Pestle Analysis

PESTLE analysis, which is sometimes referred as PEST analysis is a concept in marketing principles. Moreover, this concept is used as a tool by companies the world over to track the environment they’re operating in or are planning to launch a new project/product/service etc.

PESTLE is a mnemonic which in its expanded form denotes P for Political, E for Economic, S for Social, T for Technological, L for Legal and E for Environmental. It gives a bird’s eye view of the whole environment from many different angles that one wants to check and keep a track of while contemplating on a certain idea/plan.

The framework has undergone certain alterations, as gurus of Marketing have added certain things like an E for Ethics to instill the element of demographics while utilizing the framework while researching the market.

There are certain questions that one needs to ask while conducting this analysis, which give them an idea of what things to keep in mind. They are:

What is the political situation of the country and how can it affect the industry? What are the prevalent economic factors?

How much importance does culture has in the market and what are its determinants? What technological innovations are likely to pop up and affect the market structure? Are there any current legislations that regulate the industry or can there be any change in the legislations for the industry? What are the environmental concerns for the industry?

All the aspects of this technique are crucial for any industry a business might be in. More than just understanding the market, this framework represents one of the vertebras of the backbone of strategic management that not only defines what a company should do, but also accounts for an organization’s goals and the strategies stringed to them.

It may be so, that the importance of each of the factors may be different to different kinds of industries, but it is imperative to any strategy a company wants to develop that they conduct the PESTLE analysis as it forms a much more comprehensive version of the SWOT analysis.

It is very critical for one to understand the complete depth of each of the letters of the PESTLE. It is as below:

Political: These factors determine the extent to which a government may influence the economy or a certain industry. [For example] a government may impose a new tax or duty due to which entire revenue generating structures of organizations might change. Political factors include tax policies, Fiscal policy, trade tariffs etc. that a government may levy around the fiscal year and it may affect the business environment (economic environment) to a great extent. Economic: These factors are determinants of an economy’s performance that directly impacts a company and have resonating long term effects. [For example] a rise in the inflation rate of any economy would affect the way companies’ price their products and services. Adding to that, it would affect the purchasing power of a consumer and change demand/supply models for that economy. Economic factors include inflation rate, interest rates, foreign exchange rates, economic growth patterns etc. It also accounts for the FDI (foreign direct investment) depending on certain specific industries who’re undergoing this analysis. Social: These factors scrutinize the social environment of the market, and gauge determinants like cultural trends, demographics, population analytics etc. An example for this can be buying trends for Western countries like the US where there is high demand during the Holiday season. Technological: These factors pertain to innovations in technology that may affect the operations of the industry and the market favorably or unfavorably. This refers to automation, research and development and the amount of technological awareness that a market possesses. Legal: These factors have both external and internal sides. There are certain laws that affect the business environment in a certain country while there are certain policies that companies maintain for themselves. Legal analysis takes into account both of these angles and then charts out the strategies in light of these legislations. For example, consumer laws, safety standards, labor laws etc. Environmental: These factors include all those that influence or are determined by the surrounding environment. This aspect of the PESTLE is
crucial for certain industries particularly for example tourism, farming, agriculture etc. Factors of a business environmental analysis include but are not limited to climate, weather, geographical location, global changes in climate, environmental offsets etc. There are many templates available for companies to conduct PESTLE analysis. Many organizations have provided information regarding their PESTLE analysis as case studies available on the Internet.

Singapore is an eastern country, which still follows the traditional families values. However, the younger generation has started to change their belief and started to adapt to the western culture and values.

The increase in disposable income, housing boom, and aggressive retail promotions, create an increase in consumer pending power especially on seasonal sales (guide me Singapore 2012). Consumers prefer to buy the best quality products at lower price which Charles and Keith can provide this service.

