Our Zoom Video Communications PESTLE analysis shows that the company is extremely successful with almost all the factors being in favor of the business.
When you think of online video conferences, what is the word that pops into your mind? It must be Zoom. Zoom has become such an integral part of all of our professional and academic lives. It is very interesting to see how important it has become. The following Zoom Video Communications PESTLE analysis will tell us more about the business.
Headquartered in San Jose California, USA, Zoom Video Communications, Inc., or as we know it to be Zoom is an American communications tech company. The service offers a cloud-based online platform which enables users to video chat for various purposes.
Recently we have seen a boom in the usage of such services because of the Covid-19 pandemic that hit us like a storm and left the world in chaos. Zoom made it possible for worldly activities like work and education to take place. Zoom was founded in 2011 by Eric Yuan but the software was officially launched into the market in 2013.
Yuan serves as the CEO and chairman of the company. The current services Zoom offers are Videotelephony, Online chat, and Business telephone systems. As of 2020, they have more than 2500 employees working for them around the world.
In this PESTLE analysis, we will get to analyze Zoom to understand where it stands from a business perspective. No matter how glamorous it sounds, we can never be sure before seeing the effect of macroeconomic factors on it.
Political Factors affecting Zoom
Politics play a major role in making or breaking a business. A brand as big as Zoom always needs to be ahead of emerging trends made possible through intense R&D. They have many research centers around but the biggest and most important one is in China which also develops the software.
This obviously can be a bit problematic for the business because it is based in the USA and tensions between China and them are mostly high. However in this case the brand gained nothing but popularity.
The pandemic made people realize its utility so even political tensions could not stop growth.
It is also believed that the messages on Zoom are encrypted and decrypted through servers located in China and that they are required by the communist law to submit this data to the government.
Though Zoom never formally responded in acceptance of this allegation, they have admitted that they have one data center in China which complies with the request.
This did raise some speculation against the software on the grounds of potential breaches of private and sensitive information at the governmental level.
In 2019 they received a FedRAMP authorization from the GSA that basically is proof that Zoom complies with set security requirements thereby rendering it as a video conferencing software for governments.
Some industry experts even believe that this is the era of “zoomatisation” of politics worldwide as per Covid-19. It has become such an apparent need for people and political leaders alike, that in this case, politics has not been able to harm Zoom.
Economic Factors
Whereas almost 90% of businesses and industries took a severe blow from the global pandemic, services like zoom rose sharply.
This was possible because Zoom was the solution during a time of strict social distancing for people to stay connected with their loved ones. It also did not stop people from their studies and work, so it became a very important part of daily life.
One of the biggest success factors here is that they offer 40 free minutes of online video sessions, unlike their competitors. In the first quarter alone of 2020, Zoom reported a booming increase of 354% while the revenues rose by 169% yearly afterward.
It was amongst the fastest apps to grow in 2020 during the pandemic and the valuation of the company at the end of the year was calculated to be a very impressive 100 billion dollars.
In 2021, they reported having secured revenue of a billion dollars in the April-June quarter! This is 54% more than what was made when the world went online in 2020. In the US, zoom has a whopping 42.8% of the total market share making it ahead of all competition.
Sociocultural Factors
As has been mentioned repeatedly in the article, Zoom has become a part of our socioeconomic spheres around the world.
The sole reason for such an immense increase in usage is the virus. It has made Zoom into one of the go-to applications one would use alongside social media.
On one hand, it has erased barriers and made information flow to be possible, on the other, it has also blurred the lines between work-life balances. Now we are all on our digital devices for work, for studies, and for leisure.
Now we also have access to everyone’s personal spaces which can be positive and negative; positive for better chances at fostering relationships and negative because it erases all professionalism. It is not even far-fetched to call Zoom the emerging social media of the covid-19 pandemic.
Zoom themselves conducted research from many of their users to have a better understanding of how important they are in daily lives. The key takeaways from that survey tell us that people are now convinced that “online mode” will stay forever though not solely; a hybrid mode of balancing fact to face working with virtual working is the new tomorrow.
That being said, there are negatives to the popularisation of Zoom. It has greatly reduced our actual mobility because all we have to do is log onto a screen. We also stare way more into screens than ever before for meetings and lectures.
Another major flaw with the online mode is the lack of non-verbal communication. When you interact in person, your social skills are polished and honed because you learn to use gestures and facial cues.
