M-Pesa is a mobile-phone money transfer service that is offered by Vodafone through a telecommunication company known as Safaricom. The M-Pesa service provides its customers with services such as cash withdrawals, cash depositing, paying for goods and service (Lipa na M-Pesa) and cash transfers using their mobile phones. The service began in Kenya and expanded to Tanzania, Afghanistan, South Africa, and India. M-Pesa is a service that can expand to all developed countries. A PESTEL analysis will shed light on the strategic expansion into the foreign market.
The political stability of any country can affect how business is done. Developed countries are politically stable thus enabling businesses to thrive. The introduction of M-Pesa services in a developed nation such as the United States will be successful as the country is stable. The type of governance also affects the ability to do business in a country. For instance, the United States has two main form of governance; the democratic or republican governance (Autio, & Fu, 2015). The democratic and republican policies will influence factors such as taxes and government spending that ultimately affects the economy. A government that will be willing to adopt a greater level of government spending will stimulate the economy thus making the country healthy for business.
Economic factors will also affect any business venture as it related to the economy. Subsequently, economic factors will also have an effect on the internal operation of any business. High interest rates will influence the entry of M-Pesa services into any developed nations as the company may be hindered from taking out loans to boost operations. Similarly, low-interest rates will provide M-Pesa service providers with a platform to seek loan service in case the need arises (Cavusgil, & Rose, 2014). Moreover, an economic recession rate can also affect the purchasing attitude of customers thus affecting the sales of any business. A developed nation such as the United States recovered from the 2008 recession and thus will provide an ideal business platform for M-Pesa services.
Developed nations also have favorable social factors that will have a positive impact on any business entering into its market. For instance, the United States has a population that is willing to try new products and services especially if it renders immediate services (Brouthers, 2013). The success of M-Pesa in other countries will draw the interest of customers from the developed nations. Developed nations also have high populations that will guarantee a wide market exposure for the M-Pesa service. For instance, the United States has a large population that will provide the providers of M-Pesa services with a ready market for the service.
The technological landscape in developed nations is incomparable to developing nations as it is advanced. The landscape will provide the providers of M-Pesa with an ideal platform to do business and grow beyond their current feat. The providers of M-Pesa will use the available technologies to advance the service. The providers will also use the technologies for finding new ways of distributing the service thus reaching a wider market (Bravo-Biosca, & Menon, 2016). The strong technological landscape will also provide the providers with a platform to engage in intensive research and test so as to find ways to enhance their business.
Environmental factors address issues such as the scarcity or availability of raw materials, ethical and sustainable ways of doing business and the carbon footprints standards of the county. M-Pesa will not have any environmental issues to consider as its operations are technology based and involve the manipulation of specific software that eventually guarantees the provision of the numerous M-Pesa services (Turró, & Peris-Ortiz, 2014).
M-Pesa providers have the advantage of being the sole providers of the services. The providers will thus launch the service but adhere to the rules and regulations of the country. Developed nations such as the United States have laws that regulate foreign businesses and thus can influence its operations. For instance, the existence of the Telecommunication Act (1996) gives the federal communication commission the power to refuse to licenses and telecommunication service provider include its cellular and satellite communication of more than 25% of its capital stock is controlled by foreign investors. M-Pesa providers will have to find ways to overcome such hurdles and ensure a smooth entry into foreign markets with such strict regulations (Cavusgil, & Rose, 2014). The United States also has strict merger and acquisition procedures that aim to protect its local business and prevent crushing existing players in the same industry.
M-Pesa service is a product that is bound to change the way of making monetary
transactions across all business sectors.
Developed nations e.g. the United States are an ideal market for an
expansion initiative into a foreign market.
Developed nations have stable political environments that will ensure a
stable environment to do business. Moreover, the stable economy of developed
nations will guarantee high financial reruns for the business. The M-Pesa service providers will also need
to address the sociocultural, technological, ecological and legal factors that
will provide a hurdle or opportunity for growth for the business venture.
Autio, E., & Fu, K. (2015). Economic and political institutions and entry into formal and informal entrepreneurship. Asia Pacific Journal of Management, 32(1), 67-94
Bravo-Biosca, A., & Menon, C. (2016). What drives the dynamics of business growth? Economic Policy, 31(88), 703-742
Brouthers, K. D. (2013). Institutional, cultural influences on entry mode choice and performance. Journal of International Business Studies, 44(1), 14-22
Cavusgil, S. T., & Rose, E. L. (2014). International business. Pearson Australia
Cavusgil, S. T., Rammal, H. G., & Rose, E. L. (2014). International business. Pearson Australia
Turró, A., Urbano, D., & Peris-Ortiz, M. (2014). Culture and innovation: The moderating effect of cultural values on corporate entrepreneurship. Technological Forecasting and Social Change, 88, 360-369