Demographic profile

1. The population in Singapore is about 4. 8 millions, which consists of Chinese, Malay, Indians and expiate from foreign countries.
2. Singapore consists of 46% females in the workforce. However, large portions of this are low level and low salary positions (Ministry of Manpower 2011).

Technological

1. Technology is the power that can change our lifestyles and improve the quality of fife.For example, with the help of Internet, consumers are able to search tons of information Just by a single click.
2. The Internet also allows consumer to purchase items all over the world.
3. Technologies also help to develop new innovative products and designs to meet customer needs.

GAP of Singapore, Gillette might want to expand the shaving and personal care products in Singapore. And also in Singapore there is no competition from domestic companies as the entire GAP of Singapore is based on imports from other countries.

• Singapore are very competitive in nature. Singapore have a mindset of “Aka- us” which means afraid of losing out to others. Due to which Singapore work very hard for fulfilling their materialistic desires.

Due to which business companies like Gillette can expect a higher purchasing power from the buyers.

• The ruling party of Singapore is PAP (People’s Action Party). Due to the political stability of the PAP party for the last decade, international investors are more comfortable to invest money in Singapore. Due to these reasons businesses like that of Gillette can expand themselves into the market as they do not have the fear of changing policies of the governments.
• The income levels in Singapore are Singapore $5040 as of November 2014. Due to this Gillette will not face any problems in their sales.

As even low income people of Singapore can also buy Gillette products. So basically Gillette can increase their amount of stock of their products as it is a necessity for both men and women.

• Singapore is a multi religious and multi cultural country. Singapore has an ethnic mix of 75. 2% Chinese, 13. 6% Malay and 8. 8% Indian.
• Most of the Singapore dislike blue collar Jobs due to which Singapore have to import foreign workers to do blue collar Jobs With cheaper labor from neighboring countries, Business companies like Gillette can enjoy cost saving and therefore more can be invested for further expansion.
• Singapore always welcomes foreign investors to invest all types of sectors of business. So this is a great opportunity for Gillette to increase the sales of razor blades and various other shaving products. Also Gillette also have the opportunity of investing in other sectors if they wish to.
• The corporate tax rate in Singapore as in 2014 is 17%. Singapore has one of the lowest corporate tax rates in the world and business friendly environment which will be helpful for Gillette to start up direct selling using vending machines.

And also cause of low corporate tax rates there are chances of foreign competitors of Gillette to also enter in this market.

• Singapore has very high literacy rates(Primary Education 96% and Higher qualification holders 89%). This high literacy rates are due to compulsory primary education for all children and also English is the primary language in the Singapore Education system due to which Singapore have a good command on English. This factor helps attract international organizations like that of Gillette in Singapore.

Russian – Chinese and Russian-South Korean relationships Level governmental subsidies World Oil & Gas market Concentration of governmental efforts for construction and development of infrastructure of Russian fleet. Maintenance of good technical condition of Russian fleet for successful completing of its goals and tasks. (direct and indirect investments) Export diversification strategy expressed in growth of offshore gas & oil fields development.

Creating of free-trade zones near new shipyards for cost cutting in ships construction (order of foreign material and equipment) Infrastructure development funded with tax liabilities in regional budgets + multiplicative effect funded with small and medium business development, which provides the growth needs of shipbuilding production. Capability of training programs at the best South-Korean shipyards.

PESTLE Analysis By Peeling-Lam Cooperation wih Korean and Chinese shipbuilding companies in shipbuilding and offshore construction Sovereign credit extension Growing need to tankers and Longs fleet renovation Opportunity.

