4.4 Empirical research findings
4.4.6. Results: Empirical analysis
The PESTLE analysis framework studies, monitors and analyses the macro- environmental factors that play a pivotal role in an organisation’s overall performance (Guru, 2020), i.e., its focus is external to the organisation. Table 4.3 summarises the results from the semi-structured interviews about each of the PESTLE elements.
Table 4.3: PESTLE elements identified in response analysis
P E S T L E
Political stability Economic outlook Crime under
control Fixed line stability Trust in justice system
Strict environmental requirements Actions of political
parties Metical strength
outlook Housing Mobile network
stability Ease of
repatriating funds FRELIMO ousted
as ruling party Inflation outlook Reliable transport routes and operators
Internet/Wi-Fi
coverage Accounting requirements Political instability
in neighbouring countries
Access to business/personal financing
Healthcare
available Regional IT
support Imports and exports Government
legislation Corruption Local skilled
workers Operating
licenses Operation license
requirements Ease of doing
business Electricity
network Working permits
Employment
quotas Skilled labour
shortage Terrorism and
violence Labour law
Repatriating
foreign funds Lack of reliable infrastructure
Availability of short-term finance
Environmental requirements Local ownership
content Terrorism Sufficient clean
water Foreign exchange
regulation Lack of FDI Quality of
schooling available Global commodity
demand
Source: Own research As indicated above, the following summative aspects came to light:
• The political elements centred on factors about government policies and regulations that can impact the economy. In addition to this, considering that the country is still rebuilding after 20 years of civil war, there were concerns regarding regional and political instability and areas such instability may impact.
• The economic elements focussed on the factors that could impact the country’s financial performance and investment attractiveness. The topics covered could influence an organisation’s decision to invest (or not) in the country based on the risk-and-reward model. Answers received on the issues provided a better understanding of the local expectations relating to the country’s current and future economic prospects.
• The social elements relate to the potential wellness of the organisation, its employees, and a society that could be very much removed from where they originated. Expats will require social assurances that basic living, health, education and safety concerns are addressed before deciding to join the organisation in its decisions to invest or expand into targeted territories.
• The technology elements refer to the availability and stability of enablers that could have a constructive or adverse impact on the organisation’s operating environment, markets and industry. With modern technological innovations, any lacking enablers could be provided but will be subject to a cost versus benefit exercise.
• While the legal elements are part of society as a whole, the focus here is on the operating environment in which the organisation finds itself. As Mozambique is a foreign country, the local legislation and the level of “ownerism” have to be determined and understood.
• The inclusion of the environmental elements is not always applicable to all the industries in Mozambique and may have a higher impact on some sectors than on others. All the participants referred to Mozambique’s climate as a seasonally-driven cycle with more risk of flooding in the country’s central regions. It would also seem as if local environmental legislation is lacking.
Each of the above elements plays a role in potential investment or expansion
Since each potential investor has a unique set of objectives and risk appetite, the model should allow for such, and therefore the ability to assign bespoke weightings (or levels of importance) to the various factors. Thus, the weightings given to the PESTLE analysis are discretionary, and variable inputs into the model may change as the targeted country, territory and even organisation change.
Table 4.4: PESTLE category weightings
P 30%
E 35%
S 15%
T 5%
L 10%
E 5%
100%
Source: Own research For illustrative purposes, Table 4.4 indicates that the biggest influencers in the Mozambican macro-environment will be driven by the decisions impacting the political (30%) and economic (35%) elements. These (uncontrollable) elements represent 65%
of the total identified potential risk, and as such, these two areas would require in- depth scenario planning and risk-mitigating strategies.
Guru (2020) states that the PESTLE analysis is an excellent tool for monitoring and analysing market situations when targeting a foreign market and notes that organisations should combine it with a SWOT analysis to get a thorough picture of the specific business and market scenario.
Internally-focussed analysis
Whereas the PESTLE analysis typically focuses on external factors over which the organisation has minimal influence, the SWOT analysis focuses somewhat more on internal aspects over which the organisation may have more control (Phadermrod et al., 2016). While strengths and weaknesses are specific internal business elements
that either support or obstruct organisations from achieving their objectives, opportunities and threats could result from the PESTLE analysis results’ conclusions (Phadermrod et al., 2016). Therefore, an organisation should align its business operations and strategic decisions to its strengths and proactively identify and mitigate its weaknesses before they result in negative consequences.
During the semi-structured interviews, participants ranked seven possible strengths and weaknesses in order of importance to their business success in Mozambique. The summative results are indicated in Table 4.5.
Table 4.5: Pertinent strengths and weaknesses
Strengths required Weakness to guard against 1. Leadership team and management style Availability of required skills 2. Critical skills relevant to industry Retention of expats and skilled staff
3. Market share Advertising and brand awareness
4. Key relationships with major suppliers Language barriers
5. Footprint in Mozambique Management style
6. Advertising and marketing Organisation funding 7. Global size of the organisation Supplier relationships
Source: Own research In terms of strengths, leadership was highlighted as the most vital requirement to have to be successful in Mozambique. Considering that most experienced leaders were expatriates, it puts additional responsibility on them to transfer their skills to local talent and deliver positive business performance results. Due to the limited pool of skills available (see also the weaknesses below), critical skills relevant to the industry were also highlighted as an essential strength. As mentioned above, the ability of existing skilled labour to transfer knowledge and skills to new employees was essential for contingency and succession planning. On the other side of the spectrum, it was found that the organisation’s good marketing and global size were not considered as essential strengths within this context. It was more important to have key relationships with suppliers and identify the most reliant suppliers to ensure you never run out of products.
In terms of weaknesses, feedback ranked the unavailability of skilled labour and the retention of skilled staff as the most concerning – supporting feedback received in terms of strengths as above. Sub-standard housing, health and educational infrastructure that resulted in most expatriates not bringing their families to Mozambique (which resulted in many returning home prematurely, thereby leaving the organisations exposed) was also listed as a weakness. This resulted (among others) that the transfer of skills and knowledge to local employees halted.
4.4.7. Results: Artefact creation