G8 Education Limited Macro and Micro Environment Analysis

This report analyzes the macro and micro environment of G8 Education Limited, an Australian company providing early education services, using PESTEL and Porter's five forces model. It examines political, economic, social, technological, environmental and legal factors that affect the business. The report offers recommendations for the company to address challenges and opportunities. The subject is business analysis, and the course code and college/university are not mentioned.

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G8 Education Limited Macro and Micro Environment Analysis
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Abstract
Macro and micro environment analysis are used to analyze external and external business
environments that an organization operates in leading to an understanding of the challenges the
organization faces and the opportunities that exist thus determining strategies that can be put in
place to address them. For internal analysis Porter’s five forces model is used while the PESTEL
analysis is used to analyze the external environment. G8 Education is an Australia company with
interests in the area of education operating over eighteen service areas. This report uses PESTEL
and Porter’s five forces model analysis to analyze G8 Education and offer recommendations.

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Table of Contents
Abstract............................................................................................................................................2
Introduction......................................................................................................................................4
Macro-environment analysis of G8 Education................................................................................4
Political factors................................................................................................................................4
Economic factors.............................................................................................................................5
Social factors...................................................................................................................................5
Technological factors.......................................................................................................................6
Environmental factors......................................................................................................................6
Legal factors....................................................................................................................................6
Industry competitive analysis using Porter’s five forces.................................................................7
Bargaining power of suppliers.........................................................................................................7
Bargaining power of buyers.............................................................................................................7
Threat of substitutes.........................................................................................................................8
The threat of new entrants...............................................................................................................8
Rivalry among existing competitors................................................................................................8
Conclusion.......................................................................................................................................9
References......................................................................................................................................10
Appendix one: Organizational Profile...........................................................................................11
Appendix two: G8 Education revenue stream in 2017.................................................................12
Appendix two: Strategy, Vision and Values of G8 Education......................................................13

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G8 Education Limited Macro and Micro Environment Analysis
Introduction
G8 Education Limited is a locally owned Australian company that derives its revenue
from providing early education services. The company has approximately 7,730 people operating
its services in Australia. It operates eighteen services within the education line which exist as its
brands. This makes the company one of the largest ASX listed childcare companies (IBIS World
2017, p. 2). This essay is an analysis of the macro and micro environment that the company
operates.
Macro-environment analysis of G8 Education
The macro environment involves factors that affect the entire economy of business.
These influences depend on the interrelatedness of the factors that exist since some factors affect
the whole industry while others affect specific industries only (Porter 2008, p. 2). To understand
the macro environment of G8 Education, PESTEL analysis is used to examine political,
economic, social, technological, environmental and legal factors that affect the business. This
tool is used to identify possible threats and opportunities that impact the industry and are outside
its control.
Political factors
Political factors relate to the government and its goodwill in supporting the business
environment that the firm operates in. These factors include legislation, tax policies, safety laws
and political stability in the country which affect the entire economy. Ranked number fifteen
with ease of doing business, Australia offers the best business environment for childhood
education (Australian Trade and Investment Commission 2017, p. 8). G8 Education is enjoying

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political stability in Australia that has created better consumer services for the company to
operate. Australia offers a stable and robust performing economy due to its proven economic
resilience and sustained growth that provides a safe and low-risk environment for doing business.
Being a modern, developed and stable nation, it offers competitive drivers that encourage
investment. Molnar (2002) adds that Australia has a transparent regulatory system and sound
governance frameworks that lead to economic resilience. This economic freedom that the
country offers have created a better business environment that attracts foreign investments which
may have negative impacts on G8 Education.
Economic factors
Economic factors relate to rats of inflation, taxes imposed by the government and
unemployment that influence the way the economy behaves. This is because businesses are not
recession proof thus the need to develop strategies for dealing with such variations. The country
offers one of the highest growth rates of the developed world with its GDP estimated at 2.2% in
2017 (Australian Trade & Investment Commission 2017, p. 6). The fact that the unemployment
rate in the country is low makes the business environment better since it means that most people
can afford child education. This creates high future opportunities for G8 Education since there
are higher economic benefits that the company derives.
Social factors
Social factors involve consumers and the way they purchase products basing on factors
like demography, ethnicity, social status lifestyle changes, immediate needs and trends in the
industry. Consumers shape the way the organization operates since they are the one who choose
what is important to them. Trends affect most consumers since people tend to influence each
other. According to Bruce (2012, p. 12), the social context of education in Australia is changing

