BUSM3125 – Strategic Management Assignment Help
Executive Summary
The main purpose of this report was to analyze and examine the current business strategy of Pearson Australia. The contents of this report consist of five different sections. The paper begins with a brief background and history of Pearson Australia, external factors and macro-environment analysis, sector/competitive analysis, resources and competences identification and competitive advantage analysis, and current strategy discussion. At the end of this paper mind mapping is introduced which represents an overall summary of the report and will also be attached with the report to help visualise the ideas and ease interpretation processes.
In the first section, background and history of Pearson Australia will be narrated in strategic sense. The second section is about the external factors macro-economic of the company here, the analysis will examine the influence of these factors, and the strength, weakness, opportunities and threats, which the company can use to develop proper strategies in order to get the core competence and sustainable competitive advantage. The strategic framework that will be used to determine influences of macro-economic aspects toward the organisation called PESTEL (which is an abbreviation of Political, Economic, Social, Technological, Environmental and Legal aspects). Next, identification of key factors/forces/stakeholders will also be performed to specify possible opportunities and threats to Pearson Australia. The overall direction of the company in the future with their current strategy will also be forecasted. Fourthly, Porter’s Five Forces analytical framework will be used to reason sector and competition matters of Pearson Australia. The five forces comprise of the threat of entry, the threat of substitutes, the power of buyers, the power of suppliers and competitive rivalry. By cracking these forces, company’s competence can be understood. The next section covers identification of Pearson Australia’s resources and competences plus their competitive advantage discussion. In this analysis, VRIN framework which used the Resource-based view (RBV) of strategic management to examine company’s internal characteristics; Value, Rarity, Inimitability and Non-substitutability, will be the tool to estimate sustainable competitive advantage of the organisation. The last part deals with a discussion over the current business strategy of Pearson Australia, whether it is efficient or not with some reasoning to support such statement.
1.0 Background and History of Pearson Australia
Pearson is a company that prides itself of learning. As an organization they aim to educate everyone and provide the right material needed in order for people to learn independent of their age and location. Pearson has textbooks, courses and resources available either through print, online or also through multilingual packages distributed to students and teachers. The organization is a world leader in the learning portfolio providing innovative textbooks, online testing, software solutions and integrated services. Pearson also has a wider family which includes consumer publishing through companies such as Penguin and Dorling Kindersley and also provides information through the Financial Times. As a company Pearson has been the world leader in educational publishing with 150 years of experience in the latest expertise in technology. They aim to create interactive online learning and support. Pearson also provides education and assessment services in over 65 countries with products such as MyLabs, involving their best digital homework and assessment package which aims to change the way students and teachers are learnt and teach. Edexcel is another product which is UK’s largest body providing academic and vocational qualifications and assessments. Pearson’s aim is to provide products and services worldwide that help to develop learning and ultimately develop people.
Pearson started out over a hundred and fifty years ago in 1950, through an innovative and simplistic goal of becoming the “world’s leading learning company” Pearson (2013). Pearson has achieved their objective and continues to be the benchmark in this competitive industry. Its continual expansion due to its “expertise in technology” Pearson Education Australia (2013), high quality and efficient use of resources, high level of goods and services, diversity and flexibility as allowed Pearson to effectively achieve their goal. One hundred and fifty years later Pearson overall strategy hasn’t differed from its original statement. “We have a simple mission: to help people make more of their lives through learning. We’re the world’s leading learning company, but we believe that companies, like people, are Always Learning. That’s because there’s always room for a bit more understanding” Pearson (2013). Evidently understanding the perennial polemic of change within the worldwide economy, Pearson has efficiently segmented markets and countries in order to capture the worldwide economy.
Pearson is currently undertaking several initiatives which consist of the Pearson Think Tank, Blue Skies, and Digital Education Advisory Group. The Pearson Think Tank aims to connect the depth and breadth of expertise within the company and partners to provide a positive, clear and respected voice on the knowledge of key educational issues. Through a range of research Pearson offers and evidence-based thinking and high quality publications allow the company to provide valuable insight to both policymakers and practitioners. The Blue Skies initiative aims at collecting a bold range of new ideas for the future of higher education with leading experts who set out their vision of the future. The Digital Education Advisory Group consists of leading education and IT of Pearson to provide the Australian Government with advice and knowledge on the steps to take in transforming the teaching and learning through technology.
2.0 Analysis of the macro-environment of Pearson Australia
2.1 Understanding of the purpose of this analysis
The macro environment consists of the factors, which exist in the external environment of the specific company (Yuksel 2012). These external factors can have an influence over the management or operation of a company in both the short and long term. Moreover, in most occasions, the specific company cannot take control over the external factors (Yuksel 2012). To be more specific, the external factors can be divided into various categories including demographic, political, economic, social, technical, legal and environmental (Yuksel 2012).
The critical analysis and understanding of the external factors and macro environment is the basis of the strategic management of specific companies and organizations. Only with an understanding of the influence of these factors consisting of strengths, weaknesses, opportunities and threats, can the company develop the proper strategies, in an effort to obtain the core competence and sustainable competitive advantage (Yuksel 2012). In most successful companies, the senior managers will spend a large amount of time and energy analysing the macro environment in both domestic and global markets (Yuksel 2012).
