Pestle Analysis and Factors for Starting an Online Business

This article discusses the Pestle analysis and factors responsible for starting an online business in context to a case study. It also covers the strengths and weaknesses of legal frameworks and funds for online businesses, and the identification of three sectors in the UK and the role of HR policies.

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Business Foundation
7/25/2019

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Contents
Q1. Pestle analysis and factors responsible for starting an online business in
context to case study.............................................................................................2
Q2. Strengths and weaknesses of legal frameworks and funds for online
business.................................................................................................................4
Q3. Identification of three sectors in UK and role of HR policies......................7
References..........................................................................................................11

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Q1. Pestle analysis and factors responsible for starting an online business in
context to case study.
According to the given case study of eBay that mentioned the objective of the firm to plan for
an online business or trade in effective way. It will serve the customers and regular people to
have access to the financial markets, and other services. However, a number of factors may
impact the initiation and implementation of this business idea, into their business. Therefore,
an analysis of the environmental and other factors will be done in context to the company.
The new online venture here can be stated as the area where the good will be traded at a
fair value, named as “Online sun” (Omidyar, 2018).
Political and legal factors
The most significant political and legal factors for the online new venture that may arise can
be the data security risks issues, along with the danger of frauds. The factor of trade of any
kind of illegal products may also create issues, and the lack of responsiveness of the tax
payers. Government agencies are concerned about the tax evasion into their investigations.
Moreover, there has been an increase in the involvement of the government into the aspects
of privacy policy agreements. Therefore, these are certain political and legal factors that may
affect the implementation of the new online business idea of providing all goods and services
at a fair value (Plummer, Allison and Connelly, 2016).
Economic Forces
In the company, the online new venture there is an unending supply of the unique products
and the weak economic conditions are major that impacts the revenues. Factors that influence
their plan for the new online business may include the aspect of exchange rate between USD
and other currencies. Change in inflation rate, tax rates, costs of labour, unemployment and
fiscal policies are stated to be major factors (Devece, Peris-Ortiz and Rueda-Armengot,
2016).
Social factors/forces
The aspects of lifestyle and the attributes of the choices of individuals, i.e. both men and
women differ with respect to the products sold through eBay. As the business idea of
conducting a fair trade involves the trade or exchange in a fair manner to all the people. This

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facilitates the fact that people rely more on the use of internet for online shopping, and eBay
provides them a better platform.
Technological factors
With the growth of the internet users, there has been an increase in the public online
consumption, and this has led an increase in the high-speed network service. eBay makes the
use of PayPal as a platform, ensuring the secured, and easy payment services. However, a
factor in technological context, i.e. problems may occur related to the patent protected
technical knowledge and features. Therefore, in the launching and implementation of their
new business ideas or ventures, the company may get affected by patent dispute (Agarwal
and Wu, 2015).
Environmental factors
The company provides a better prospect of the green and clean environment, by ensuring
people to buy and supply green products to the world. There were factors such as eco-
packaging and work-environment mainly affects effective operations of their business. Thus,
these are certain factors that may affect the functioning and growth of the company in future
years (Solomon, 2017).
Now, factors need to be considered while making decisions for conversion the business into
reality. Firstly, we must find a niche i.e. market to perfectly base the new service or product.
This is essential to avoid any issues, in the future and gain competitive advantage. Secondly,
defining brand and customer in context to the products and evaluating demand for that
product. This is followed by selection of the appropriate vendors, deciding the name of
company. At last, setting up the payment method, promotion of products and giving
customers a reason to buy their product is all necessary. Besides, use of modern and
productive technology is significant to take the decision to convert an online business into a
reality (Khmara and Kronenberg, 2018).
Thereafter, certain key factors play a major role in influencing the success of the online
business of eBay, as a new business venture. These include strategic focus i.e. effective
leadership, management, and planning to undertake effective planning for the new business

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venture. People act as other major factor that will affect the process of initiation till the
implementation of the business idea (Lindgren and Münch, 2016).
People include personnel, staff, and aspects of learning and development. Third factor is
operations i.e. processes and work in eBay that will mainly affect the success of the business
venture. The remaining two factors consist of effective marketing of eBay products, through
establishing customer relations, sales, and responsiveness. The most vital factors amongst all
are finances i.e. arranging assets, facilities and other equipment. This is because to begin
with a new trade or online business, market capitalisation and financial positioning is to be
done, through sufficient finances (Mustafa, Pflugel and Philip, 2019).
Q2. Strengths and weaknesses of legal frameworks and funds for online
business
Legal frameworks for establishing a new business may include number of aspect which refer
to the rules rights, obligations for the companies, government, and citizens (vom Brocke, Zelt
and Schmiedel, 2016).
Registering a business name, federal tax requirements, state, and local tax requirements are
essential aspects. Obtaining the permission of business and license, and laws & regulations
and determining the legal structure for the business. However, there are certain established
legal frameworks such as consumer right framework, GDPR framework (Lindgren and
Münch, 2016).
Strengths and weaknesses of the Consumer rights framework and GDPR
Basis Consumer Rights
Framework
GDPR (General Data Protection
Regulation)
Strengths The framework is also
known as consumer rights
act 2015. It provides rights
to the consumers to buy
things, according to their
will. This act as one of the
major strengths (Citizens
advice, 2018).
It is a privacy compliance legal framework
which provides a structure for managing
personal data in context to the
organisations (Ratten, 2016).
It has one of the major strengths, that
through GDPR compliance, businesses
protect their data effectively (Aithal,