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as the government takes the initiative for children under five years. According to G8 Education
(2018) by creating a higher focus on the importance of early childhood education, the company
has established itself as a pillar of education in the society increasing its ability to survive in the
macro social environment. This has increased its recognition in the society through its corporate
social responsibility initiatives.
Technological factors
Technological factors relate to advancements in technology; both the ones used to
develop products and those used to run the business efficiently to compete with others within the
industry. Technological changes in the county have impacted the value chain making education
efficient which leads to reduced business risks and challenges faced by G8 Education. G8
Education as one of the best companies that have adopted technological advancements in the
sector. It enjoys business benefits of technological advancements and economies of scale that
have allowed it to dominate the industry.
Environmental factors
Environmental factors set norms and standards of business operation that impact profits.
The Australian business environment calls for greener technologies to reduce the carbon effects
that the firm will suffer. To survive the environmental impact of the business environment, G8
Education complies with the Australian environmental requirements by adopting the green
environmental approach which shows respect for the environment and at the same time
sustainable environmental responsibility to teach children to learn environmental management.
The company does not only comply with environmental conservation but rather focusses on
equity and fairness by taking actions that will have a positive impact on the future generation

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(G8 Education 2018, pp. 6). These include minimizing consumption, recycling consumables and
supporting environmental awareness.
Legal factors
Legal frameworks control and regulate the business environment through setting
conditions that define the way a business operates. Copyright laws, employment laws and
consumer protection laws shape and determine the way the business environment looks like. The
legal framework in the country is based on the political goodwill of the government to support
early childhood education. This has created a better environment for business operation since the
government has taken the role from parents. G8 Education complies with all the legal
requirements of the industry to avoid the consequences of non-compliance.
Industry competitive analysis using Porter’s five forces
Porter's five forces analysis is a tool for analyzing business competition by determining
the competitive intensity and attractiveness of the industry. These forces exist at the
microenvironment which consists of forces close to the firm that affects its ability to reach out to
its customers and make profit (Porter 2008, p. 78). Any change in one of the factors forces the
business to reassess the marketplace to develop new strategies. These forces are power of
suppliers, threat of subsidies, bargaining power of buyers, the rivalry of competitors and threat of
new entrants.
Bargaining power of suppliers
The bargaining power of suppliers is high because there are many companies that are
operating in the consumer sector. This makes the competition for raw materials high which
decreases the margin that G8 Education Limited earns in the market. Further, dominant suppliers

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have better negotiation power leading to higher prices for the consumer services filed which
lowers the overall profitability.
Bargaining power of buyers
The bargaining power of buyers is high since they have a lot of demands and
expectations. Consumers buy the best and quality offers that they get by using the minimum
prices. This means that G8 Education has to offer quality services and at the same time offer
competitive prices that can attract more buyers (Bell 2015, pp. 3). The autonomy of buyers and
the availability of information makes it easy for buyers to increase their bargaining power since
they can compare the options that they have with what G8 Education offers.
Threat of substitutes
The threat of substitutes is not high since the nature of education that the company offers
is different. Even though there are other services like Dropbox and google drive that can change
the quality of education. These services work well for older adults who can take instructions
easily. Therefore, the value proposition that the substitutes offer is an opportunity rather than a
threat since G8 Education can build itself around the business proposition that these companies
provide (G8 Education 2016, p. 18). Further, G8 Education provides a variety of early childhood
education brands that limit the power of substitutes.
The threat of new entrants
Since Australia offers a good business environment for investing, the threat of new
entrants is high since the business environment is good. Further, transparency in regulation and
government policy creates a stable and attractive environment that is easy for business (Ogutu &
Martin 2015, p. 5). Also, new entrants bring innovation and new ways of doing business that

