Cisco Systems Pest Analysis

INTRODUCTION

Cisco Systems is the worldwide leader in networking. Amazulu's phone system, being one of Cisco's products, brings together the phone, email, text, conferencing and video simply by connecting to the network. It makes work more efficient, does more with less and takes productivity to the next level. Surprisingly, such a wonderful product is still outside Singapore market. Presently, most of the companies are using the phone system, Response Point, which belongs to Microsoft System. This report attempts to analyze the potentials of this phone system, whether it is feasible to bring into Singapore market.

PEST (Political, Economic, Social and Technological) analysis is concerned with the key external environmental influences on a business. Identifying PEST influences is a useful way of summarising the external environment in which a business operates. However, it must be followed up by consideration of how a business should respond to these influences.

The following frameworks are used in analyzing the external environment of the market and the product itself. The external environment is made up of the mega environment and the task environment. The mega environment is the analysis of the macro environment; it includes political/legal, economic, socio cultural, technology and international factors. The task environment is specific outside elements with which an organisation interfaces in the course of conducting its business.

MEGA ENVIRONMENT:

Political factors

The People's Action Party ("PAP") has dominated Singapore's parliamentary democracy from 1963 general elections. The latest general elections held on 7 May 2011 marked the lowest result of 60.14% for PAP since independence. However, PAP still manages to win 81 out of 87 seats and sweeps into power. Under the PAP government, the country has succeeded in attracting foreign investment, upgrading the education and skills of local workers and boosting the economy to the point where it is one of the highest per-capita GDP in the world. It has since delivered a 41-fold jump in gross domestic product ("GDP"). More recent efforts to stimulate the economy include the opening of two integrated resorts, bringing Formula One races to the island and organising the first Youth Olympics in 2010 to bring the country's name to the world.

Singapore is one of the leading examples of countries that continue to reduce corporate income tax rates and introduce various tax incentives to attract and keep global investments. Effective tax rates as one of the lowest in the world and the general "business friendliness" of Singapore are the two important factors contributing to the economic growth and foreign investment.

PAP government has created an environment in which highly qualified and well paid bureaucrats oversee an economy that is friendly to business and offered a predictable legal and regulatory, because of a clean and corruption-free image. Thus, chance of the share-market scandal pressure and illegal share trading by insiders in Singapore are very rare. In addition, the mode of decision making is by consensus, and the leadership style is collective.

Economic factors

Singapore has a highly developed state capitalist mixed economy. Although the country strongly promotes free-market policies and practices, government intervention is also evident in macroeconomic management and major factors of production such as land, labour and capital resources. Government influences can also be felt from education, to transportation, to housing and to the media. Overall, it has an open business environment, relatively corruption-free and transparent and stable prices.

The economy depends heavily on exports, particularly in consumer electronics, information technology products, pharmaceuticals, and on a growing financial services sector. GDP grew a record 14.5 per cent in 2010. The economy grew by 8.3 per cent on a year-on year basis in the first quarter of 2011 and it is expected to grow by 5 to 7 per cent for the full year. Singapore has attracted major investments in pharmaceuticals and medical technology production and will continue efforts to establish Singapore as Southeast Asia's financial and high-tech hub.

Globally and regionally, the Singapore economy has demonstrated astounding resilience to financial crises such as the 1997 Asian Financial Crisis or the 2008 Global Financial Crisis. Singapore is also the only Asian country to have AAA credit ratings from all three major credit rating agencies - Standard & Poor's, Moody's and Fitch. According to the 2011 Index of Economic Freedom, Singapore is the 2nd freest economy in the world. Apart from strong business and regulatory policies, other factors such as the country's strategic geographic position, a vast natural seaport, a highly skilled workforce and a favourable tax regime, have created conducive business environment for companies and industries. A stable & sound economy increases the confidence of Cisco to bring in Amazulu's phone system to Singapore.

Social factors.

Singapore, like many other countries, is facing the aging population, which serves a problem as our workforce is shifting towards a population of greater age. The slowdown in growth of Singapore labour force is expected to grow to 55% of our resident workforce that are aged 40 years and above by Year 2015. With such a new concern, the government is introducing legislation requiring companies to offer re-employment to workers beyond the age of 62, effectively by 1 January 2012. This will allow older workers to work longer and have sufficient amount of savings for old age. Companies have to adapt to the change of the re-employment policy and benefit from the financial grant available under the legislation.

It is a common assumption that older workers will be more resistant to change, especially technological change, than younger workers. Though such resistance may have been a factor during the initial wave of technological changes, most companies may still be willing to invest into the product because of the attractive financial grant which will not only help the company to cut costs but also increase the productivity and motivation of the workers. Amazulu's phone system's user friendly feature will certainly help older workers keep abreast with technology and increase their staff morale which in turn makes work more efficient and effective.

Technological factors

Singapore's information communication