Xero Pestle Analysis

APPLIED CASE REPORT

On

Xero

Mounika Chinthalapally

ID: 13473510

Table of Contents

1. Introduction                                                                                                3
2. Company Overview                                                                                   3  
3. Discussion                                                                                                  4

1. Vision/Mission Statement                                                                   4
2. Major Competitors                                                                              4
3. PESTLE Analysis                                                                               4    

1. Political                                                                                    5
2. Economical                                                                              5
3. Social                                                                                       5
4. Technological                                                                          6        
5. Legal                                                                                        6        
6. Environmental                                                                         7

1. Conclusion                                                                                                 7
2. References                                                                                                 7              

1. Introduction

This report is an applied case report which is developed to analyze the international strategic management issue. This report is an applied work which is used to formulate strategy to evaluate and analysis of the environment. In strategic management, there are several strategic tools that help the organizations to formulate the business strategies. One of those external environmental analysis tools is PESTLE. In this report, we are using the Pestle analytical tool to understand the competitive environment of its industry in which it is operating. Any organization will use the business strategic tool called PESTLE analysis when they are expanding their businesses internationally. Here we are using the Pestle analysis on a growing company called Xero which is expanding its market internationally.

1. Company Overview

Xero is an accounting software company in New Zealand which develops cloud based accounting software for small and medium sized businesses. It also expanded its businesses in Australia, UK and USA. Xero is the leading accounting software provider in the New Zealand and it also increased his customers by expanding its market to more than 138,000 customers. Forbes ranked Xero has the Number1 in World’s Most Innovative Growth Companies for both 2014 and 2015(www.Xero.com, 2015). The company also awarded with Hi-Tech Company of the year at New Zealand Hi-Tech Awards. Xero is available to use all over the world which runs in the cloud. Anyone can have access to do your finances from any device with an internet connection at any time. It is the largest emerging global leader of online accounting software which provides the business owners with real-time visibility to their financial position that works simple, smart and secure. It develops the products which are based on Software as a service (SaaS) model and sold by subscription. It allows unlimited users to access at the same time with no extra costs. Xero’s international growth has attracted the significant funding from venture capital investors. It has increased its revenue growth of 77% in 2015(www.Xero.com).

Xero’s goal is to become the long term global leader in small business software industry and achieve the vision of millions of small businesses growing on Xero.

1. DISCUSSION

1. Xero vision/mission statement

Xero business model is purely with SaaS. Replacing traditional software with cloud software including licensing, hosting and backup operations, consulting and training, find a specialist, customer support. Xero made his Partnership with accountants, bookkeepers and developers.

Xero vision statement is: “The global leader of small business accounting” The vision statement describes the future of the company that is to be the world’s leader for small businesses in accounting.

Mission Statement: “Grow prosperity by connecting people, money and resources with beautifully designed software”.

1. Major Competitors

In New Zealand, Its main competitor was MYOB which is an Australian based company. In US, its biggest competitor was QuickBooks; its 90% of the market of small businesses are using this accounting software (Wikipedia, 2016). There are many other accounting software companies which are developing with SaaS accounting since 2010 and many other companies using the traditional accounting software is also launching with SaaS versions.

1. PESTLE ANALYSIS

Firms when expanding their business internationally they need to understand the factors that are considerable to develop their business. PESTLE is an analytical tool which is used to identify the external factors of a firm’s external environment, particularly related to international markets. PESTLE is expanded as political, economic, sociocultural, technological, environmental, legal contexts in which a firm operates. .These factors can determine the direction and purpose of the international business operations. This pestle analysis will helps the managers to gain a better understanding of the opportunities and threats they are going to face. Understanding Pestle before entering into the new market is essential. The fact is that a strategy which is similar in home environment will not give any assurance that it will also work out in other countries.