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make the business more competitive. However, the company has solved this challenge by
acquiring most education affiliated institutions so that the threat of new entrants can be reduced
(G8 Education 2010, p. 11). In addition to that, the developing interest of the Australian
government in education makes the threat of new entrants high since it sets conditions that allow
smooth operation and service delivery to children.
Rivalry among existing competitors
G8 Education operates in a competitive customer service industry which can impact the
proceeds the business reaps. However, G8 has built sustainable differentiation of its products. G8
Education competes with other competitors like Affinity group which create high competition in
the industry. This calls for the need to develop aggressive strategies to survive the industry
challenges. Further, competition remains high due to easy market entry of other competitors.
However, the firm remains better placed since it has the best strategies for surviving
environmental forces.
Conclusion
Sridhar, et al. (2016, P. 216) suggests that firms can use micro and macro environment
analysis to develop business strategies for surviving internal and external business challenges. To
survive the business challenges from the macro and microenvironment forces, G8 Education
needs to build economies of scale to lower its fixed costs per unit and at the same time invest in
research and development to define standards of operation that make it difficult for new entrants.
G8 Education has to establish a competitive advantage that will lead to survival. G8 Education
needs to strengthen its internal competitive advantage and work on adopting to the business
environment that it faces. By balancing the five forces and developing strategies to ensure that
the company adopts to the challenges in the external environment.

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References
AustralianTradeandInvestmentCommission, 2017. Invest in Australia, Why Australia, s.l.:
Australian Government.
Bell, N., 2015. Is G8 Education the market’s best sell?. The Sydney Morning Herald, 12 March.
Bruce, T., 2012. Early Childhood Education. 4th ed. s.l.:Hodder Education.
Education, G., 2016. G8 Education-Investor Presentation, s.l.: G8 Education Limited.
G8Education, 2010. G8 Education Limited, s.l.: Balvane Securities.
G8Education, 2018. Company Overview. [Online]
Available at: https://g8education.edu.au/about-us/company-overview/
[Accessed August 2018].
G8Education, 2018. Corporate Social Responsibility (CSR). [Online]
Available at: https://g8education.edu.au/about-us/corporate-social-responsibility/
[Accessed 19 july 2018].
IBISWorld, 2017. G8 Education Limited - Profile Company Report Australia, s.l.: IBIS World.
Molnar, A., 2002. School Reform Proposals: The Research Evidence. Greenwhich: Information
Age Publishich.
Ogutu, F. & Martin, M., 2015. Porter’s five competitive forces framework and other factors that
influence the choice of response strategies adopted by public universities in Australia.
International Journal of Educational Management, 29(3).
Porter, M. E., 2008. The Five Competitive Forces that Shape Strategy. Harvard Business
Review, 88(1), pp. 78-93.
Sridhar, R. et al., 2016. A Political, Economic, Social, Technological, Legal and Environmental
(PESTLE) approach for assessment of coastal zone management practice in India. International
Review of Public Administration, 21(33), pp. 216-232.

THE BOARD
Reviews, applies judgment
and, as appropriate, approves
the PCC’s recommendations
THE PEOPLE & CULTURE ‘PCC’
The PCC operates under the delegated authority of the
Board. The PCC is empowered to source any internal
resources and obtain external independent
professional advice it considers necessary to enable it to
make recommendations to
the Board on the following:
Remuneration policy, composition and quantum of
remuneration components for executive KMP, and
performance targets.
Remuneration policy in respect of NEDs
Talent management policies and practices including
superannuation arrangements
Design features of employee and executive STI and LTI
plan awards, including setting of performance and other
vesting conditions Further information on the PCC’s role, responsibilities and
membership is contained in the Corporate Governance
Report set out in the Corporate Governance section of the G8
Education website
Appendix one: Organizational structure source G8 Education (2017)
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Appendix one: Organizational Profile

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Appendix two: G8 Education revenue stream in 2017
Appendix two: G8 Education revenue stream in 2017 source IBIS World (2018)

Our Values are considered as we assess how
performance has been achieved
Measurable performance objectives are set
across all strategic priorities and are closely
aligned to our purpose and values.
This ensures a balanced focus across all key
strategic areas.
The strategic priorities are translated into
performance objectives and KPIs
SHORT TERM INCENTIVE PLAN (STIP)
OUR STRATEGIC PRIORITIES
Team, Quality and Safety, Families and Performance
OUR VALUES
Passion, Innovation, Dedication, Compassion,
Integrity
OUR PURPOSE
Create spaces that shape generations
now and next
Appendix three: Strategy, Vision and Values of G8 Education. Source G8 Education Annual report 2017
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Appendix two: Strategy, Vision and Values of G8 Education