Background of G8 Education Limited
Any organization which wants to ensure strategic success will have to ensure that it takes into consideration all the essential factors in order to ensure that the business is ready for the complex nature and dynamic components of the business environment (Hill, Jones & Schilling, 2014). For this purpose, it often becomes very important for the business to undertake a strategic analysis based on which they can make plans for the future (Annual Reports – G8 Education., 2018). The primary purpose of the given report is to undertake a strategic analysis for the company G8 Education Limited for its operations in Australia. The company is involved in education and care services and has a considerably large market share. The report will be analyzing the macro environment using tools like PESTLE and SWOT analysis, which will then be followed by the analysis of the industry using the Porters Five Forces.
The G8 Education Limited is the largest child care and educations operations in Australia which is listed under the ASX which is the Australian Stock Exchange. The company is listed under the name (ASX: GEM). The mission of the company is very simple and is primarily based on providing high quality and developmental educational care services to the children in Australia. The company aims to achieve this growth and quality through the four pillars of sustainability and growth (Annual Reports – G8 Education., 2018). The company was found in the year 2006 and was developed by a team of professionals who wanted to make their firm one of the biggest companies in Australia. The company had analyzed the governmental regulations and thus the concept of the company came as a response to that. The company floated in the year 2007 with the name Early Learning Services Limited. In the year 2010, the company merged with the Pace Child care and there the company became G8 Educations Limited (Home – G8 Education., 2018).
The company is set apart from other companies in the similar industry with its community efforts in investment in educational resources along with qualified educators. Although the operations of the company are going well, the company currently lost a whooping amount of $458 million after it issued another cut to the earning forecast of the organization.
The PESTLE Analysis can be described as a useful tool which can be used by the organizations to analyze their external environment and be able to easily ensure that all factors are considered effectively in order to formulate strategies in the long run (Team, 2013). The PESTLE Analysis is an acronym for the Political, Economic, Socio-cultural, Technological, Legal and Environment.
PESTLE Analysis
Political factors
The Australian markets are considered to be one of the most crucial markets in the globe because of various aspects which include a growing economy, a stable business and political environment, well-educated and skilled multi lingual workforce and a competitive cost base. The presence of these factors makes the country very competitive and suitable for innovation and technology.
Economic factors
The capital growth in Australia has been comparatively good and hence, the income of the residents have been considerably high (Vogel & Güttel, 2013). The cities in Australia have been growing considerably and as the population grows, the income also remains high and the demand for the consumer goods and
lifestyle products also increases. The country is open to various pure investment strategies which enable the businesses to flock towards the country. The cost of living in Perth, Brisbane, Adelaide and Melbourne are considerably less but the services are good which makes the county good in terms of quality of life. The economy of Australia is very stable in nature and has a high GDP.
Social factors
The social trends can have a critical impact on the demand and supply of the place and the population of Australia mostly comprises of the working population, the middle class and the upper class (Wheelen et al., 2017). As the number of expatriates in the country have been increasing, the family population of the country has increased and thereby a business dealing in education and care would perform considerably well due to working cycle of the parents and the help they need with their children.
Technological factors
The technologies have been paving way for new products and newer processes. The technology used can not only bring benefit to the organization but also the customers. The technology has also lead to an advancement in the educational industry with digital learning and online communication with the parents of the students has become a common method (Home – G8 Education., 2018).
Environmental factors:
The country is very strict with respect to the Environmental factors as well and the country has been supporting the environmental friendly products as it creates business opportunities and affects business and demand patterns in general as well (Zott & Amit, 2013). The water quality available in Australia is a concern and needs to be well considered when beginning a business with respect to a service like day care and education.
Legal factors
Political Factors
The legal environment is surrounded by various policies and legislatives which make the business conduct quite complex in nature (Stead & Stead, 2013). The child care and education business in Australia, is bound by various rules and legislatives which can make the business very difficult and thus G8 needs to ensure that it abides by all these rules in order to ensure successful operations.
