A Report Of Radius Payment Solutions Pestle Analysis?

Executive summary

This is a report of Radius Payment Solutions PESTLE analysis. The report discovered some political, environmental, legal, economics, political and social factors which affects the organization either positively or negatively.

Introduction

Radius Payment Solutions refers to a fleet and payment Service company located in Cheshire. In Manchester, the company runs a technology center, founded in the 2016 march. Today, the company is operating in more than 29 countries. Some of its area of operation includes Malaysia and Singapore. It started its variable cost fuel card in 2016 September with a primary goal of controlling fleet fuel costs. By 2016 October, the company acquired Trackyou, a telematics company whose headquarters were in Wrexham. The acquisition increased the number of traced vehicles by 20,000. Besides, RadiusRadius offers tailored services and products for vehicle fleets globally, which includes smartphone applications, telematics, own-brand fuel, market-leading web, etc. Radius is also the largest re-seller of Oil company fuel cards in Europe. This paper aims to identify the likely future changes in the United Kingdom economic, social, political, technological, legal environment, which might affect Radius, identifying possible effects to the company and suggesting ways to improve future profitability concerning the changes.

Methodology

The study will adopt both qualitative and quantitative designs to gather data (mixed methods). Studies suggest that this design provides researchers with a rigorous approach to approaching the research questions (Dörnyei, 2007). Moreover, it incorporates data, various types of research designs, terminology, and procedures in achieving the objective of the study. Therefore, the study will examine secondary sources to collect data.

PESTEL Analysis

PESTEL is an analysis tool that analyses market factors such as social, political, environmental, legal, technological political, and economic factors in the business environment. The tool is utilized by organizations to determine its performance and the external facts which impact the performance and activities of the organization. The analysis is essential for organizations regardless of their location, size as well as the extent of its operation (Needle, 2010).

Additionally, PESTEL analysis has very important in the growth of businesses. PESTLE helps owners and shareholders to identify crucial changes in the technological, political, legal, economic environments. Besides, it allows companies to undertake market research thus enabling the organization to gain substantial market share and expand their businesses. Besides, the analysis helps in identifying threats and opportunities- by gathering data, businesses identify risks and opportunities resulting from external factors hence enabling the company to address the most critical opportunities and taking advantage of them.

Economic factors

According to Needle (2010), economic factors are the economy's performance determinant, which directly impacts a company and usually have long term impacts. They include; Interest rate, exchange rate, UK inflation rate, unemployment levels, etc. in the UK, there will be an increased rate of inflation, which will a direct effect on the potential opportunities. Foremost, the UK inflation rate and those of the international markets are critical in the UK company's operations. Breinlich (2017), suggests that due to the unstable economic situation in the UK, there are massive expectation inflations where inflation is expected to reach 2.73% by 2020 from the current 2.0% in 2019. The high inflation in the UK will be caused by business uncertainty in the company. This high inflation impacts business confidence partly and results in lower capital investment spending levels.

Social Factors

They are factors dealing with the markets' social environment. They include; demographics, population, cultural trends, etc. Several social factors affect the company. These factors are fundamental marketers, especially when targeting specific customers. Also, it reveals more about a national workforce, and their willingness to perform their duties under certain conditions. In recent years, the immigration rate is increasing, which implies the need for more houses, therefore creating a market for organizations. For instance, the immigrating level to the UK is expected to further rise drastically while emigration to decrease. Kerr (2013), argues that immigration affects the organization as well as the government. However, with the increasing unemployment level in the country, the business may suffer from low purchase power. Therefore, in the future, the company will be both positive and negatively affected. For instance, immigration creates jobs, hence increasing the company’s market; however, the company may experience decreased purchase due to increased unemployment rates in the UK.

Technological Factors

These are technical innovation factors which impact how business is done. This includes automation of warehouse processes, smartphone wallet application, tag and trace technology, artificial intelligence, etc. Based on Boddy (2008), technological factors carries an impact on organizations globally. Due to the increased automation, the company in the future may achieve increased profitability once the company position itself to take advantage of the opportunities associated with the advancement in technological.

