook Inc. in many ways like in identifying existing competition, threats of new venture
entrance, bargaining power of buyer and suppliers. Furthermore, this help in decision making,
setting target, policies, minimise negative impact and adopt positive. Thus, company have to
implement Porter's five force theory timely for gaining competitive and many other advantages.
Description of Porter's five force theory for Facebook Inc. is given below:-
 Competitive Rivalry – Medium: starting done with analysing current competition
Facebook Inc. is having competition with other social networks like Twitter and
LinkedIn. As well respective company is having such features which help them in
competing with other organisation. Because of this referred firm is declared as top social
network website (Savrul, Incekara and Sener, 2014). For example young generation
prefer or more comfortable to use Facebook, WhatsApp and Snapchat while on other
hand, professional users use LinkedIn, Twitter and Facebook Page. Hence, given
enterprise is having moderate risk. Social media market is full of competition because of
variety of Apps in environment.
 Threats of New entrants – Low: world of social networks, smartphones, gadgets are not
expensive because of this existing companies having threats of new entrance. For coming
out of this Facebook need excellent programmer and secure server. Referred organisation
is having strong impact in market beating their customers is not easy task. Thus,
Facebook is having some unique features which no other social network having. Instead
of this, major issues is all about trust and loyalty of customers. It is not easy task for any
organisation to gain these both easily. Facebook is proofed as trusting administration
since it is introduced in market and having reputable and image in business environment
(Bharadwaj and et. al., 2013). More than billions of population is using applications of
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same organisation, thus, it is not easy for new venture to beat image and goodwill of firm
because they are having good market share breaking is not easy task. Hence, it can be
stated that internet business could be characterised by take down obstruction to entry.
 Bargaining Power of suppliers – Moderate: Suppliers of Facebook is having
bargaining power and for referred company suppliers are those who providing
developers, modern or latest technology equipment, and they are aid in forming of
various apps and assorted software. Facebook Inc. is taken as the majority individual of
such technologies; but the substance of concern is that exclusively some prestigious
suppliers are existing that are Ericson and IBM. Thus, there is not too much choice in this
regard is modest in nature and fairs related to changing is also really costly. Thereby,
bargaining power of the suppliers for the same company is average.
 Bargaining power of Buyers – High: there is variety of social media app and people is
having different account on all these. This divide time of people they are spending on
using Facebook because they are giving time to other Apps also like WhatsApp, Snapchat
and many more. Entire process is giving fair amount of bargaining power to their users.
Although, Facebook is free to use it not cost anything this is the main reason because of
that peoples are easily switching to other networks also. Using several networks is not
charging any amount this is main reason of switching networks. Apart from this there are
some more purchaser of Facebook Inc. like marketers who create their websites, page or
advertisement. They can also move to another social media websites if they feel high
prices are charging by Facebook for getting better publicity. Thereby negotiation power
of purchasers are also consider high (Marketing theories - explaining porter’s five forces,
2017).
 Threats of Substitutes – High: there are several other applications also related to
Facebook in the platform of social media. Thus, given company has its substitute in
market like Whatsapp, Twitter, Google+, LinkedIn and many more. Apart from this,
there are different innovative and creative apps in market and also new are introducing on
regular basis all these things are giving major impact on enterprise in adverse manner.
Marketers are also customers of Facebook and substitutes of these are television,
newspaper, blogs and many more. Hence, Facebook have it many substitute products in
social media market.
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Illustration 2: Porter's five force industry analysis model
(Source: Marketing theories - explaining porter’s five forces, 2017)
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3. Investigation of internal environment of Facebook Inc.
Internal factors are those which are related to internal working of company like policies,
objective, goals, employees and many more. Facebook Inc. is the company founded in 2004 and
founder is Mark Zuckerberg (Popescu, 2013). For this analysing internal factors which is
important for company then after that they work according to that. Some crucial term which
require comprises of various prospects such as resources, capabilities, core skills and core
competencies too. Description of these is given as below:
Resources: These are those assets which is used by company as per requirement for
meeting day to day activity. Key resources of Facebook Inc. are intelligence team, hardware,
technology such as software and many more. With appropriate commodities activities of
business cannot be carried out in proper manner as well give major impact on image of brand.
Resources which respective firm is having are human resources, administration group which is
required for managing entire working, department like (software engineers, web developers,
debuggers, testers, servers checkers, risk handler and so on). Thus, all employees are working for
attaining objectives and goal of Facebook Inc. from survey it has been identified that there are
more than 25, 105 personnel approximately working with them. They are opening a unit of
stakeholders in which, chief one are clients or users, publishers, work – forces, government body
and communities.
Capabilities: It is generally ability of performing work which help in differentiating
Facebook from others. This is not work of individual in company but consider overall activity of
employees and team (Solomon and et. al., 2014). When capability of every individual is combine
it increase monetary value of given company which is 13% per annum and now Reaches up – to
US$15.934 billion approx in the year of 2017. In add-on to this, given venture has also owned
various new apps such as Instagram and Whatsapp. By this way, numerous of consumers of
mention enterprise is increased in forceful manner.
They are also considering turnkey services connected with break down which needed
certification of users, pushing notification, information related to location, consolidation, social
media and data analytics into single software. Instead of this, they also found a style of
generating profit with selling of Android apps. In recent trend, Facebook Inc. has introduce its
own surface for hosting videos and publishing of recent news.
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Core skills: Every organisation required skilled workforce for doing entire activity of
business same Facebook also focusing on core skills of employees while hiring them. As per
their requirement personnel should have different attributes and knowledge in field of problem
solving, web development technology, designing, cloud computing, artificial intelligence,
distributed system and many more (Sekaran and Bougie, 2016). Social network are totally based
on different languages for working on this there is requirement of person who can work on these
languages such as Java, C++, Oracle, Algorithm, Cloud computing, PHP, Git and many others.