Economical factors Credit availability Logistic Labor intensity level Economic stability Exchange and inflation rate Price fluctuation Credit terms Credit extension from the biggest Russian banks, such as Alfa Bank, Subprograms, Phenomenon bank. Availability of railway and sea transport routes Construction of new shipyards allows to reduce the labor intensity and increase the productivity level Existing of corruption in industry sector Potential risk of high inflation rate and non-stability exchange rate High volatility of commodity and financial markets Dependence of shipbuilding contracts from steel price fluctuation

High debt costs and loan payments Threat Social factors Social programs Upgrade of the Far Eastern Shipbuilding College in Abolish Kane Specialized department of FIJI branch in Abolish Kane Camp for 1 ,OHO workers Construction of residential quarter for shipbuilders (2,500 apartments) Reconstruction of food service areas – upgrade of cafeterias for 6,000 people Upgrade of first-aid stations Comprehensive program on safety strengthening Improvement of working conditions and implementation of social programs Insufficient quantity of well-qualified shipbuilding specialist in design and production area at the current moment.

Their business diversified in the world. So Deco’s performance is influenced by the political factors. This includes the legislation, tax rate political stability. In credit crunch situation unemployment is common problem in everywhere. The governments encourage the retailer to create Job opportunity for the local people. Tests gives the opportunity for the people and also the government to reduce the level unemployment.

It creates the opportunity from lower-paid, flexible hour, highly skilled, and higher paid which meet he demand form population categories such as student, citizens and disabled person.

Economical Factors:

Many political changes result in changes in economy. Suppose tax rate or interest is decides by the politician. But their effect on performance In the I-J, Tests could not expand their business. Because of, they have had already expand one third of their business in the I-J. In credit crunch situation, many people are unemployed.

So the effective demand of the product is decreased. This is another type of factor. Though companies still growing outside the I-J but they are still depend on the I-J business. Hence, Tests would be affected by the any slowdown in the I-J.

Social/Cultural Factors:

Nowadays, everyone is very busy. Basically the British people who are working. So they have moved to the one-stop service. Tests provides the food item as well as non food item such as electrical product, clothing, baby product etc and also the finance service. Customer can save their time and energy.

Customers are aware of health and the demand of food is changing day by day . For the reason Tests launch the organic product. Most of the customers are mixed origin. So Tests try to meet all type of customer demand. The Sociological features analyze that the increase in young professionals. Obviously there is a demand for new trends for the young generation. Demographic changes such as an increase in women worker that leads to reduce the main meal preparation in the I-J. This has seen an increase in the meals for one or quick microwaveable meals to make cooking quick and easy.

Technological Factor:

Technology gives new trends for the Tests. Tests is now most leading company only because of internet. The customer and company both are benefited by the new technology. Customer satisfaction rises products are available, easy to online hopping; service can be more personalized by delivering the product through the website wry. Tests. Com. The company setup the self checkout point which more easily for the customer and convenient for them. Tests opens the Auk’s most energy capable stores.

Since 2000, Tests has spent considerably in progressing energy effectiveness and it has succeeded in dividing the amount of energy its UK stores necessitate for each square foot of room (2006 baselines). The Cheetahs Hill store is a major development for Tests in meeting its long term environmental objective to dramatically reduce its carbon footprint.

Environmental Factors

There has been increased pressure on many companies and management acknowledges their responsibility to society and takes steps in a way which benefits Tests pestle analysis By airmails overall society.  You may be interested in PESTLEe Analysis Turkey

As a global business their strategy could to minimize the climate changes. In Tests, the corporate governance responsibility to becoming zero- carbon business at 2050 and helping the customer to reduce the carbon foot print 50% by 2020. A core Tests value is that they reduce them minimizing their waste which produces every store. Their strategy is to generate waste to energy by reducing, using and recycling it.

Legislative Factors

The performance of Tests is directly affected by government legislation and policy.

The food retailing commission suggested setting up banning many current policies such as, demanding payment from supplier and changes the price without notice. The government tries to stop the monopoly controls. Tests Pl is a large food retailer in the I-J market that operates 2,200 stores . The company offers financial product and service such as Tests banking, home insurance, dental insurance, car insurance telecoms service as well as electrical appliance, clothing, home appliance.

