PESTLE Analysis Example: Australia

Australia, officially known as the Commonwealth of Australia is a sovereign country

which comprise the mainland of the Australian Continent, the island of Tasmania
and several small islands. It is known to be the largest country within the Oceania
and the sixth largest country in the world on the basis of its total area. Australia is a
beautiful country with ample options for outside investors. The capital of the country
is Canberra, while her most populated and crowded city is Sydney. If we look at the
history of the continent, native Australians have been occupying and living in the
Island for the past 65000 years. Dutch were the first earliest invaders who came to
her shores in the 17th century, and then the British followed it in 1770. However, all
the colonists and invaders decide to come together and lay the foundation of the
commonwealth and united Australia on January 01, 1901. She has been a united
country since then.

To learn more, we will take study how political, economic, social and technological
factors are affecting the country collectively.

1. Political Factor
The political factors refer to the government and its affairs within a country which
can impact the operations of organizations through the various policies made by
governments from time to time that have a direct impact on the taxes to be paid by
the companies, the licenses that may be required to be obtained, etc. The government
in Australia is stable and provides a healthy and positive environment for
organizations to operate their businesses in.The country’s figurehead (the Prime
Minister) sits at the head of the Australian government. The country’s business
climate makes it a hot contender for investments. The political situation is rather
stable, allowing investors to feel confident in their purchases. As for economic
challenges, the country’s government addresses this, as well as policy changes. In
fact, recent economic policy changes have driven Australia to be one of the top-rated
countries in the region.

Transparent Political System

The administrative management system of the government is comprised of

constitutional monarchy and liberal democracy. Queen Elizabeth the 2nd is the
official head and leader of the country and prime minister is the head of the
government. Australian governors and governor generals respect and treat queen at
the state and federal levels respectively. The management system of the government
is fair and transparent, that’s why people have trust in her government. The country
has two major political parties; the Australian labor party and the liberal party.

Alliances & Connections

Australia has very strong ties with the US and she is a member of the United Nations.
She has also got membership and alliances with other world-leading organizations
like Commonwealth of Nations, OECD, G20, ANZUS, Asia Pacific Economic
Cooperation, ASEAN plus Six Mechanism, Pacific Island Forum, and World Trade
Organization.

Criticism of Neighbours

Despite having a membership at the UN table and close relations with the US, the
UN and her neighboring country New Zeeland has fiercely criticized her for poor
treatment towards refugees, deportation laws, not caring for indigenous people, and
violation of human rights.

Political Climate

The strong and stable political climate of the country has attracted the attention of
investors because stability makes them feel to trust the system. As far as the
economic policies of the county are concerned, Australia’s recent economic and
political reforms have made her one of the top-ranking countries in the region.
 2. Economic Factor
The economic factors refer to the GDP ratio in the economy of a country/market that
define the paying capacities of the people in that country which consequently
impacts the revenue of the organizations. The per capita income in Australia is high
and so is the overall GDP as compared to many other popular cities and countries in
the world. The quality of life of the people in Australia is high and they spend well
on various products of their need. In the year 2017, the GDP in Australia turned out
to be 1323.42 billion USD. The GDP per capita during the past 10 years has been
constantly increasing and the year 2017 witnessed the higher GDP.

Australia’s real gross domestic product (GDP) was AUD 1871.51 billion in 2019
and due to COVID-19 outbreak it is estimated to shrink by 6.665% to be
around AUD 1746.77 billion in 2020. Australia’s unemployment rate was 5.183%
of total labor force in 2019. Due to slowdown in global economic activity due to
COVID-19 pandemic the unemployment is expected to increase by 31.99% and
reach 7.621% in 2020. Unemployment is further estimated to increase in 2021 by
14.60% and reach 8.924% of total labor force in Australia. Australia’s per capita
GDP was estimated at USD 55421.33 whereas purchasing power parity (PPP) based
per capita GDP is estimated to be at USD 53559.18 for the year 2019. The output
gap for Australia in 2020 is estimated to be in negative at 0.492% of the potential
GDP which indicates that Australian economy will be underperforming by managing
actual output.

Strong Economy

The highest per capita means earning per citizen, it means that every citizen of the
country is employed and earning well. When people are working and earning, then
there will be lower unemployment, less crime and people will be happy. Happier and
mentally satisfied people would perform better, and then the overall productivity of
the country would rise. The way her economy is progressing, her issues like
inflation, business investment, and household income would be resolved sooner.

Best Choice for the Real Estate Investors

Businesses and investors who are interested in the real estate business, then the US
currency exchange rate would make it favorable for them to invest. Real estate is a
flourishing industry here in Australia; it allows to buy property at a less price, and
sell it at a higher price sometimes later. Although it is a great promising opportunity
for investors, but much of the country’s resources are stuck in the real estate. No real
productivity is happening; just renting prices are being multiplied.

