External Environment And Political Factors Information Technology Essay

“Political factors is refers to government policy such as the degree of intervention in the economy. It’s like what goods and services a government want to provide. Political decisions can impact on many vital areas for business such as the education of the workforce, the health of the nation and the quality of the infrastructure of the economy such as the road and rail system” (Oxford University Press, 2007). Basically it meant the intervention of the government such as policies and regulations that will affect the economy.

As for Maxis Communication there was a government intervention that had helped the company. “The Malaysia Broadband plan that is the National Broadband Plan(NBP) was launch in 2004 via the minister of Energy, Water and Communication and Malaysian Communication and Multimedia communication. This strategy is for the government to invest in broadband network connectivity and services for key regional organizations in order to stimulate critical demand for broadband services. Infrastructure and service provision is to establish an open market in which industry operators can creatively meet the growing demand for broadband connectivity in a variety of ways that include fixed, wireless and satellite approaches. In September 2006 leading mobile operator, Maxis Communications Berhad, launched Maxis Wireless Broadband, a 3.5G (HSDPA) mobile service providing households and business customers with wireless broadband connection for both information and telephony services via a single wireless modem terminal. The service has proven popular with yearend subscriptions in 2007 expected to total nearly 100 000 subscriber” (ICT regulation toolkit, 2010). Imagine the infrastructure and service provision as a part of the pyramid building that allows the building to achieve greater heights with its stability. These things will encourage people to invest in Maxis as well, as it is booming at that time.

Public awareness.

Public awareness of the product is important and crucial as it will increase demands. The government had played its role in this via NBP. “Given the high costs of deployment of broadband networks, especially in rural and remote areas, the government needs to assist development by increasing public awareness and stimulating demand. Approaches were taken such as lowering the cost of end-user terminals through import duty and other tax reductions and possibly subsidizing broadband equipment in schools.” Tax reduction will reduce cost that will encourage consumer to buy the product. “Educating citizens about the benefits of broadband while further developing Internet skills.” This is important to let the future prospects to learn how important is the product and service. After acknowledgement of the service, is to know how it can benefit the user. “Providing a legal framework for e-commerce and other application. Ensuring that consumers have enough information on providers and pricing options as well as available technology” (ICT regulation toolkit, 2010).

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3G licenses.

“Back in 2002, Telecoms giant Telekom Malaysia and top cellular operator Maxis Communications have been awarded Malaysia’s 3G mobile phone spectrum licences, the communications regulator announced. The government has decided to award only two third-generation telecommunications licences, one each to Telekom Malaysia Bhd and to Maxis Communications Bhd”(AFP,2002) This gives Maxis communication an upper hand in competing with other service provider such as Celcom and Digi. By being the first one to be obtain that licence, they, Maxis can fulfil the demands of the market for 3G phone that is emerging.

Economic factors.

“An economic factor refers interest rates, taxation changes, economic growth, inflation and exchange rates”(Oxford University, 2007). Demand and supply is one of it. “The demand is the will and ability of consumers to purchase a particular commodity and the supply is the ability of the business to provide for the demand of consumers” (Scholasticus K, 2010).

Number of mobile subscribers.

“In 1994, new firms such as Maxis, Celcom, Digi and Time, have tended to concentrate on mobile telephony, raising the number of subscribers from 872,000 in 1995 to 5.5 million in 2000″(The Economist Intelligence Unit. 20 Apr 2002). This shows that the demand for mobile phones and headsets increases by seeing how the number of consumer increases at that time. As demand increases, the number of sales made and prospects increases. At that time mobile phone, mobile phone is newly emerging into the market, thus Maxis was at the right place and the right time base on the statistic below provided by The Economist Intelligence Unit, 2002.

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“Government statisticians broadly concur about the explosion of cellular phone use, estimating that 22 percent of the population had mobile phones by mid-2001, and that 30 percent of Malaysians will carry them by 2003 “(The Economist Intelligence Unit, 2002).

Graph1.0(source: The Economist Intelligence Unit, 2002)

The statistic above(Graph1.0) is about on the number of Mobiles increases every year without fail. This means more and more people will subscribe from service provider. Thus Maxis communication will have lots of prospects back then. As can be seen, the number of mobile users incline while the number of mainlines did not change much. From 1996 to 2001, the number of mobile users double up. This shows that demand has increase whereby the number of mobile users represents the demand. Maxis was one of the supply, aside its competitors. At that time, it was like a golden age for Maxis.

Graph2.0(source: sofee, 2006)

As can be seen, the number of Mobile subscriber in Malaysia kept increasing, this gives a good opportunity for telecommunication industry to become successful.

Diagram1.0(source: sofee, 2006)

This is a proof that Maxis was able to dominate the market at that time. This gives a huge advantage to them in terms of financial resources and revenue.

Technology factors.

“It refers to the new technologies that create new products and new processes. MP3 players, computer games, online gambling and high definition TVs are all new markets created by technological advances. Online shopping, bar coding and computer aided design are all improvements to the way we do business as a result of better technology. Technology can reduce costs, improve quality and lead to innovation. These developments can benefit consumers as well as the organisations providing the products” (Oxford University Press, 2007). Technology of the country or region such as infrastructure and services are sometimes contributed by the government. Thus, this may overlap with political factors. Technology can benefit company as it opens many doors of opportunities.

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Evolution of 3G to 4G.

The Star, 2010 mention that “Malaysia is to graduate from 3G to 4G standards next year in its internet broadband and cellular technology. The change from 3G to 4G and LTE (Long Term Evolution) will enable video, audio and data to be combined for a comprehensive message. This kind of technology will open to many opportunities for Maxis. Maxis of course did not let this chance slips away but grab it. The Star also mention that Maxis Communications Bhd is testing the 4G LTE (fourth generation long term evolution) technology and at the same time conducting trials for its IPTV (Internet protocol TV) offering in the Klang Valley.” Time awaits for no man. People were moving from 3G to 4G at that time, so must Maxis. If not, they will be left behind as 4G became the new demand from the people. An opportunity that must not be missed, else consequences will follow. Competitors might grab that chance if Maxis do not take it. That will definitely allow other service provider to penetrate through the market. Thus, Maxis must make used of this opportunity and by investing or venture into the 4G technology.



Diagram2.0(source:skmm, 2011)

It is because broadband becoming more popular, many telecommunication industry had venture into this line as well. Same goes to Maxis Communication. This is an overview of the, notice that a few points in the diagram above overlap between political, technology and also economic. Awareness, affordability, and attractiveness is a part of government intervention. In the supply would be more on technology which greatly affects the demand of the people, that is economy.

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