Business Organisations and Environments: PwC Expansion in New Zealand

Desklib offers solved assignments and past papers to help students succeed.

Business Organisations and Environments in a Global
Context
1

Executive summary
The report has the discussion on the background of the selected company that is PwC. The
information of the country, New Zealand where this organisation will expand has been provided.
The important information of the country such as its culture, economy, and major industries has
been discussed. An analysis of New Zealand’s analysis was provided by considering few factors.
Influence provided by factors on business of PWC was analysed. Competitive environment of
New Zealand by assessing rivals, new entrants, suppliers and buyers were found in context to
PWC. The scheme of supply of demand has been described that should be considered by the firm
while making expansion in New Zealand.
2

Table of Contents
Introduction......................................................................................................................................4
Background information on (PwC).................................................................................................4
Background information on the business environment in (New Zealand)......................................5
Analysis of the business scenario....................................................................................................7
Conclusion.....................................................................................................................................14
Reference list.................................................................................................................................15
3

Introduction
The global environment of business can be described as the environment of the countries where
the business has operations. The business environment affects the decision-making of the firm
and has been classified into internal and external environment (Hamilton and Webster, 2018). A
business in order to operate in different nations should have acquaintance with the culture as well
as language of the host country. The report provided in this task will have discussion on the
business expansion of PwC or PricewaterhouseCoopers International Ltd in New Zealand. The
analytic tools such as demand and supply scheme as well as assessment of external
environmental factors will be provided for the business expansion of PWC in the allocated
country. Through these frameworks, the environment of the business in the selected country can
be assessed. The selected firm for the purpose of business expansion will use the foreign direct
investment method. This method will allow the firm to invest in New Zealand and have control
over the functions of the business even in foreign nation.
4

Background information on (PwC)
PricewaterhouseCoopers provides professional services that follow the legal structure of limited
liability partnership. This company has been formed in 1998 and is headquartered in London,
United Kingdom. It serves the countries worldwide. At present, Robert Moritz is the chairperson
of the firm. The annual revenue generated by this organisation has been 41.3 billion dollars as
per the annual report of 2018 (pwc.com, 2019). It employs 250,930 workers all over the globe.
The services provided by the company included tax advisory, assurance service, data analytics,
management consulting, financial advisory among others. This company has operations in 158
countries including North America, European countries, Asia, Caribbean, Middle, Asia, Central
America, Africa, and others. It has the market share of 11.8% as per the report of 2016
(pwc.com, 2019). The profit earned by this organisation has been 935 million dollars in the year
2018. It has value of 99.46 dollars in the year 2019. Some of the major competitors of this firm
are Accenture PLC, BDO International Limited Capgemini SE, Bain and Company, Inc, KPMG
International, Deloitte Touche Limited Ernst and Young Global Ltd, Mercer International Inc,
Marsh and McLennan Companies, Inc, McKinsey and Company, Inc, and The Boston
Consulting Group among others.
PwC is a multinational firm that is one of the auditors such as Deloitte, KPMG, and EY
(accountingverse.com, 2019). It comes next in rank after Deloitte as reported in the year 2016
(Dakers, 2016). Among the 250,930 employees, 28% workforce work in Asia and another 28%
work in North America and Caribbean. In the Western Europe, there are 30% of the total
employees working for the firm (pwc.com, 2019). Out of the 41.3 billion dollars of revenue,
17.06 billion has been generated by Assurance practice while 13.78 billion has been earned from
advisory services. The firm earns revenue of 10.45 billion through the tax advisory services. As
per the report of 2018, it has been found that PwC ranks fifth in the list of largest private
companies of America (forbes.com, 2018). The strategy of the company is turning the vision into
reality by imagining possibilities of enhancing services with performing it in practical way for
effective delivery of the services (strategyand.pwc.com, 2019). The purpose of the business is to
develop trust among the people and solve significant issues. The values hold by the company is;
5

act with integrity, care, work together make a difference, and reconceptualise the possible
(pwc.com, 2019).
This firm has been formed by merging of Coopers and Lyband with Price Waterhouse. Brand
Finance has ranked this firm among the valuable brands of the world in the year 2017
(brandfinance.com, 2019). It has gained recognition for its Corporate Social Responsibility in the
year 2016. The operations of the company are diversified as The European countries account for
34% of the total operations and American countries for 42% (Hood, 2016). The revenue growth
has been 15% from Middle East and 12% from African regions (pwc.com, 2019).
6