Head Office of Foreign Companies

Many companies are moving and relocating their head offices into Australia because
the business relocation here is a bit cheaper than other western countries for Asian
companies.

Taxes

Australian taxation policy and rules depend on the income; if the income is higher
and it is more than roundabout 25 million dollars, then the standard 30% tax rate
would apply. If it is less than 25 million dollars, then the tax rate is 27.5%. if income
is $18200, then the rate is zero percent. In case, it is more than $18200, then the
business has to pay 19% tax rate on every dollar over it.

Imports and Exports

Some of her prominent exports are oil, gas, gold, coal, wheat, beef, education, and
financial services. On the other hand, Australian’s imports are fuel, machinery,
electrical equipment, vehicles, mineral oils, pharmaceutical products, medical
apparatus, furniture, and plastic. In 2017, the total imports of the country comprised
of 221.4 billion US dollars.

3. Social Factor
Social factors concern the customers in the market and the concerns, values,
practices and beliefs of the people within a society are capable of impacting the
revenue earned by an organization as well as its overall growth in the market. The
people in Australia are educated and pay attention to the overall growth of the society
which is why concerns like exploitation of resources by companies are highly
focused upon. The firms will have to pay attention to such concerns, to their
corporate social responsibility, etc. to create positive impressions upon the
customers.

The consumer price index (CPI) has also been evaluated and it has been seen that
the year 2018 witnessed the higher CPI during the last 10 years. Australia has a
smaller population than most other countries. As of 2018, it’s nearly 23 million. The
average life expectancy differs by men and women; men average around 80 years
and women 84 years. There are three social classes in Australia: the working, middle,
and upper class. What separates these classes? This is debatable. The upper class is
typically 5-10 percent with property, capital, and ownership being their main sources
of income. The middle class is the people who don’t have manual jobs. And more
than 20 percent of the population identify as manual workers (the working class).
Australia puts emphasis on higher education. You can choose between universities
and TAFE (institutions of technical and further education). Going to either of these
institutions is also affected by your wealth and social status.

Less Population

The landscape of Australia so vast and majestic, but if you compare her size with the
total population of the country, then it is much lower. According to an estimate, the
total population of Australia in 2020 is approximately more than 25 million people.
The average life expectancy of males and females is roundabout 80 and 84 years old
accordingly.

Diversity

After the 2nd World War, Australia allowed to mass immigrants to habitat the Island.
Therefore, Australia has the world’s most multicultural and multi-ethnic society.
That’s why the country is conscious about refugees and immigrants because they
have had faced such multicultural and multi-ethnic issues in the past. What the world
is facing today.

Three Social Classes

Australian society is divided and comprised of three parts; upper class, middle class,
and working class. The upper class and middle class acquire big houses, expensive
clothes, and luxury cars. The difference in both of these classes is the amount of
money they have in the banks. But the outlook, lifestyle, and manners of both of up
classes is almost the same. However, the working class is usually under the debt to
maintain the same luxurious lifestyle set by the upper class.

Higher Education System

Australians prefer higher-tech education, and the selection of educational institution

depends on status and wealth. Rich people would go to the private schools and
colleges, and the working class have to attend the government schools.
 4. Technological Factor
Australia is known for its technological innovations. It adopts new technology more
frequently than countries in similar standing. The purchasing of new technology is
expected to reach $65 billion this year. Technological factors refer to the growth of
technology in a market that may be essential to be used in the various processes and
operations of an organization through which products and services are improved and
provided to the customers. The technological growth in Australia is significantly
good which means that companies can make use of such technology to not only
maintain and improve the quality of their services (such as using eco-friendly
refrigeration technology to store products), but also to reduce their costs of
operation.

There’s trouble regarding technological policies and research. Most research and
development falls towards national research centers, while university researchers
must struggle over funding resources. The government funds over 50 percent of all
the research and development; industries contribute around 40 percent. Then there’s
the new law passed by government officials regarding encryption. The government
has passed a controversial law to allow police and security to access anyone’s
encrypted messages.

To citizens, this is an invasion of privacy. It also means products using end-to-end

encryption, like WhatsApp and Signal, are expected to change for this policy. People
outside of Australia fear similar policies will be adopted into their home countries
too.

Tech Innovation

Australians economy is spending approximately 65 billion US dollars in the

technology. It shows the country’s interest in the technological innovation. Local
businesses and companies are investing and adapting the latest technology.

