PEST analysis is a strategic tool used to analyse external factors affecting the business and stands for political, economical, social and technological factors (Lancaster et al, 2002).
The main political factors affecting Vodafone include EU Roaming Regulation that aims to decrease charges for mobile phone usages abroad by 70% (Preissl et al, 2009) and increasing level of consumer rights within Europe, and decisions made by European Union Regulatory Framework for the communications sector. Moreover, any government intervention through legislation or otherwise in the markets Vodafone operates can be considered as political factors.
Economical factors also affect Vodafone main of which are the growth of GDP and the level of inflation rate within markets where the company operates. Furthermore, global economic issues like the global financial crisis of 2007-2010 are also economic factors affecting Vodafone. Generally any external economic changes affecting Vodafone can be classified as external economic factors.
There is a range of social factors as well that affect Vodafone. For instance, changing work patterns that are becoming very popular make people work from home increasingly relying in communication technologies. Also, there are issues like people going ‘green’ and ageing population in developed countries that are going to affect Vodafone directly or indirectly.
The impact of technological factors on Vodafone is without any doubt due to the nature of the telecommunications industry. Specifically, a technological innovation in communications and emergence of alternative means of communication such as online chatting, and Yahoo! Messenger are going to affect Vodafone strategy in a way that the company is left with a choice of either to form strategic alliances with above companies or to commit to considerable amount of research and development in order to introduce innovative products and services to the market.