Legal Factors

Some legislations impact the business environment in specific states. They include; gender gap, responsible marketing, Natasha law, employment laws, etc. Due to its globalization, business laws are crucial for the organization. Recent reports have indicated that the UK as come up with business-friendly employment law, which has significantly impacted the company ability to recruit talented employees, hence having a competitive advantage in the market (Howcroft et al., 2019). This is an indication that in the future, the company will be able to ire employees globally without many restrictions; therefore, increasing productivity and efficiency.

Political Factors

This refers to the degree of government intervention to a specific industry. Some of the factors include; increase in the income tax threshold, political uncertainty, and UK decision to leave the EU, etc. Political certainty are significant to company operation. The UK political environment is not stable due to the country’s decision to exit the European Unions- popularly known as ‘BREXIT.’ Due to this political uncertainty and the ability of an organization to invest remains low (Dhingra et al., 2016). This uncertainty is expected to have the UK’s utility stocks and banking under threat, thereby, limiting the company's investments and product diversification, therefore, affecting the company’s profitability.

Environmental Factors

These are factors that relate to the environment. Environmental factors have become crucial due to the increasing pollution, scarcity of raw materials, climate change, as well as carbon emission. With the increased greenhouse effects and global warming, some states come up with policies to protect their environment, which could restrict various investments (Beder, 2013). These would impact the business operation of Radius, whose activities include the sale of petroleum products hence requiring the company to comply with the environmental requirements. Certification of the company to various environmental legislation around the world is time-consuming and expensive, thus affecting the profitability of the company. Therefore, from environmental factors, In future, the company fuel investments may be cut, decreasing the organization profitability.

Discussion

Due to the economic factors, the company might face very many effects. Hall (2009), argues that inflation impacts the organization's competitiveness. For countries with a high rate of increase compared to the other states, companies export less price-competitive products, which creates lower profits. On the other hand, reduced export results to reduced job creation and countries achieve imbalance in terms of trade. Moreover, export reduction decreases national income and accelerates unemployment. Therefore Radius being globalized with the increased inflation rate in the UK can result in a negative impact on the organization.

The higher the price of a good, the lower the demand. Therefore, with the increased rates and inflations, there will be less demand for the company products, affecting its profitability. Dehejia et al., (2012), suggest that increased interest rates impact client’s ability to purchase, as per the law of Demand vs. Law of Supply. Customers have loans; therefore, high-interest rates in an economy results in less money owned by possible clients. Hence this reduces the ability to buy products and services; therefore, organizations suffering from decreased sales. Besides, with the high-interest rates in the UK and other places in the world, the organization sales are severely reduced. On exchange rate, a devaluation of the currency makes exports cheap, and the organization, which is exporting product benefits, though imports become expensive. Unfortunately, appreciation decreases the competitiveness of exporting organizations. Therefore with the issue of BREXIT, the UK currency is depreciating, making export cheaper, which is an advantage though affected by the import of materials (Campos & Coricelli, 2015). Besides, the high unemployment levels affect the ability of citizens to purchase the firms’ goods, therefore negatively affecting the profit of the state.

Additionally, from the social perspective, scholars have revealed that over the years, there has been increased immigration, which has resulted in a positive impact on the UK economy. As per the neoclassical economics theory, rapid international immigration results in geographical differences in the supply and demand for labor. The resulting discrepancies cause works from less developed countries to migrate to developed countries (Meade, 2013). The immigration creates a market to radius products and among other benefits, avails professional skills that positively impact the competitiveness of the organization. Immigrants are talented, therefore, provide companies with talents hence enabling them to make increased profits. The UK has a growing and improved health care. This will drastically influence the company's employees, consumers, as well as stakeholders' purchasing power. For instance, consumers, if in good health, would otherwise use the money supposed to be used in health issues to purchase the company’s products and services.

