PESTEL Analysis of France

INTRODUCTION

The term of international business is taking an important place in the world today
and many factors are related to international business. A through external
environment analysis is very important before a business is started in a particular
country. Here in this we have done a PESTEL analysis for France.

POLITICAL FACTOR

Considering the political part many factors have to be taken into account. France is
a developed country; the political environment there is stable in the sense that there
is no political trouble, no war, no political crisis, and no conflict; this is a good
factor which can attract investors and new business entry. In another way setting
up a business in France required a lot of capital from the investors. In certain
territories in France like: Mayotte, Saint Pierre and Miquelon, Wallis and Futuna,
Monaco, the government has fixed an investment limit of 1 500 000 Euros for
foreign enterprises. In fact the government has elucidated a precise list of tax or
mandatory contributions which have to be paid by business people in France. The
government of France has no any control on religions or culture, there is no policy
stated by the government to restrict any new entry of any business which is
not matching with the belief of the French population.

ECONOMICAL FACTOR

One important factor which contributes a lot in doing a business in another country
is the economic position of this country. Talking to economic situation is related to
many factors such as: interest rates, level of inflation and employment, gross
domestic product of the country (GDP), per capita income and so on. The GDP
real growth rate of France has increased from (0.3% in 2008 to 8% in 2009), this
reveals a better economic situation of the pays although the phenomenon of
recession; in fact France weathered the economic crisis (recession) better than the
other big countries of Europe. The GDP per capita has shifted from $33800,
$33700 to$32800 in 2007, 2008 and 2009 respectively, this shows that a quite
standard position of GDP per capita of France which reveals a good economic
situation of the country. The unemployment rate has quietly increased from 7.4%
in 2008 to 9.7% in 2009 and the population poverty line was 602% in
2004. Considering all these aspects it seems that the economic position in France is
favorable to setting up a business.

SOCIAL

France population in 2010 is 65,056,792. The age structures of France population

are 0-4years 18.5%, 15-64 years 65% and 65 years above have 16.5%.The
population growth rate of France is 0.549%.The life expectancy of France, male
average age is 77.78 years and female average age is 84.34 years. The literacy rate
of France has 99% of total population. France is highly developing country there
are 75 percent of the people staying in the cities. There are two languages spoken
by people one as French and another is Catalan. The French people of very proud
of their language which is famous worldwide and also shown their identity..There
are different religions, Roman Catholic, Jewish and Muslim. In France Islam is the
2nd largest religion. The French people share a great passion of food. France is very
famous for cuisine, wines and cheese.

TECHNOLOGICAL

France has an excellent scientific and technological environment. As being

the world’s 4th industrial power, one of the world leader in space technology, in
nuclear energy, in computer engineering, in environmental protection. All the
credit France owes to its quality education system which includes 230 engineering
colleges and 87 universities which are well known for their research.
Technological and industrial growth funded by the government helps in increasing
the standard of living of people. France spends about 2.2% of its GDP for the
development of its technology and industrial growth (on research and
development). Number of patent application in a country indicates how a process
or product offers anew technical solution to a problem. There are about 14743 new
patents in 2009. The number of technical journals articles published in France is
about 30,309 in the year 2009.The amount France gets by exporting its R & D such
as in computers, scientific instruments; aerospace and electrical machinery is about
$93,209,237,841(2009).There is research credit tax (CIR credit import
research), it’s a corporate tax relief which government forgoes the expenditure of
the firm on its R & D operations. The technological index of France is 4.65.
ENVIRONMENTAL

In France, forest covers about 30.3% of land. France is the first country to have a
separate ministry for environment. France is been ranked 17th for carbon dioxide
emission. The EPI score for France is 78.2 and it holds 7th rank. This could be
achieved as Frances 78% of energy production comes from nuclear power. France
has even imposed a carbon tax. It’s about 17 Euros per ton of carbon dioxide
emitted. It contributes about 4.5 billion Euros per year. France carbon emission is
about 382,870 kt. being a member of G8 France has decided to cut short its carbon
emission by about 20%2012.

LEGAL

Employment laws
Hiring: Written contract are mandatory to all grades and levels. It should be in
French. Firing: cannot be removed unless the organization specifies one of the
claws mentioned in the French law. The dismissal process on disciplinary basis is
very official and failing to pursue the practical steps, even where the firing is
clearly reasonable on the merits, May effects in the Courts overturning the firing
and ordering the recall of the employee.

Taxation
The current standard rate is at 19.6%. The reduced rate (for food and books) is
5.5%. A specific rate of 2.1 % applies only to the drugs taken in charge by the
Social Security. The net revenue of VAT in 2008 is 126 billion euro.

Subsidy policy is applicable only to agricultural and green revolution products.

FDI: Policies on direct investment flows are there since 1984-1985. Both inward
and outward flows are at a higher rate.

The Labor Code

(Code du Travail) is the major basis for labor law. Meeting across the code is a
large organization of legally enforceable rights introduced from side to side group
and work agreements (règlement intérieur).
CONCLUSION
France being at the heart of Europe has a great advantage. It has world’s largest
consumer market consisting about 500 million consumers. France also is the
leading destination for tourism. France government provides a great support for
foreign investment.

BIBLIOGRAPHY

http://www.balticfem.com/en/bandiar/swot-analysis/france.html
http://data.worldbank.org/country/france
http://www.alacrastore.com/alacra/help/sample_datamonitoress.pdf
http://www.ambafrance-uk.org/Environment-France-and-the-fight.html
http://www.studentsguide.in/competetive-exams/france.html
http://www.diplomatie.gouv.fr/en/espaces_dedies.php3?id_rubrique=159