This because the industry’s main suppliers are from those inside the UK. However, this has been complicated by the crisis of terrorist, competitors from neighboring countries. This has made the control of information be based on international politics. `

Technological Trends

Nearly half of the world’s population have access television and Internet connections in their homes. In the UK nearly half of the populations have access to internet in their homes, according to the annual survey by the Pew Internet & American Life Project in July 2007.

The number of home broadband users nationwide now equals the total number of Britons with any type of Internet connection in 2000, the first year the survey was conducted. Six out of 10 adults have broadband access at home, compared to 15% two years ago. Nearly one-third of rural Britons have home broadband connections, compared to about half of Britons living in urban areas and the suburbs. Income and race are becoming less important differentiators in UK broadband adoption. In Far East things have taken a new dimension majority of the parents have resorted for internet for academic purposes this has led to increase in the needs of broadband connections in homes.

Economic Trends

The US sub prime crisis has already had a global impact on global financial markets and could affect consumer spending worldwide. At first sight, this would seem a disproportionate reaction but banks all over the world are exposed to US debt.

Sub-prime lending was lending at higher interest rates as a means of helping American consumers of lower incomes and poorer credit records obtain mortgages. These loans were then sold on, in complex ways, to other institutions including hedge (higher risk higher return) funds. The treatment of sub prime loans by the banks is likely to have far-reaching effects including, possibly, a slowdown in the US economy and a confidence linked decline in US consumer spending. Fact is that US retail sales rose only 0. 3% in August 2007 suggesting increasing caution of the crisis ahead. US retail sales are a major driver of economic growth and may be viewed as an early response to a housing slump and financial market turmoil. Over the past 12 months, retail sales rose by 3. 9% excluding autos. However, the level of spending did not indicate recession tendencies though analysts expect growth to decline in the near future. There were modest increases in sales for furniture (0. 5%), electronics (0. 4%), sporting goods (0. 3%), and health care (0. 3%) compared with the same month a year ago.

Thus, this national economic problem might have a small effect on the health food sector because organic foods are usually priced higher than regular food (Xinhua News Agency, 14 September 2007). This trends affecting world economy is contributing to the fall in demand for cars and other consumables that use the products of the industry. Currently there is a high food price which is contributing to decrease in the demand for this product.

Environmental

The company is very competitive; Vodafone is balancing its e-commitment to communities they operate in through its corporate responsibility. They assist in environmental activities.

Legal Constrains

The company is operating all over the world but from UK. Each country have the own laws to complied with. The head finds it difficult to for example convert financial statements prepared in different accounting standards and procedures. These is one of legal constrain facing this company, although accounting standards board are solving this problem though convergence of accounting standards.

References

1. Ackoff, R. L. (1979). A Concept of Corporate Planning.New York: John Wiley. Ansoff, H. I. (1965).
2. Corporate Strategy: An Analytical Approach to Business Policy for Growth and Expansion New York: McGraw-Hill. Burgelman, R. A. (1983).
3. Corporate Entrepreneurship and strategic management: insights from a Process study. Management Science, 29, 1349-1364.
4. Burton D (2000), Research Training for Social Sciences: a Handbook for Postgraduate researchers, (ed. ), Sage Publication Ltd, Great Britain, Cameron, K. S. , Sutton, R. I. , and Whetten, D. A. (1988). Issues in organizational decline. In K. S.

The United Kingdom plays a very important role in the European mobile market as it accounts for a total of 12.9% market value (Datamonitor 2008). By the end of 2011 the United Kingdom mobile phone market value is estimated to gain a raise of 29.1% since 2006 valuing around $4.4 billion (Datamonitor 2008). The industry boundary could be around the manufacturing and giving the service to the mobile phone as these two complement with each other.