Behind a screen, you basically cannot communicate the same way. This is why many people did not find the quality of their productivity to be the same.
Technological Factors
This is a very self-explanatory factor in Zoom’s case because it is a company possible because of technology; it is essentially, software.
Although they do offer translation services in the app, they have recently acquired Kites (a German start-up) to work on machine translation solutions. The aim is to offer multiple translation options to users for a better experience.
The auto-generated captions were previously being offered to only paid Zoom and webinar accounts are now being extended to all users. They want to be more inclusive for everyone.
Businesses like Zoom end up doing really well because they are a need of the hour and because all of the technology is online, infrastructure costs are significantly lower than other businesses.
It is predicted that this technology will only grow further and won’t become irrelevant anytime soon.
There is some news speculating that MS Teams, Zoom and Cisco all plan to offer collaborative services whereby users can connect inter-platform without involving any third parties. How convenient would it be to just log into one and use all three?
Legal Factors
Whereas Zoom is doing wonders around the world, they are stuck in a few legalities. First of all, they are not very secure as a platform.
People can easily hack their way into private meetings including government meetings. If the meetings are public there is no legal offense unless the hackers use hate or derogatory speech or send threats.
Zoom also is under fire for providing visibility to users to an extent that they can see the passwords and other sensitive matters being typed out on the screen.
They are under many lawsuits regarding the sale of data without asking for permission from users. iPhone users who use the platform are at more risk than others.
This practice has given birth to the term “zoombombing” which is made possible because of the data being sold. Hackers have enough information to get into meetings uninvited. They had to pay 85 million dollars for a lawsuit whilst promising to improve their security services.
As a part of this lawsuit, they have to pay 15% back to what subscribers pay them for the service.
It is also predicted by some experts that in the near future, Zoom recordings can actually be used for evidence in courtrooms. So there must be an elaborate framework developed that ethically collects such information which can be used to solve various cases.
Environmental Factors
One would think that Zoom is the kind of business that has the least environmental impact as it does not create any pollution or damage to the atmosphere. Well, this is a flawed perception.
Zoom doesn’t add to waste and pollution like what a manufacturing industry might do, but it still causes a lot of harm to the environment. The method in which internet data is stored and transmitted is the culprit.
It takes 2-12 litres of water and an area of about the size of an iPad mini to conduct one hour of a video conference. Not to mention said video conference emits 150-1,000 grams of carbon dioxide. If you choose to close the cameras though, this effect is reduced by 96%.
So you see, even zooming causes harm to the environment. So if you don’t absolutely need the camera to be on during a meeting, keep it off.
Zoom calls cause CO2 emissions. It was calculated that one hour of a zoom call with 6 participants releases about 0.05 kg of CO2. This amount when taken into consideration with the number of users of the service and the time they each spend is monumental.
That being said, Zoom is still a better alternative to driving or flying to meetings. The harm it causes is far less compared to what vehicles and traveling do.
Zoom Video Communications PESTLE Analysis: Final thoughts
Now that you have reached the very end of the article, you must see zoom in a completely different light. Needless to say that what the business has achieved in such a short span of time is amazing.
This PESTLE analysis has shown that Zoom as a company is extremely successful with almost all the factors being in favor of the business. Political factors though against the business have ultimately helped, the technology is revolutionary and the economic factors are perhaps the best part.
Social factors have also integrated Zoom into our daily lives really well. The only struggle they seem to be having is with legal and environmental factors. The latter have proven to be better compared to alternatives so no harm there, but the legal issues cannot be ignored.
Overall, we see immense growth for zoom in the near future. They are not becoming a “has-been” brand any time soon! Also, make sure you check out our SWOT analysis of Zoom!
A PESTLE analysis is basically a tool of macroeconomic nature that is used by experts and learners alike to analyze and accurately comprehend the status of a business entity, an industry, or even a country at large.
In this day and age when globalization is the norm and global boundaries are blurring out ever so vastly, it is imperative that we are able to analyze various businesses and countries. Knowing how to conduct a PESTLE analysis can help you in doing that.
If you know any or you are one potentially, investors can benefit a lot from this information. If you have never formally worked on it before, try using a template to get a grip.
However, if you have worked on this tool before, then you might as well just go right ahead and conduct a PESTLE of your own. Might we suggest you look out for a PESTLE analysis framework before you start? This framework makes life ten times easier. It allows you to compile your findings and data in a very concise, clean, and easy to read manner. Best of luck with your analysis!
