Global Business Management: Porter's Five Forces and PESTLE Analysis in the Context of KPMG International

This report discusses the importance of global business management and how Porter's Five Forces and PESTLE analysis can help in the context of KPMG International. It covers political, economic, sociological, technological, legal, and environmental factors that impact the organization's operations and decision-making. The report also includes insights on the threat of new entrants, rivalry among existing firms, threats of substitutes, bargaining power of buyers, and bargaining power of suppliers.

GLOBAL BUSINESS
MARKET

TABLE OF CONTENT
INTRODUCTION...........................................................................................................................3
MAIN BODY..................................................................................................................................3
Discussing porter's five forces analysis and the pestle analysis in terms of International
business management..................................................................................................................3
PESTLE analysis-........................................................................................................................3
Porter's forces model-..................................................................................................................5
REFERENCES................................................................................................................................8

INTRODUCTION
Global business management is the management of all the business operations in all the
working organization operating around the world. International business focuses on business
activities and transactions between different countries and the regions, Managing all those
business activities around the world comes under global business management. International
business has many advantages like market expansion, increased demand, better risk
management, access to export financing and increased revenues and this is the reason global
business management is important and organizations should focus on it(Luo., 2021).
The company KPMG LLP is one of leading company in UK that provide tax, audit,
regulatory, financial, advisory and assurance services to its customer in UK. KPMG in UK is a
part of global network firms KPMG international operating all around the world and which was
started in 1987 and now become third largest accounting firm In the world right now it has
operations in more than 150 countries. KPMG works as international consulting business and
manage its operations from headquarter in Netherlands. In this report we will see PESTLE
analysis and porter's five forces modal in the context of KPMG international.
MAIN BODY
Discussing porter's five forces analysis and the pestle analysis in terms of International business
management
Global business management is very important part in managing international business that
is production and sale of the goods and services all over the world (Nandonde, 2019). This
management is done by any organization using different analysis that can be PESTEL or porter's
five forces modal. Every organization does this to get ahead in the competition from other firms.

PESTLE analysis-
PESTLE analysis is a tool used by an organization for keeping track on all the external
factors that could impact decisions of the organization. It understands market and helps
organization in taking better decision regarding organization operations and the production.
Organization that successfully evaluates and analysis the changes in the environment can gain
advantage over the other competitive firm in the industry. PESTLE is an acronym that stands for
political, economic, sociological, technological, legal and the environmental factors that affect
organization time to time in taking decisions and operations.
Political factors are all those factors that includes tax policy, environmental laws-regulations,
trade restrictions or reforms that are made by the government to have control on industries of that
country. These factors help in determining the extent of government influence on that industry.
(Casañ, Alier and Llorens., 2021). Some trade barriers of government act as a hindrance for that
industry type and the Business gets affected by the adverse policies of the government and leads
them in financial losses like KPMG international impacted when Britain existed from the
European union in 2016 as it was not able to supply services easily as it was providing in Europe
before Brexit and then there were Covid restrictions in 2020 that impacted them most as they
were not able to provide services during lock-down. Further, there are some government things
useful for the company like government corporate tax 19% a year is advantageous to the
company.
Economic factors are all those factors that are related with the growth and decline of economy,
its interest rates and the exchange and inflation of the country. The wage rate, working hours,
unemployment and cost of living of that country also comes under the economic factors. KPMG
considering economic factors always choose the countries with highly efficient financial markets
with a good human resource availability for easy accumulation of financial and human capital.
But after Covid second wave higher inflation in most of the country affected KPMG negatively
and it was from two sides first increased cost of the services they provide and at the same time it
decreases purchasing power of money that consumer has themselves with and which in turn
reduces consumer spending on goods and services.
Social factors are all those factors that includes the cultural norms, expectations, health, safety
career attributes, population growth rates and age distribution as (Than., 2021). These are helpful
for marketing analytics and making strategies for the companies and to get better returns from

the market in the long run. These factors are significant for producer as they want to target
certain consumer in the market. KPMG investment and regular research helps it to know local
consumer knowledge to attract consumer and then plan audience to target for their services but
the scandals by KPMG that started from 2018 leads it to loss of brand image and the high
penalties which leads clients to opt for other firms that were existing in the market.
Technological factors mean the factors related to the innovations and developments in the
technologies. These are the factors that impact organization's operations and helps them to work
efficiently and effectively. New developments like artificial intelligence made in technology
helps companies to work faster for their clients(Lee,J.,et.al.,2019). KPMG innovates and
improves audit quality by investing in good technology and it also describes that technology is
key in consulting and advising organization for its business transformation in the long term. Not
only this in 2021 technology innovation hub report reveals that physical workplace and
technology both remains a very important component of KPMG international.
Legal factors are those factors which includes changes in legislation and business laws by the
government that will have impact on employment, access to materials, resources and taxation.
Some laws have an impact on all the business environment in the country adversely and act as a
hurdle for the operation and production of industries. Apart from the law made by the
government legal factor also includes all those laws, rules and regulations that companies
maintain in the organization and which every employee shall abide. The KPMG in UK was
impacted from the general data protection regulation bill of European union before UK existed
from Europe. The bill was a privacy bill for safe information and privacy of the people of Europe
but it affected KPMG negatively as it was not able to reach consumer information from time that
affected them.
Environmental factors are all those factors that are impacted by the surrounding environment,
and they are related with the environmental aspects of that country. The raising of corporate
sustainability responsibility in every other country is becoming more central in the operations of
the companies working in those countries and the factors like climate, carbon footprint, waste
disposal are also covered under the environmental factors. Environment factors are becoming
very important thing in today's world after it has Covid-19 pandemic. Considering environment
factors KPMG international is increasing sustainability reporting across all the organization
globally and is focusing on sustainability.

