Professional Documents
Culture Documents
2009
Assignment
[Type the company name]
10/12/2009
BUSINESS ENVIRONMENT
PESTLE ANALYSIS OF THE PAPER
INDUSTRY
PESTLE Analysis
PESTLE analysis is a useful tool for understanding the industry
situation as a whole, and is often used in conjunction with a SWOT analysis
to assess the situation of an individual business.
What are the key political factors likely to affect the industry?
What are the important economic factors?
What cultural aspects are most important?
What technological innovations are likely to occur?
What current and impending legislation may affect the industry?
What are the environmental considerations?
Political Factors
The Political factor refers to the governmental policies which are much
influenced by the economic situation in a country. It is a macro aspect of
analyse which deal with major changes to the government policies of a
country. It has great influence to the business outlook and confidence.
Political factors often comprises of
– Current taxation policy
– Future taxation policy
– The current and future political support
– Grants, funding and initiatives
– Trade bodies
– Effect of wars or worsening relations with particular countries
Economic factors
The Economic factor is an area where macro economic environment
can affect the outlook and competitiveness of any business sectors in the
country. Economic factors comprises of
Social factors
The Social factors refers to the cultural aspects of the country. Social
factors comprises of
- Demographics
- Lifestyle patterns and changes
- Attitudes towards issues such as education, corporate responsibility and
the environment
- Social mobility
- Media views and perceptions
- Ethnic and religious differences
Technological factors
Technological factor is more tangible and easy to validate. It includes
ecological and environmental aspects, technology incentives such as
Research & Development incentives, automation reinvestment, high capital
setup and rate of technological change in certain business. The technological
factors include:
Legal factors
Legal factors often comprised of
Environmental factors
Environmental factors includes
- The level of pollution created by the product or service
- Recycling considerations
- Attitudes to the environment from the government, media and consumers
- Current and future environmental legislative changes.
Paper Industry in India
Paper industry in India is the 15th largest paper industry in the world. It
provides employment to nearly 1.5 million people and contributes Rs 25
billion to the government's kitty. The government regards the paper industry
as one of the 35 high priority industries of the country.
In 1951, there were 17 paper mills, and today there are about 515 units
engaged in the manufacture of paper and paperboards and newsprint in
India. The pulp & paper industries in India have been categorized into large-
scale and small-scale. Those paper industries, which have capacity above
24,000 tonnes per annum are designated as large-scale paper industries.
India is self-sufficient in manufacture of most varieties of paper and
paperboards. Import is confined only to certain specialty papers. To meet
part of its raw material needs the industry has to rely on imported wood pulp
and waste paper.
Environmental Impact
The pulp and paper industry is a chemical process industry with major
impact on the environment. The potential pollutants from a pulp and paper
mill can be classified into four categories: (1) liquid effluents, (2) air
pollutants, (3) solid wastes and (4) noise pollution.
The environmental problems faced by large and small paper mills are
entirely different. Pollution control is more difficult for small and medium size
agro-based units. Chemical recovery in these units is not economically viable
and therefore black liquor and lime sludge are not being burned for heat
recovery. It is estimated that a 30 tpd small paper mill 10 can be almost
three times as polluting as an integrated paper mill of 200 tpd.
For the same reason as wastepaper production requires substantially less
energy than other processes its environmental impact is also much lower. As
shown in Sharma et al. (1998) water pollution in the form of wastewater is
up to 90% lower compared to wood and agro-based production. Solid waste
from wastepaper production is shown to amount to only a tenth of that from
agro-based production. The type and quantities of solid waste generated
differ considerably across mill types.
Stricter environmental regulations added to the constraint on raw
materials. As mentioned above programs such as the dedicated forest
program were implemented implying increasing costs for firms to ensure
sufficient availability of raw materials. Furthermore, environmental
regulations regarding air, water as well as solid waste effluents forced many
small paper mills to close down. Small and medium size pulp and paper mills
very often cannot economically provide chemical recovery facilities. They
therefore suffer from higher emissions as well as higher external energy
requirements since recovered chemical and waste products can effectively
be used for cogeneration of steam and electricity. The decomposition
analysis allows to gain further insights on the contribution of both input
factors and productivity change to output growth.
Conclusion
In this paper, we analyzed the India’s pulp and paper sector from
various angles. We developed economic as well as engineering indicators for
technological change and political, social, legal and also the environmental
factors. We discussed our findings within a broader context of structural and
policy changes in the sector. The economic analysis showed that productivity
has decreased over time with a bias towards increased use of material over
labor and capital inputs. The decrease was mainly due to the increased
number of small and less productive units that were set up following the
acute paper shortage in the early 1970s. In the sub period of 1982 to 1990
along with the establishment of larger plants as well as first liberalization
measures productivity showed increasing though fluctuating trend. Yet, since
1990, the sector has suffered a tremendous downfall in accordance with
overall economic recession.
The paper sector has been marked by continuous shortages in supply of
various products, especially white printing paper and newsprint. Meeting
future demand, which is expected to increase considerably, will continue to
be a challenge as major expansion and modernization efforts would have to
be undertaken while raw materials scarcity prevails and price development
on international markets is unfavorable to the industry.
Future production has to be economically viable and environmentally
sound and needs to be more efficient in terms of resources use and
production. As major policy changes have been implemented in the 1990s to
overcome the acute problems in the paper sector. We further pointed out
low cost potentials for reducing environmental pollution and improving
overall plant productivity. However, the implementation of initiatives
towards energy efficiency is being hampered by barriers both of general and
process specific nature occurring at the macro and micro level of the
economy. Lack of information about potential savings and existing
technologies are among the barriers. Energy and environmental audits could
substantially help overcome these barriers. The analysis reveals that energy
policies in general and price-based policies in particular are efficacious for
overcoming these barriers in giving proper incentives and correcting
distorted prices. Through the removal of subsidies energy prices would come
to reflect their true costs, while environmental taxes could be imposed to
internalize the external costs (including environmental costs).