Skilled labour can take company to its high and low both so while placing candidate HR
manager have to take care of all the requirement.
Core competencies: This context help in several manner one of them is improving
relation with other corporations. Facebook Inc (Hiltonand Platt2013). is performing in better way
in this respect and thus giving extraordinary competition to Google since its overall income
coming from mobile advertisement is approximately 73 % which is much in compared to
Google's. It consider personal single sign-ons system, which is assist in tracking record of
marketers like as buying rate. Instead of this, given enterprise is also offer harmless and secured
means of sharing data or information. They have latterly modify their safety system and
nowadays concentrating more on the same so that correct offerings can be delivered to actual
users.
4. Identification of strengths, weaknesses, opportunities and threats of Facebook Inc.
Identification of these four factors is important like strength, weakness, opportunity and
threats. So company have to do market research on time because it helps in grabbing several
opportunities and minimising risk. SWOT analysis of Facebook Inc. is given below:-
Strengths: - this is very important factor which is help Facebook to sustain in market. Major
strength of given company is its market position, image and share. As well they are serving
worldwide. Strong Brand Image: This network is widely using by everyone as well popularity
comes along with strong brand image (Tayur, Ganeshan and Magazine, 2012). Main step
of building its image is serving globally as a reliable media service. Large consumer base with externalities: Large number of people are using Facebook
such as students, businessman, professional and everyone. It is becoming with assistance
of attractive looks through advertisement, attractive websites and many more.
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 High Revenues: Finance is backbone or blood of company which is required for meeting
day to day activities. Appropriate finance can be possible when Facebook is generating
high revenues with this given company is having capability of conducting research and
development program. As well they can invest amount for new product and can
investment for new venture.
Weaknesses: - This is internal strategic factor apart from this Facebook is suffering many
weakness which is based on nature of social media. These can be analysed through SWOT
analysis and factor which is reducing success of business can be identified.
 Absence of better promotional techniques: Facebook is not doing promotional
activities in better manner. There is absence of clicks, large number of people are getting
registered on different types of social media apps.
 Lack of honoured e - mail address: The referred organisation is also not having famous
and riskless email addresses related to some others (Yu and Ramanathan, 2012). Firm
such as Google is providing better indistinguishable Gmail services then Facebook. This
is giving negative effect on the image of given company. Thus, they need to improve
these condition and offering much safer emailing to their anticipated users.
 Absence of client's privacy: Users are not feeling that safe and secure because now a
day cyber-crime, account hacking, leaking personal info etc. such kind of activities are
increasing. In this area Facebook is not having good image in market. Case connected
with outpouring of personal data or information like images, videos, messages and many
more is enhancing in today's world day by day. This is major weak point of same
company. But furthermore, than billions of users are existing in this global who are using
applications of Facebook Inc. they are still using after knowing that it don't have privacy.
Opportunities: - These can be related to future and present both. For company, it is important to
grab it because this leads in growth and development of business (Kim Suresh and Kocabasoglu-
Hillmer, 2013).
 Facebook Messenger: This app in introduced for convince of users. So they can easy
chat with their friends and relative there is no requirement to again and again login to
account. Messenger is having such features which attract customers towards it and pull
them to download (Kolk, 2016).
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 Easy-to-use: Facebook is easy to use because there is no requirement of purchasing
software. It can be used after installing App in mobile phone, laptop and computer. When
people are using messenger, there is no need of login again and again.
 Business diversification: Facebook is having an opportunity of diversifying their
business from social media to advertising. For this, respective enterprise has already
taken several steps by purchasing Oculus VR. This is the virtual reality technology which
supports business in their social networking services.
 Product Innovation, market penetration and development: Innovate more products is
an opportunity for organisation which is complementary to its mobile apps and social
networking websites. On the other hand, market penetration and development can
enhance the revenue and membership.
Threats: - These are parts of external factors through which company is going on.
 Newsfeed Confusion: Given company have to alter their newsfeed algorithm on
continuous basis for making their customers or users happy. Instead of this, tweaks are
badly received it destroy credibility of social networks.
 People Stop using Facebook: This is major threat because there are many new social
networking are coming in market which is more attractive then Facebook. Because it
seems less attractive mainly to advertiser, developer which results in negative impact on
business, its financial condition, revenue as well gives major impact on operations.
 Privacy Concern: Users feel that they are not safe and their personal information or data
is not secured. Because when user uploading their image in this situation other can take
its screenshot. Such issues are becoming serious now a days from last some periods.
Privacy concern is more important because they can create any issues in life of person for
present or can be related to the future also (Johnson, 2016).
 Market Saturation: When company is becoming more popular, this results in increasing
contribution to market saturation which results in future growth of business.
CONCLUSION
As per the above discussion, it has been concluded that environment which is full of
companies and dynamic is nature is known as business environment. It includes macro and micro
both factor when they are modify gives major impact on day to day working of business. For
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minimising their impact, company has to do PESTEL (political, economic, social, technological,
economical and legal factor) and SWOT (Strength, weakness, opportunities and threats) analysis
on timely basis. It is because; this is the best tool for organisation to examine various factors and
these will help in growth and development. Analysing internal and external factors is important
for company for identifying the future opportunities and minimising upcoming or present
negative impact. Apart from this, porter's five forces model is carried for referred organisation.
This helps in knowing existing competitors, threat of substitutes, bargaining power of buyers as
well as suppliers and threat of new entrants. All these are broadly explained in this assignment
which give a brief knowledge about Facebook Inc. Social media sector is wide and having too
much competition in respective sector as well as competitor of Facebook is Whatsapp, Twitter,
LinkedIn and many more.
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