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Consumer rights framework
provides protection the
protection towards the
unfair selling practices to
the customers (Kuratko,
Morris and Schindehutte,
2015).
In addition, the consumer
protection framework
ensures the right to safety
against the goods and
services hazardous to
health, life and property
(Weber, 2016).
2017).
Moreover, it enhances the management of
the data within unit. This will ultimately
lead to the major factor of increasing the
loyalty of the customers and help in
building trust amongst them (Yeh, 2018).
Limitation One of the limitations is that
the consumer protection act
applies only to the goods. It
considers the gas,
electricity, and water if they
are put up for supply in a
limited quantity.
Another significant
limitation of this act or
framework is that it
incorporates only two
clauses regarding the supply
of goods. It does not impose
any strict liability or penalty
on the individuals who
supply such goods (Aithal,
One of the big drawbacks of GDPR is the
course or expenses to implement it. The
companies, such as eBay might need to
appoint a Data Protection Officer and need
to ensure that their products are secured.
Another major limitation is the huge
amount of fine that the companies need to
pay in the case of non-compliance to the
principles of GDPR.

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2017).
In context to eBay, it has been found that the company, eBay has been committed to the
protection and security of the data of the customers worldwide. Therefore, as per the stated
guidelines of GDPR, eBay safeguards the personal information to develop trust and value to
their customers. The company has highlighted the icons, which will support the privacy and
security maintenance of the personal information. eBay provides the aspect of an increased
transparency around different purposes stating the use of personal information (Omidyar,
2018).
Now, this section will now identify or consider the sources through which funding can be
done for the new online business. One can tap personal savings, credit card, and borrow
against your home, and taking a bank loan.
Bank loan is the common and widely used source of funding especially, in context to the set-
up of online business in small and medium-sized enterprises.
Personal investment is one of the major aspects that starting a business, an individual’s first
investor is himself, and therefore he/she can invest accordingly. Here, investment can be in
the form of cash, or collateral with the assets. This determines or proves to the investors, and
bankers that they have a long-term commitment to their project, and the person is willing to
take risks (Dibrova, 2015).
On the other hand, for starting up a new online business the company can also seek funds
from the government agencies. These provide financing that consist of the grants, subsidies,
and others depending on the availability. Besides, the company can opt for the ‘start-up
loans’ wherein loans are provided to the new businesses with less strict eligibility
requirements. Crowd funding can also act as an option in which the company or managers
can ask in a social group or friends to ask for making the contribution. There are some other
forms or kinds of sources of funding, and it also consists of ‘business incubators’, that
focuses on providing funds to the high-tech sectors (Bocken, 2015).
In context to the new online business plan of the company, eBay regarding ensuring the fair
trade to all of their customers, it can be stated that ‘venture capital’ acts as appropriate
method. As venture capitalists provides or assist in financing especially to the technology

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based businesses, and companies with the high growth potential. eBay is one technology-
driven company with the increasing growth in information technology (IT), and
communications that will provide major support in the implementation of new online
business idea.
Q3. Identification of three sectors in UK and role of HR policies
According to the above analysis of the online new business venture, I have decided to work
and conduct the fair trade in context to three sectors in UK. To provide the customers goods
and services at a fair value the online business venture catered three sectors i.e. retail,
healthcare, and education. These are the three sectors in which the online business venture
can be operated profitably. According to the present condition of the UK economy, these
three sectors were identified significant to the economy (Venkataraman, 2019).
For an example, education is one of the top three growing sectors of the UK economy, as a
big source of employment (Green, 2018). As it has been found that British universities in the
country contribute major i.e. more than 73 billion to the economy. Moreover, it benefits the
young generation or students living in the country, along with the employment to people.
Therefore, through this new venture the business can provide services and value to the
customers, in the form of better education, and lead to enhanced growth of the education
sector (Mandelblatt et al., 2017).
In context to the wholesale and retail the online business venture will focus on the
manufacturing of clothing and other items as per the demands of the consumers. As almost
35% of the jobs in UK, belong to this sector in the country, in sales and customers. Therefore,
this will facilitate the start-up of the online business venture, in the economy of UK with high
growth and success in the future years.
The third important sector for the effective operation of the online business venture can be
‘healthcare’ or medical department. There has been an increased demand of the healthcare
public service, private healthcare services need to be expanded. Therefore, to operate and
implement the online business venture and providing the basic care facilities to improve their
health condition can be an appropriate option. This will improve the functioning, and growth
of the health sector or healthcare organisations in the economy of UK (Green, 2018).