Tech Policies and Funding

Australian Nation Research Center usually takes the credit of the tech innovation
and development. That’s why it’s irritating for some people that they and their
organization should make a name of themselves.
No Encryption

Australian government has passed the law of removing encryption from the personal
and private message. It is for security purposes. If hackers and outsiders get their
hands on the private information of people, then it can be disastrous. The
Government says that by removing the encryption from the private messages of
citizens would help the police to catch the criminals and terrorists. If the encryption
is removed, then hackers can use the backdoors of the government and get access to
the private information of people. Critics say that it’s an attack on the privacy of the
people.

5. Legal Factor
Legal factors refer to the various laws and regulations that may be required to be
followed by organizations and their strictness impacts the operations or the
organizations. There are various laws in Australia that will impact companies and
will be required to be followed by the company while operating in the country such
as policies regarding fair competition in the market, paying proper wages to the
employees and workers as well as providing them proper working conditions,
payment of several taxes such as those paid under the Carbon Tax policy, etc.

Legal factors include the imposition of various laws and regulations by the
government and other higher authorities. These factors affect the way business firms
operate and consumer behavior in the industry. Thus, legal factors affect various
decision making and operational activities of organizations. (Legal Factors, 2019)

Australia is the biggest host of legal technology companies in APAC apart from
China and we have nearly double the saturation compared to the US market, so it
can be difficult for legal professionals to find the most beneficial products and
services. This is where consultants continue to play an important role.

These are related to the legal environment in which firms operate. The introduction
of age discrimination and disability discrimination legislation, an increase in the
minimum wage and greater requirements for firms to recycle are examples of
relatively recent laws that affect an organisation’s actions. Legal changes can affect
a firm’s costs (e.g. if new systems and procedures have to be developed) and demand
(e.g. if the law affects the likelihood of customers buying the good or using the
service.
To find information on the legal factors in a city of country, investigate the following
resources.

AustLII

Free access to Australasian legal materials, including legislation, decisions of courts

and tribunals, and treaties. Articles from law journals and law reform commission
reports are among its secondary materials.

WorldLII

Provides free access to primary and some secondary legal materials from overseas
jurisdictions. Includes International law databases.

AGIS Plus Text: Attorney General's Information Service via Informit Online (1975
- present)

Covering all aspects of Australian law, and an authoritative collection for primary
legal research in comparative and Commonwealth law. Includes articles, reports, and
books from Australia, New Zealand and the Asia Pacific region, plus selected
material from the United Kingdom, U.S. and Canada starting from 1999.

ACCC

The Australian Competition and Consumer Commission, and contains information

on fair trading, business rights and responsibilities and industry monitoring.

6. Environmental Factor
Since the problems of environment degradation are highly discussed and shown
concern about in the present day, there are strict policies and regulations that will be
necessary to be followed by companies in Australia. This will not only be a legal
obligation for the company to avoid fines and penalties but also will be essential to
maintain their reputation amongst the consumers who are becoming increasingly
aware of the environment issues

Environmental factors include the weather and climate change. Changes in

temperature can impact on many industries including farming, tourism and
insurance. With major climate changes occurring due to global warming and with
greater environmental awareness this external factor is becoming a significant issue
for firms to consider. The growing desire to protect the environment is having an
impact on many industries such as the travel and transportation industries (for
example, more taxes being placed on air travel and the success of hybrid cars) and
the general move towards more environmentally friendly products and processes is
affecting demand patterns and creating business opportunities. There is rising
concern for environment among the customers and people of society which has
influenced various initiatives by retail firms operating in industry. However,
development of various environment laws by Australian government may further
affect the working of this organization ("Australian business and environment laws
- Austrade", 2019).

To find information on the environmental factors in a city of country, investigate the

following resources.

Environment Complete via Ebsco

Covers all areas of environmental research and technology, environmental law,

public policy, social impacts, urban planning, and more. Coverage starts in the
1940s.

Web of Science Core Collections

This portal hosts Web of Science, Current Contents Connect, BIOSIS Previews,
CAB Abstracts, MEDLINE, and via the Additional Resources tab, Journal Citation
Reports. Its CrossSearch feature enables a "quick overview" search of these
databases and also searches Agricola and Pubmed.

MEDGE: Management and Environment Information via Informit Online (1985 -

2006)

Indexed articles on management issues for business and government.

Conclusion:
The PESTLE Analysis
Example of Australia
provides that the
Australian market is
flourishing and the
Australian economy is
promising. Thus, if a
firm is operating in the
Australian Market or is willing to
expand its operations in Australia, the
company would have bright chances.

The new law affecting encryption and

data privacy is deemed a step back by
most citizens and security experts. That
won’t stop the change though, as the
government feels it’s doing what’s best
for the citizens.
Australia is one of the world’s strong
countries with beautiful landscape. The
Government should discourage real
estate investment, and encourage
investment in the technological sector.
The stable political environment of the
country is admirable, and it’s one of the
main reasons for attracting investors.
Removing encryption is not a good step
either in terms of security or privacy.