Porter's forces model-
Porter's five forces model identifies and analyse five competitive forces that shape every
industry and help every industry in determining the industry's weaknesses and strengths in long
term because this are needed by the company to accept opportunities and the threats they possess
the KPMG firm from time to time analysis this porter's force modal. The main objective is to
assess the competition that exist in particular business sector. Being an international company
KPMG has strong competition from various other international firms like PWC, EY, Deloitte
and even from some other regional accounting firms such as MNP, Richter etc. as well. Porter's
five forces includes-
Threat of new entrants-
This force considers how easy or difficult is it for any other competitor to join that particular
industry. Profitable market attracts new entrants as they think it is easy for them to gain profit,
and when competitors think that it is easy to join that same industry the risk of an established
business to lose its market share will be the higher and their profit will decrease in long run.
(Madsen, and Grønseth., 2022). KPMG international has risk of new entrants and that is higher
and that can be seen from the fact that in last 4-5 years Calgary- based MNP had the largest
revenue increased among all the top accounting firms in Canada and at the same time KPMG
international profit that was 3,213 crores USD in 2021 also attracts other business leaders to join
this industry and that will have lose in KPMG market share.
Rivalry among the existing firms-
This force helps in examining the intensity and the level of the competition that exist in the same
industry type (Masayuk, 2019). Rivalry competition is higher when there are chances of
consumer easily switching to another industries' product and services and that can leads in losing
market share. When there is high rivalry competition the cost of advertising and promotion of the
product increases like KPMG international has high rivalry because there are many firms like
PW PWC, EY, Deloitte operating in the market that provide same services to the clients that
KPMG is providing at the same cost. KPMG also has to spend high cost on the marketing
strategies just to get ahead in the market than the competition firm.
Threats of substitutes-
This force aims in examining how easily any customer switches to the product or service that of
a competitor. It helps in evaluating and analysing the number of competitor that exists in the

market, prices they charge and the quality they offer for the same product (Niño Durán, et.al.,
2020). It also helps in knowing the earnings and the profit of all the competitors in the market.
Many competitors offer the same product and this is the reason threat of substitute increases. The
threat of substitute in KPMG UK is high and is increasing day by day as consumers can easily
select someone internally for the organization for providing the same advisory, tax and
consultancy services that KPMG is providing and then spending money externally on outside
source at higher amounts and not only this KPMG substitute are already present in the market
like deloitte providing the same services to its consumers.
Bargaining power of buyers-
This force helps in examining the power of the consumers and their effect on pricing and the
quality of the product (Chang, Liu, and Mashruwala., 2022). Consumer have power when their
number are less than the number of sellers providing the same services and this in turn helps
them to switch easily. But whenever any producer provides unique product it automatically
reduces the power of consumer. KPMG consumer has moderate power as services provided by it
is are more professional than the other existing firms but at the same time buyers are also
knowledgeable and the reason that some bargaining power definitely exist with the consumer to
provide the same services as of KPMG.
Bargaining power of supplier-
This forces helps in evaluating the power of suppliers for selling their product and suppliers
power is high when supplier is providing key inputs and their inputs are different from the other
suppliers (Zhao, 2021). A high power of negotiating by suppliers often leads to higher prices of
raw material and low quality of the product. This leads to higher prices of the product and lowers
the potential margin of that of the industry. The KPMG international does not have high
suppliers negotiating power as it works in service sector industry that, and they themselves
provide tax, consultancy services to the customer. Risk of bargaining power of suppliers is low
in case of KPMG.
CONCLUSION
Keeping the contents of the above prepared report it can be concluded that global business
management is important in running every global business in today's market. Further, Porter's
and PESTLE analysis both have become necessity of every organization to utilize opportunities
in their way that come because of the external factors and at the same time it helps to face threats

and challenges by planning a strategic approach towards them. Not only this it has also been seen
that for entering any new service sector in UK these evaluations have become necessary. The
firm in the UK is successful because it keeps analysing the different approaches and change its
organization structure according to them.

REFERENCES
Books and Journals
Casañ, M.J., Alier, M. and Llorens, A., 2021. A collaborative learning activity to analyze the
sustainability of an innovation using PESTLE. Sustainability, 13(16), p.8756.
Chang, H., Liu, S. and Mashruwala, R., 2022. Customer Bargaining Power, Strategic Fit, and
Supplier Performance. Production and Operations Management, 31(4), pp.1492-1509.
Lee, J., et. al., 2019. Emerging technology and business model innovation: The case of artificial
intelligence. Journal of Open Innovation: Technology, Market, and Complexity, 5(3),
p.44.
Luo, Y., 2021. New OLI advantages in digital globalization. International Business
Review, 30(2), p.101797.
Madsen, D.Ø. and Grønseth, B.O., 2022. Five Forces Model. In Encyclopedia of Tourism
Management and Marketing. Edward Elgar Publishing.
Masayuki, M.O.R.I.K.A.W.A., 2019. Price Competition vs. Quality Competition: Evidence from
a Survey.
Nandonde, F.A., 2019. A PESTLE analysis of international retailing in the East African
Community. Global Business and Organizational Excellence, 38(4), pp.54-61.
Niño Durán, et.al., 2020. Reliability and validation model for a Porter´ s competitive forces
“threat of new entrants”: Findings from banking industry in Colombia. Contaduría y
administración, 65(2).
Phan, S., 2021. The effect of pestle factors on development of e-commerce. International Journal
of Data and Network Science, 5(1), pp.37-42.
Zhao, B.J., 2021. Supply Chain Bargaining Power and Cost Stickiness. Available at SSRN
3685994.
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