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The sector of education mainly studies the aspect of enhancing the literacy and critical
thinking of the individuals through the established institutions, training centres, schools and
so on. On the other hand, healthcare sector primarily deals with the study, treatment, and
prevention of any illness or disease of the individuals. Retail and wholesale is the sector that
consists of the wholesale, and retail business of any type of product. And here, retail may
include a range of products, or items delivering value to the customers. These include
grocery, drug, department, and convenient stores, which determines the trade of many items,
and other services. Therefore, it has been examined and analysed that all the three sectors
will provide different services to the customers, i.e. in terms of the goods or services
delivered to the customers and the related impact on the economy (Mandelblatt et al., 2017).
Now, discussing about the role of HR policies, it has been found that these contribute to the
effectiveness of the company in longer period. Some of the significant HR policies may
consist of compensation and benefits, health safety and security, diversity in the workplace
and others. Now, two of the HR policies i.e. health & safety, and diversity will be studied in
the contemporary organisations.
It is the duty of an HR manager or owners to ensure good health, safety, and security of the
clients, patients, workers or members of the organisation. a culture of safety is important to
be maintained in the workplace, and prevent any kind of injuries or accidents. A key aspect
of this policy, is to provide training and development that helps workers to be safe while
working in the organisation. Good health and safety of the workers will enable them to
perform at their best potential in the organisation. This requires organisational members and
employees to practice effective communication, and build strong relationships in the
organisation. Therefore, by integrating these practices, and policies the company can focus
and implement new strategies, and business plans (Zhong et al., 2017).
On the other hand, maintaining and embracing the key aspect of diversity and equality is
essential for the growth of the organisation. This is essential to prevent any discrimination
against any worker or staff to help them show commitment towards the organisational goals
and objectives. The aspect or policy of equality and diversity is about respecting the
background, and all other differences of the individuals working in the company. An
organisation with diversity amongst their workers will bring about competitive edge in the

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industry amongst the rival firms. Therefore, there is a great importance of the workforce
diversity and equality to be maintained in the organisation (Zhong et al., 2017).
Besides, diversity and equality in the workplace also promotes a sense of job-security, and
increase satisfaction. It also enables managers to initiate and execute effective work
strategies in the organisation. Thus, these aspects determine the effectiveness of the work
practices and human resources within organisation, leading to growth in future period. The
HR policy of the diversity and equality is beneficial from the perspective of both i.e.
organisation and employees. To the employees, the policy ensures the availability of equal
opportunities and fair treatment in the organisation. This leads to an increased motivation of
the employees to work towards the goal attainment, which ultimately benefits the
organisation as a whole. Additionally, there is a significant contribution of the diversity
policy to the promotion opportunities, and recruitment of employees in the organisation (Noe
et al., 2017).
Bringing up the rear discussion, now this section will reflect upon my understanding and
learning of the above mentioned concepts in organisations.I have understood that each sector
contribute a significant portion in the revenues or growth of the economy of the nation. As in
the above analysis, I found there was significant impact or influence of the education, and
healthcare sector on the economy of UK. The concept of opportunity cost, and choice
making were also studied during class lectures and sessions, that impacted functioning of
different sectors in the economy. Opportunity costs have been understood as the cost
incurred due to avoiding the benefit linked to the best alternative choices. Therefore, I
understood that it is important to understand the opportunity cost of various products and
services.
Work practices and growth must be ensured in all the sectors, leading to positive outcomes.
Besides, each sector ensures a steady growth of the income and revenues in the economy of
the nation. Therefore, I would work and implement the business idea keeping in mind the
relevance of operations into these sectors.
Moreover, I have realised that to initiate and implement any business idea or new
opportunity, it is important to strengthen the capacity to utilise the resources in the
organisation. Assuming the role of HR, I have understood that it is required to practice and
implement effective HR policy, to gain competitive advantage in the industry. HR policies

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such as diversity, compensation, and maintaining the health, and safety of the workers need
to be implemented to increase organisational effectiveness. These policies play a vital role in
assisting the managers facilitate achievement of goals, and employees to work efficiently and
effectively. Furthermore, I learned these concepts throughout the research on the new start-
up, or online new business venture for gaining success, and profits. Thus, I mentioned from
the above analysis, a reflection on the understanding on these concepts.

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