The Opportunities identified from the given Pestle Analysis has been given as follows:
Opportunities
Educating the staff about the use of technology.
As the environmental friendly goods have become increasingly popular, the organization can engage in the use of environmental friendly goods and materials with respect to its day care business.
Threats
As the industry is a booming one in Australia, the competition faced by the business is very high. Hence, other companies with prior experience may want to enter the business making it difficult for the firm to survive for long (Williamson et al., 2013).
The Porters Five Forces Analysis can be described as a useful tool which can be used to analyze the internal environment of the organization. The Porters Five forces analysis of the education and care industry in Australia has been given as follows:
Competitive Rivalry
The rivalry in the industry is very high due to the presence of different competitors. Although there are various local companies also present, the larger companies operate on a higher level (Slack, 2015). These companies possess a competitive advantage in administration and advertising. Companies like Earlville have been giving a tough competition to G8.
Threat of Substitute Products
The substitute institutes of the G8 are the churches, nonprofit organizations and the employer sponsored child care and education facilities. Personal babysitters, private tutors and stay at home parents are some other substitutes, for the kind of service G8 provides.
Threat of New Entrants
The threat of new entrants in the industry is very high as although the legislative requirements are strict, the cost of entering industry is quite low. Moreover, the state has been supportive of education and kindergarten programs which hurts enrollment in larger enterprises like G8.
The customers in case of the education and child care sectors have considerably higher power. This is because the customers have various options within the industry, which are reliable and can be accessed easily. The customers generally get attracted to the company providing cheaper sources.
Bargaining Power of Suppliers
The suppliers have a high bargaining power as well because they tend to provide a greater value without any priced reduction (Rothaermel, 2015). Although there are various substitutes present, the price cannot be put to value and hence, as the customers want the best for their child, they would not like to bargain on the price much.
The strengths of G8 are as follows:
- Quality services with low substitute chances
The weakness is as follows:
- Increased private competition (Lasserre, 2017).
- Increased prices
Conclusion
Therefore, from the given analysis of the external environment of the G8 Education using the Pestle Analysis it can be stated that the organization has been facing complex external factors. Technology, legislative rules and the political factors are certain components which need to be adequately considered in order to ensure that the business faces less difficulties to operate the company. Moreover, when the industrial environment was analyzed, using the Porters Five Forces, it could be examined that the company faces the threat from competition with respect to the private companies and hence, it needs to consider that its services match their standards.
References
Annual Reports – G8 Education. (2018). Retrieved from https://g8education.edu.au/investor-information/annual-reports/
Hill, C.W., Jones, G.R. & Schilling, M.A. (2014). Strategic management: theory: an integrated approach. Cengage Learning.
Home – G8 Education. (2018). Retrieved from https://g8education.edu.au/
Hubbard, G., Rice, J. & Galvin, P. (2014). Strategic management. Pearson Australia.
Lasserre, P. (2017). Global strategic management. Palgrave.
Rothaermel, F.T. (2015). Strategic management. McGraw-Hill Education.
Slack, N. (2015). Operations strategy. John Wiley & Sons, Ltd.
Stead, J.G. & Stead, W.E. (2013). Sustainable strategic management. ME Sharpe.
Team, F.M.E. (2013). PESTLE Analysis. Strategy Skills. Free management eBooks, p.15.
Vogel, R. & Güttel, W.H. (2013). The dynamic capability view in strategic management: A bibliometric review. International Journal of Management Reviews, 15(4), pp.426-446.
Wheelen, T.L., Hunger, J.D., Hoffman, A.N. & Bamford, C.E. (2017). Strategic management and business policy. Pearson.
Williamson, D., Cooke, P., Jenkins, W. & Moreton, K.M. (2013). Strategic management and business analysis. Routledge.
Zott, C. & Amit, R. (2013). The business model: A theoretically anchored robust construct for strategic analysis. Strategic Organization, 11(4), pp.403-411.
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