With the increase in the technology there is always a better phone in the market with newer specifications, and because of the attractiveness of the deals the consumers are going for a better mobile all the time even if they don’t use all the integrated applications. On the other hand this market is nearing its maturity which is a superior threat for all the service providers and mobile manufacturers as they need to invest in more and more for research and development. The recent data shows that just in the U.K there are 69.7 million active subscribers for the mobile phones in 2006 which are 9.7 million more than the total U.K population (Mintel 2007). This states the popularity of the mobile phones and the usage.

For any industry to be successful there will be some key determinants of success which helps its growth, and when these determinants come together it could a successful one. And these determinants for the mobile phone manufacturing and service industry could be the Technological, Economical and Social factors. These could be the three main determinants of this industry mainly because all of these complement each other, as the better the technology in a mobile phone the higher the price will be. Even at a high price consumers would tend to buy these phones as for they are getting the latest technology in their hands and thereby they can show off their status.

Technology

In this 21st century the technology is booming and all the companies in any kind of industry would like to use the cutting edge technology for their products or services. As the more technology used in any firm would determine its market capture, its consumers, mainly the price of their products or services. In the mobile phone manufacturing the technology is rapidly increasing. It’s equally important for the manufacturer to produce high quality for the consumer as in the past mobile phones are only used to talk to the other person, now with the growth in the technology consumers can send and receive text messages, they can check their e-mails, take pictures with integrated camera of up to 8 mega pixels, and most wonderfully consumers can video chat.

All of these explain the technological growth and consumers do pay higher prices to enjoy and experience this kind of technology in their palms. The manufacturers on the other hand are not just providing mobile phones which can do only these things; they are also incorporating other things such as touch screen, Bluetooth and infrared connectivity, wireless local area network (WLAN) which the consumers can use for wireless connectivity (internet), watching live TV, mp3 player, and for all these the consumer thinks it is worth paying the price either set by the manufacturer or the service provider.

Economy

The U.K mobile phone industry plays a rather very important role in the economy of the country. The U.K mobile market has generated a total revenue of $3.4 billion in 2006 (Datamonitor 2008) As its been forecasted that the U.K economy to grow between 2.4% to 2.6% between 2007 and 2011 (Key note 2007), but over this very small percentage raise over 5 year period, the consumers are going to lose confidence in the economy but at the same time as the mobile phones are a very essential part of their day to day lives it tends to survive. The mobile penetration rate is also so high that few consumers have more than one phone, or more than one contract or connections and thereby increasing their expenditure.

At the same time the mobile phone industry contributes to the economy by importing a lot of raw materials to be used in the production or manufacturing and also exporting the end products. It also contributes to the economy by increasing the employment rate, the more outlets or offices it opens by creating a series of distributors and retailers the more the more the employment rate will be. If the mobile industry has to go into recession, it has been estimated in 2004 that the total revenue the government could lose could add up to a total of around �9,864 million (O2 2004). And if we take the rate of technology growth from then to now and the price factor into consideration it could have definitely gone higher by now.

Social

Social factors have a very large impact on the industry. The demand levels of the products and the sales are continuously affected by the attitudes and beliefs of the consumers. In addition people have mobile phones not just for communication it also adds peace of mind for the people who care, a lot of people have them as to organise their lives either in a social context or a business context there by making most of their time, and a majority of consumers carry for personal safety. People would like to have mobile phones as they carry them any where they want. It also provides more convenient access to other services like banking, working etc. It also improves social networking as we tend to communicate more by talking rather than just sending e-mails.

Usefulness of External Environment Analysis

Any firm within the industry can increase its chances of competitiveness by doing an external environmental analysis. The managers need to use the information gained by the external environmental analysis for future planning, strategy formulation by making the environment ready for any positive changes and thereby keeping away from the negative ones and better decision making as the external environment is changing continuously. By doing this kind of analysis there is every opportunity for the firm to get its resources ready for the kind of strategy they want to develop. Managers need to keep examining the external environment as it is very dynamic as market conditions change day to day, technology is growing, and there is a prospect for them to know who their competitors are.