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Flipkart PESTEL Analysis

Info: 914 words (4 pages) PESTEL Example
Published: 2nd Nov 2020

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According to Chaudhany (2016), GOI (The Government of India) is currently trying to boost the economy of the rural areas by promoting online businesses in these regions. GOI's plan may see new regulations in the e-commerce industry, which will influence Flipkart's operations. However, given that India elects leaders every five years, considerable uncertainty on Flipkart's interaction with the GOI exists because, as Bazzi & Clemens (2013) note, some leaders may be unfriendly to investors, which will negatively impact the company's operations. Furthermore, in 2012, the GOI opened up the retail sector to the entry of multi-brand MNCs (Patibandla, 2014) to promote FDI (Financial-Direct-Investment), among other logistics that could improve India's e-commerce supply chain. However, allowing foreign retailers such as Amazon into the Indian markets has resulted in intense competition for Flipkart. Finally, Miahra (2017) affirms that Flipkart must abide by rules such as the new GST bill that limits Flipkart from getting pricing benefits from sellers that are situated in countries with lower tax rates (Garg, 2014).


Indians' rapidly growing economy assures investors such as Flipkart of continued markets. Furthermore, the liberalisation of the Indian economy to allow international investors in various industries including retail will contribute to economic growth. Furthermore, the government requires that foreign companies in India should sell or use specific percentage goods (for retailers) and resources (for manufacturers) respectively that are locally sourced (Patibandla, 2014). Such a strategy is useful to ensure sustainable economic growth. Furthermore, Kumar (2017) states that the number of online consumers is rising daily and there are expectations that approximately hundred million people will have gone digital by 2018; this will facilitate the growth of Flipkart.


According to Rath & Samal (2015), most of the Indian population is rural, which stands at about sixty-nine percent and, while the urban population contributes to sixty percent of the total GDP. Rath & Samal (2015) expect that within the next 15 years, the urban population will contribute to almost seventy-five percent of the GDP. This trend demonstrates the importance of the urban population to organisations. However, with the current GOI interventions to develop rural areas, these rural populations will be important to businesses such Flipkart in the future. Currently, Flipkart is struggling with its logistics, which, understandably, are concentrated in the urban areas. Nonetheless, as the importance of rural regions, which carry most of the India populations grow, Flipkart will need to expand its logistics.


According to Padhy & Sampat (2017), Flipkart has implemented data analytics systems for efficient business performance. Information systems in the company integrate the information about market opportunities and predict sales that the company is likely to make. This strategy enables the company to take advantage of technological advancements such as big data for competitive advantage. Furthermore, by 2019, approximately eight hundred million people will be using smartphones, and a larger percentage will be able to access e-payment platforms for an easier purchase of online products (Kumar, 2017).


Despite the fact that Flipkart is an online retailer, its operations are subject to environmental factors. Rising concerns by both governments and consumers about sustainable business and low carbon emissions is a major issue (Marron & Toder, 2014). Governments promote sustainable business practices through rules and regulations. Some of the most popular rules pertain to carbon emissions and general environmental regulations (Marron & Toder, 2014). In some cases, these rules introduce fines or taxes, to organisations, which lower profitability margins for businesses.


Chaudhany (2016) asserts that there are legal factors that affect operations of Flipkart. In July 2015, Westland books accused Flipkart of selling "Scion of Ishvaku", yet Westlands alone was given the rights to sell the book by Amazon. This conflict demonstrates the need for Flipkart to be more aware of property rights such as licencing and trademarks. Furthermore, the recent Zomato breach resulted in the theft of consumer data, which raises concerns about the ability of online organisations to protect consumer data (Kumar, 2017). As online business continues to grow, governments and corporations alike develop regulations. Some of these rules may complicate business practices or raise operation costs, which can influence profitability margins.

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