Background information on the business environment in (New Zealand)
Wellington is the capital city of New Zealand. The largest city of this country is Auckland. The
population of this country is 4,977,700 as estimated in the year 2019. The important sectors of
economy are horticulture, agriculture, mining, forestry, and fishing. The neighbouring countries
are some parts of Australia, submerged continent of Zealandia, United states, Fiji, Australia,
France, Tonga, Samoa, and Kiribati. As per the report of 2018, the Gross Domestic Product
based upon purchasing power parity of the country is 199 billion New Zealand dollars (imf.org,
2019). This sovereign island nation is located in the southwestern part of Pacific Ocean. The
service industry followed by industrial, agriculture as well as international tourism add to the
revenue of the country. Concerning the government and politics of the country, it is a
constitutional monarchy with parliamentary democracy (gg.govt.nz, 2019). This country is
identified as a stable and well-governed nation. The parliament of the country holds the
legislative power and comprises of House of Representatives and Queen Elizabeth the Second
(parliament.nz, 2019). The governor general appoints the ministers and the Cabinet forms policy
and is responsible for taking major decisions (teara.govt.nz, 2019).
New Zealand ranks at 16 for its advanced market economy. The native people adapt Polynesian
culture. The British and immigrants of Ireland also influence the Maori culture. Christianity has
developed or modified the culture of the native country. The culture so different countries such
as America, Australia, Asia, and others also influence the culture of New Zealand (rnz.co.nz,
2017). The culture of the country can be identified in the literature, art and media of the region.
Due to the resurgence of Maori culture, there has been increased in the weaving and carving
practices among the Maori artists.
This country ranks in the 53rd position for its largest economy as per the nominal GDP that is 206
billion dollars (imf.org, 2018). The horticulture in the year 2007 has amounted to 959 million
dollars. Forestry industry adds to 4% of the national GDP. The country mining industry has
increased the revenue by 1.5 billion dollars in the year 2006. In the year 2017, this industry has
contributed to around 1.3% of the economy. In the 2007, the fishing industry has earned the
country around 226 million dollars. 90% of the fish are exported in different countries by the
year 2000 (Sawe, 2018).
7

Figure 1: Population of New Zealand
(Source: worldometers.info, 2019)
The population of the country has been 4,798,570 as per the repost of 2019 (worldometers.info,
2019). The unemployment rate of the country as reported in the year 2019 is 4.3%
(tradingeconomics.com, 2019). Its inflation rate has been 1.7% (tradingeconomics.com, 2019).
New Zealand’s interest rate is 1.5% in the same year (tradingeconomics.com, 2019). The
financial system of New Zealand is dominated by the sector of banking. The banking system of
the country consists of lending mostly to the private sector of non-financial companies
(rbnz.govt.nz, 2019).
8

Analysis of the business scenario
Elements Factors Influence
Political  Labour party under
leadership of Prime
Minister Jacinda
Ardern is not stable
(bbc.com, 2019).
However, they have
promised to bring
stability.
 There can be
additional 5 to 10
percent of tariff on
imported goods from
some countries and 1.4
percent on others
(data.worldbank.org,
2019).
 Import customs in
New Zealand requires
for a special
permission if imported
goods exceeds the
amount of 1000 dollars
(austrade.gov.au,
2019).
Unstable political condition in
future may happen to be risky
for PWC’s business. This
factor can influence the
business negatively. If the
party’s promise to bring
stability is considered, then
this might influence positively
on PWC. Additional tariff can
increase operational costs due
to extra charges on imported
goods by PWC. Therefore, the
influence of extra expense
may perhaps become negative.
Additional tariff on goods will
become a burden for
employees and this factor can
prove to be a negative one.
Economical  Inflation rate of New
Zealand is presently at
1.7 percent
High ascend in inflation rate
from 1.7 to 2 % can cause
major economical imbalance,
9