In the case of Pearson Australia, the analysis of the macro environment is the basis to assess the current strategy and provide further recommendations for the future strategic management of Pearson Australia. It is expected that the macro environment analysis can contribute to the further growth or expansion of the company globally, with the increased productivity and profitability.
2.2 Identification of Key Stakeholders
Stakeholders can be defined as the individuals or organisations that can impact or be impacted by the operation or management of the specific company. Since the concept of stakeholder was put forward, it has been widely used in various fields, such as strategic management, corporate governance and corporate social responsibility (Boivie et al 2011). In this case, the importance of a stakeholder for strategic management should be highlighted. It is of vital significance to have a better understanding of the needs, changes or influence of the stakeholders in strategic management.
In a broader sense, the stakeholders include suppliers, labor unions, governmental regulatory agencies, governmental legislative bodies, government tax-collecting agencies, industry trade groups, professional associations, NGOs, employees, customers, related communities, public at large, as well as the media (Boivie et al 2011). To be more specific, there are two categories of stakeholders, primary and secondary stakeholders. Primary stakeholders are those, which can have a direct impact over the management of a company, while the influence is indirect in the case of secondary stakeholders (Boivie et al 2011). As a result, in the analysis of macro environment, external stakeholders will be analysed.
Secondary or external stakeholders include the general public, communities, government, media, and competitors. The strategic management of Pearson Australia will be greatly influenced by these stakeholders (Boivie et al 2011). In the following PESTEL analysis, the roles of secondary stakeholders will be highlighted in more detail.
2.3 Adoption of the PESTEL Model
The PESTLE model has been widely used in businesses, in order to have a better understanding of the macro environment of the companies. This model attempts to critically analyse the impacts of the factors, in terms of political, economic, social, technical, legal and environmental (Boivie et al 2011). In this case, the influence of the demographic factors will also be identified, along with the adoption of the PESTEL model.
Demographic
Demographic factors relate to the statistics about potential consumers and the target customers in terms of age, sex, race, religion, as well as education background. By obtaining more information about the potential consumers, the company can develop the proper products or services to satisfy the needs of customers (Eden 2011). In the case of Pearson Australia, the population and education should be highlighted among all the demographic factors.
The increased population will create a larger target market for Pearson Australia. In addition, due to the fact that most people have realised the importance of learning and education, gender and age differences will not influence the market scale of Pearson Australia (Eden 2011). According to the Statistics of the Australian Bureau of Statistics (ABS), by the end of 31st December 2012, the population had increased by 1.8% comparing to the same time in 2011, owing to the natural increase and overseas migration (See figure 1, 2). Both figures have shown the increase of the entire population. In addition, figure 2 explains that the increase of young people in the society can offer a larger market for the education industry, such as Pearson Australia. The Australian Bureau of Statistics has published statistics about the education condition in Australia, in terms of higher education, vocational education and training, and education among Aboriginal and Torres Strait Islander people. Figure 3 shows the number of people who obtain higher education has grown by 25% from 2005 to 2010 (see figure 3). Figure 4 indicates that from 2006 to 2010, the student who takes vocational courses or VET has grown among both males and females (see figure 4). Figure 5 illustrates that more and more students from the Aboriginal and Torres Strait Islander people are involved in both public and private education and training (see figure 5).
Figure 1: December key figures in 2012 in Commonwealth
Source: ABS, 2013, retrieved 11 August 2013, <http://www.abs.gov.au/ausstats/[email protected]/mf/3101.0>
Figure 2: The population pyramids of Australia
Source: ABS, 2013, retrieved 11 August 2013, <http://www.abs.gov.au/ausstats/[email protected]/mf/3101.0>
Figure 3: Higher education
Source: ABS, 2013, retrieved 11 August 2013, <http://www.abs.gov.au/ausstats/[email protected]/Lookup/by%20Subject/1301.0~2012~Main%20Features~Higher%20education~107>
Figure 4: Vocational education and training (VET)
Source: ABS, 2013, retrieved 11 August 2013, http://www.abs.gov.au/ausstats/[email protected]/Lookup/by%20Subject/1301.0~2012~Main%20Features~Vocational%20education%20and%20training%20(VET)~106
Figure 5: Students from the Aboriginal and Torres Strait Islander people
Source: ABS, 2013, retrieved 11 August 2013, <http://www.abs.gov.au/ausstats/[email protected]/Lookup/by%20Subject/1301.0~2012~Main%20Features~Education,%20learning%20and%20skills~249>
It can be concluded that the demographic environment is beneficial for the further expansion of Pearson in Australia within the education industry. Furthermore, Pearson Australia can diversify the contents of publications, especially for different population groups.
Political
In the political environment, political climate and political stability or risk can have an impact over the management of Pearson Australia to a large degree. In Australia, there is a high level of political stability in both the Commonwealth and different states (Eden 2011). The low political risks can encourage Pearson Australia to make more investment in the Australian market. It can be predicted that the political environment will keep stable in the near future.