Competitive Advantage theory was a theory formulated by Michael Porter, which suggests that Competitive advantage results when a business acquires or develops an attribute that allows it to outperform its competitors (Smit, 2010). Taking advantage of technological advantage is an opportunity that results in the expansion of the company and its market share — for instance, automation of warehouse processes. Furthermore, Innovations Theory of Profits suggests that innovation increased the company's productivity, has enabled the company to safe space, reduced the number of employees, more efficient material flow, and created more reliable operations, which has dramatically reduced operational costs (Fang et al., 2013). Therefore, from the application of technology, the company will achieve a competitive advantage in maximizing profits.

Looking at both the legal and environmental factors, all companies require compliance. Legal compliance creates an increased cost to an organization. On the other hand, compliance theory establishes a link between those who are subject to the power and those who hold power. According to the Market-Based View theory, both external and industry factors are the significant determinants of firm performance. This means that compliance is part of the business. Therefore, the next step is to achieve a competitive advantage from the existing factors. As per the earlier mentioned competing for advantage theory, competitive advantage occurs when an organization develops attributes that allow it to outperform its competitors. Therefore, compliance can be a significant step to achieve profitability in the company. Moreover, legislations ordering companies to pay higher wages, a company is negatively affected economically.

Lastly, looking at the political aspect, the Modern theory of shifting and incidence, which shows the link between the taxation burden and elasticity of demand and supply, suggests that there is increased cost to the buyer. Demand elasticity for taxed good, the weight is borne by the seller while the buyer experience the borne at the lower end. On the other hand, according to the law of Demand vs. Law of Supply, when prices increase, demand lowers. Therefore, the increased taxation rates might impact customer ability to purchase the company’s product.

Conclusion

PESTEL is an analysis tool that analyses market factors such as social, political, environmental, legal, technological Political, and economic factors in the business environment. The tool is utilized by organizations to determine its performance and the external facts which impact the performance and activities of the organization. The analysis is essential for organizations regardless of their location, size as well as the extent of its operation. Analyzing the organization environment enables the organization to achieve a competitive advantage in the market. For RadiusRadius, various economic facts such as legal, economic, environmental, technological factors are affecting the organization, which results in effects in its activities.

Recommendations

1. The company should comply will all laws specified to its operations to reduce the cost of lawsuits
2. The company should advance its technology to achieve benefits resulting from technological advancement
3. The company should also diversify its products to maximize profits during the high inflation times
4. To cater to the political factors, the company should employ experts to predict political issues directly linked to the organization.

References

• Beder, S., 2013. Environmental principles and policies: an interdisciplinary introduction. Routledge.
• Breinlich, H., Leromain, E., Novy, D. and Sampson, T., 2017. The Brexit vote, inflation and UK living standards. Centre for Economic Performance (CEP) Brexit Analysis, (11).
• Cha, Y. and Weeden, K.A., 2014. Overwork and the slow convergence in the gender gap in wages. American Sociological Review, 79(3), pp.457-484.
• Charter, M., 2017. Greener marketing: A responsible approach to business. Routledge.
• Dhingra, S., Ottaviano, G.I., Sampson, T. and Reenen, J.V., 2016. The consequences of Brexit for UK trade and living standards.
• Dörnyei, Z., 2007. Research methods in applied linguistics: Quantitative, qualitative, and mixed methodologies (pp. 95-123). Oxford: Oxford University Press.
• Howcroft, D., Dundon, T. and Inversi, C., 2019. Fragmented Demands: Platform and Gig-Working in the UK. In Zero Hours and On-call Work in Anglo-Saxon Countries (pp. 215-232). Springer, Singapore.
• Kerr, W.R., 2013. US high-skilled immigration, innovation, and entrepreneurship: Empirical approaches and evidence (No. w19377). National Bureau of Economic Research.
• Meade, J.E., 2013. A Neo-Classical Theory of Economic Growth (Routledge Revivals). Routledge.
• Needle, D. (2010). Business in context: An introduction to business and its environment. Cengage Learning EMEA.
• Smit, A.J., 2010. The competitive advantage of nations: is Porter’s Diamond Framework a new theory that explains the international competitiveness of countries?. Southern African Business Review, 14(1).