(tradingeconomics.co
m, 2019).
 The inflation rate rose
to 2 percent at present
quarter (imf.org,
2019).
 Interest rate is at 1.5
percent
(tradingeconomics.co
m, 2019).
 Unemployment rate
has gone to 4.3 percent
(data.worldbank.org,
2019).
which can become a burden to
PWC’s business in future and
it will influence business
negatively. Interest rate has
stooped down dramatically in
New Zealand, which gives
PWC opportunities to take
loans at lower level.
Therefore, a positive influence
can occur on business. Due to
high unemployment rate,
economic stability can be
harmed. Therefore, PWC’s
business will be influenced
negatively due to economic
imbalance.
Social  Median for hourly
earnings have reached
25 dollars, a direct 2
percent increase
(stats.govt.nz, 2019).
 New Zealand has 99
percent adult literacy
rate (oecd.org, 2019).
 Union groups have
been campaigning for
higher wages to
labours.
PWC may have to give more
wages to employees and this
additional cost can be difficult
to bear. Demands of union
groups can be difficult to
satisfy. These two factors can
bring negative influence to
this organisation. Skilled
employees can be found for
PWC due to high literacy rate
and hence, this is a positive
influence.
Technological  Technology in New
Zealand has given
Additional competition from
rivals of PWC is making
10

power to rival
companies like
Accenture, KPMG.
 Jacinda Arden wants to
change their egalitarian
culture into fast
moving one by
introducing technology
at each sector (Roy,
2018).
business difficult for this
company by using
technologies. Therefore, extra
competitive environment is
due to this factor, which
signifies negative influence
on business. Commitment of
jacinda Arden to make New
Zealand ahead in technology
can act as a positive influence
to PWC. This is because they
might have much technical
support from the government
itself.
Environmental  Urban growth has
hampered versatile
land and biodiversity is
in danger.
 Higher level of
greenhouse gas in
ecosystem is present
(mfe.govt.nz, 2019).
 New Zealand
government has strictly
implied rules upon
usage of hazardous
substances by
implementing agro
environmental policies
(content.ebscohost.co
m, 2019).
Damage to biodiversity and
higher level of greenhouse gas
emission is becoming major
issue on New Zealand.
Therefore, operations of
business are restricted. This
restriction will be imposed
upon PWC and the company
might not be able to operate in
previous manner. These
factors might have negative
influence on this firm.
Government of New Zealand
has strictly banned in usage of
hazardous materials and if
PWC can follow their
instruction, then their business
11

will be conducted in an ethical
approach. This factor can
change to positive influence if
PWC follows rules.
Legal  “Employment
Relations Amendment
Act 2018” states that
employees will have to
be given rest, meal
breaks and unfair
dismissal of employees
are banned
(employment.govt.nz,
2019).
 “Health and Safety at
work act 2015”
instructs that workers
should be given
protection and they
cannot be forced to
work in unsafe
environment
(worksafe.govt.nz,
2019).
PWC will face trouble in legal
ways if they do not follow
rules of employment act. If
employees are dismissed
unfairly and obstruction
comes from taking rest, then
legal charges could be
pressed. PWC cannot make
workers work in perilous
environment. If PWC break
rules, then New Zealand
government can press charge.
Influence on PWC of these
legal factors might be
negative. These influences can
turn out to be positive if PWC
manages to follow laws of
employment and safety.
Table 1: PESTLE analysis on NEW ZEALAND
(Source: Created by the learner)
Porter’s five forces
Rival’s threat (High)
12