An outline of ‘PESTLE’

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Table of Contents

PESTLE tool
Analysis of the industry
The attractiveness of the industry
Capabilities providing QVC with a competitive edge

PESTLE tool

‘PESTLE’ is a vital tool for analysing the environmental factors which will determine the progress of an organisation. The letter ‘P’ denotes political factors. Such factors include economic blocks such as the European Union (EU), government regulations and laws that govern the operation of firms. Political factors seem to have great ramifications on the progress of any organisation since they provide the legal framework within which organisations operate.

The letter ‘E’ represents economic factors. Economic factors also have implications on the progress of an organisation. They include taxation, budgetary regulations and economic models. These factors affect an organisation’s cash inflows and outflows.

The third letter ‘S’ denotes social factors. Social factors include demographic trends, the cultural set up of the society and lifestyle.

The fourth letter ‘T’ denotes technological factors. Technology has numerous impacts on the progress and fortunes of organisations. Technology has resulted in efficient organisations, hence, increasing output and productivity of the workforce.

‘L’ denotes the legal aspects that pertain to the organisation. The legal aspects determine the activities that an organisation can undertake. The legal framework may include the company act which guides the operation of all entities.

The last letter ‘E’ denotes environmental factors. This will entail the happenings in the national and global scene.

Analysis of the industry

QVC operates in the retail sector which entails purchasing goods from the manufacturers and selling the merchandise to clientele after charging a certain profit margin. Political factors have impacted on these organisations as it attempted to break into new lucrative markets in the EU.

There are certain regulations that the entity had to follow. This has resulted in minimal revenues from these nations whose potential is great. The most significant external force which has affected this organisation is technological advancement. The advancements in this sector have transformed QVC’s operations massively.

The entity can now film more advertisements for the products it is offering. Additionally, the entity can also include many details of how to use the products it is selling. The advancement in technology has provided many opportunities for this organisation. QVC chooses the channels that have the most listeners to air its promotions.

Moreover, QVC has an opportunity to curtail operational costs by choosing the most economical channels. The social trends have also altered the fortunes of this organisation. At first, there was a slow acceptance of QVC’s services. However, the masses have turned away from convectional shopping to the form provided by QVC.

QVC had identified a unique niche which transformed retailing by allowing clients make orders for products from their homes. Environmental factors have also affected this organisation massively.

Globalisation is a trend in the corporate world, which is encouraging organisations to seek other lucrative markets outside their borders. As such, QVC has ventured into the European market. This market provides substantial returns. The legal environment in America is relaxed allowing organisations to exercise their creativity in attracting and maintaining clientele.

The attractiveness of the industry

QVC operates in the retail sector. The industry is attractive since it has massive turnover as denoted by QVC’s incomes. The industry has benefited significantly from advancements in the communication sector. The communication sector seems to be an imperative ally to this segment of the retailing sector, which is reliant on the media outlets in winning over customers.

It also relies massively on the creativity of the involved firms. Creativity is utilised in the development of programmes and promotions that will entice and inform the masses. The returns made by firms in the sector have attracted many investors. However, this sector is capital intensive and may discourage some investors. Irrespective of the capital requirements, the industry is providing higher returns than most investments.

Capabilities providing QVC with a competitive edge

QVC derives its competitive edge from various factors such as the investments it has made. The entity has partnered with various channels which has enabled it market its products. An example of that partnership was with the Oprah Winfrey show which helped market QVC’s products to the massive followers of the show.

Additionally, the QVC also acquired some firms which would complement its operations. Some of the firms include Dominique Corporation which sold jewellery. Additionally, it also acquired Cable network shopping channel. Cable network shopping channel was one of its rivals in the sector.

Acquisition of such entities enabled the organisation solidify its market segment by increasing its access to most clients. QVC also entered into agreements with most cable network firms in the industry. This enabled the entity to advertise to a large pool of potential clients.

Sustainable competitive advantage

The above capabilities have enabled the entity build a competitive advantage. The most imperative aspect of this organisation is marketing or air time to inform clients of the products that QVC is offering. Despite the competitive advantage, QVC should pursue strategic agreements that will enable it access more clients.

Developing innovative capabilities

The work force is the most critical resource in an entity. Employees are also responsible for innovations in entities. To develop innovative capabilities, QVC should motivate its employees and establish a policy which encourages creativity and innovation. Such a policy should propose substantial investments in research and retraining.

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