Economic
There is a wide range of factors in the economic environment, which will affect the performance of Pearson Australia, such as GDP per capita, economic growth, taxation rate, unemployment rate, inflation rate, consumer and investor confidence, balance of payments and future trends (Jacobs et al 2013). Moreover, the purchasing power and confidence of customers will impact the sales or growth of companies. In this case, the factors of GDP per capita, incomes, and unemployment rate will be highlighted in the analysis (Jacobs et al 2013).
Despite the negative influence of the global financial crisis, the GDP of Australia has increased by 2.6% in 2013, comparing to 2012 (see figure 6). Figure 7 shows that even though company’s gross operating profits have decreased, the average weekly earnings of full-time adults have been improved in 2013 (see figure 7). The increase of average income and GDP can encourage a higher demand for the products or services offered by Pearson Australia, which is a great opportunity (Jacobs et al 2013).
Figure 6: GDP of Australia
Source: ABS, 2013, retrieved August 11 2013, <http://www.abs.gov.au/AUSSTATS/[email protected]/mf/1345.0#Incomes>
Figure 7: Average income in Australia
Source: ABS, 2013, retrieved August 11 2013, <http://www.abs.gov.au/AUSSTATS/[email protected]/mf/1345.0#Incomes>
In addition, the Consumer Price Index and inflation rate can be used to assess the economic environment in certain markets (Jacobs et al 2013). The CPI in 2013 has increased by 2.4%, which indicates that the price for employees has increased (See figure 8). The increase of CPI will lead to more costs for Pearson Australia, which will reduce the profitability (Jacobs et al 2013). This condition will have a negative influence over the investment of the company, as a threat in the macro environment.
Figure 8: Consumer Price Index in 2013
Source: ABS, 2013, retrieved 11 August 2013, <http://www.abs.gov.au/ausstats/[email protected]/mf/6401.0>
Social
Social changes or tendencies will have an impact on the investment of companies and the purchasing behaviors of the customers in the target market. In current society in Australia the two main social phenomena’s will be influential. First of all, since the beginning of the 21st century, the entire population in Australia has been aging, which means that companies in Australia will have to commit to make more investment in the pension costs for the retired employees (Bowman 2009). The increase of costs will have a negative influence over the increase of the profitability of Pearson Australia. This can be regarded as a threat for the growth of Pearson Australia. Secondly, there has been a positive tendency in the society as more and more people from diverse backgrounds, age groups, gender, incomes as well as regions, have highlighted the importance of education for their career development and life-long happiness (Bowman 2009). It is widely held that the education can contribute to the success in their career life. In addition, it is argued that with the economic downturn, obtaining more and higher education or training can be a good choice. This social change can increase the number of potential consumers in the target market in different regions or states in Australia (Bowman 2009). Moreover, the Commonwealth government has made every effort to support the education development among the Aboriginal and Torres Strait Islander people, which expand the market for Pearson Australia.
Technological
The innovation of techniques will encourage the company to develop new products or services. In the case of Pearson Australia, the company has benefited from the technical innovation and improvement (Jung 2010). For example, due to the development of the Internet, Pearson Australia created the platforms for the E-learning among the potential customers. In addition, the online version of Financial Times has been put in the market, which enhances the influence of Pearson Australia, with the improved brand image and organisational reputation. Moreover, due to the improvement of the techniques in terms of smart devices, such as mobile phones and tablets, more applications have been developed for the convenience of potential customers. Nowadays, owing to the Internet techniques, consumers can get trained or educated anytime anywhere they want (Jung 2010). It can be predicted that technological improvement will contribute to the further growth of Pearson Australia (Jung 2010). However, it is inevitable that the infringement of the intellectual property will also be common, due to the technical improvement, which exposes Pearson Australia to more risks.
Environmental
Due to the special nature or features of the education industry, the climate change or other natural disasters will not have a great impact over the growth of Pearson Australia (Dewes et al 2013). In addition, owing to the technical innovation, the tendency of being paperless will contribute to the environmental protection in Australia, with the reservation of the forest resources (Dewes et al 2013).
Legal
In the Commonwealth, the laws or regulations in the following perspectives will impact the management of Pearson Australia, including the minimum wage laws, environmental protection laws, worker safety laws, union laws, copyright and patent laws, anti-monopoly laws, as well as municipal licenses and taxation law (Pesonen 2012). Some of the laws will bring more pressure or burdens for the investment of Pearson Australia. For example, Pearson Australia will have to take on more responsibility for its employees and provide a guarantee for the products and services, offered to the potential customers in the Australian market (Pesonen 2012). Moreover, it is regulated that Pearson Australia should not take part in unfair trading. However, in the meanwhile, Pearson Australia can get access to more official protection from the legal system. For instance, with the increased maturity of the intellectual property protection laws, if there is an infringement of the trademarks, copyrights, or business secret, Pearson Australia can seek for remedy from related courts (Pesonen 2012). The legal risks in terms of IP protection can be greatly reduced.
