Importance of PESTEL Analysis in Strategy Management & Planning Process

Strategy planning process often requires five steps –

1. Choosing the vision, mission and the reason of existence for Mgv Fish.

2. Analyze the Mgv Fish external competitive environment to identify opportunities and
threats. PESTEL analysis is critical to understand the external threats & opportunities
arising because of the macro environment developments. Changes in macro
environment forces can impact the Porter Five Forces & industry attractiveness. Thus
significantly impacting the ability of Mgv Fish to build sustainable competitive
advantage

3. Analyze Strengths and Weaknesses of Mgv Fish.

4. Developing strategies that can capitalize on Mgv Fish strengths and help mitigate
weaknesses and impact of threats of macro-environment.

5. Execution of the strategy and building a feedback loop, using which managers at Mgv
Fish can fine tune processes and strategies going forward.

The Industrial Organization (I/O) approach advocates that for sustainable competitive
advantage external factors are as important as internal factors of the Mgv Fish.
According to Michael Porter organizational performance is to large extend determined
by various industry forces.

What are Political Factors in PESTEL / PEST Analysis

The political factors play a huge role in not only investment decision by transnational
corporations but also by companies such as – Mgv Fish. Political environment and other
factors not only impact the cost of doing business but also long term sustainability.
Some of the political factors are – governance system, democracy & institutions, military
coup chances, probability of armed conflict, law and order in market etc.

Political Factors that Impact The Aquaculture Industry in the Philippines:

Creating Social Values at Marina Gana Vida
- Judiciary Independence – In the matter of commercial and business decisions, judiciary
of the country is independent to a large extent. Business do face problem when the
conflict is between public interest and proprietary technology similar to ruling in South
Africa where government & judiciary allowed generic AIDS drug irrespective of patents
of global companies.

- Regulatory Practices - The regulatory practices are streamlined with global norms
which have helped the country to improve its “ease of doing business” ranking.

- Democracy & Other Democratic Institutions – According to Ali Farhoomand, Shiu Kau
Wong the democratic institutions are needed to be strengthened further so that
business such as Mgv Fish can thrive in an open, transparent and stable political
environment. Strengthening of democratic institution will foster greater transparency
and reduce the level of corruption in the country.

- Size of Government Budgets – both Local Governments and National Government –

The government at both national level and local levels are running deficit budgets which
is boosting growth in the short term but may lead to increase in inflation over medium
term. The bond rating of national government is investment grade.

- Segregation of Political Responsibilities between Different Government Agencies –

There are numerous government agencies which reduces the risk of overwhelming
pressure by one agency. But on the flip side it does increases both time and cost of
doing business and getting certifications and clearances.

- Role of Non-Government Organization, Civil Society & Protest Groups – The country
has a vibrant civil society community and Mgv Fish should build bridges with them and
seek out areas of co-operations. Civil society groups are influential not only in policy
making but also in building a society wide narrative.

- Likelihood of Entering into an Armed Conflict – From the information in the The
Aquaculture Industry in the Philippines: Creating Social Values at Marina Gana Vida case
study, I don’t think there is a likelihood of country entering into an armed conflict with a
neighboring country.

What are Economic Factors in PESTEL / PEST Analysis

Economic factors of a country and region have a direct impact on the potential
attractiveness of a given market. Some of the economic factors that Mgv Fish should
evaluate both in the present market and one in which it wants to enter are – inflation
rate, GDP growth rate, disposable income level etc.

Economic Factors that Impact The Aquaculture Industry in the Philippines:

Creating Social Values at Marina Gana Vida

- Price Fluctuations in both Local and International Markets – Compare to the level of
quantitative easing in last decade the prices of Mgv Fish products and prices of overall
products have remained sticky in the US market. Mgv Fish should consider the fact that
at deficit levels of United States in an emerging economy can lead to rampant inflation
and serious risks of currency depreciation.

- Consumer Disposable Income – The household income of the country has increased
constantly in the last decade and half, compare to the USA market where household
income is still below 2007 levels and not increased in real terms since early 1980’s. Mgv
Fish can leverage this trend to expand the market beyond its traditional customers by
employing a differentiated marketing campaign.

- Foreign Exchange Rate – Number of companies have incurred losses in past few years
because of forex risk in – Venezuela, Brazil, and Argentina. Mgv Fish should be careful
about the history of forex risk before entering new market. Many US companies have
incurred losses in Mexico in regular forex crisis in that country.

- Financial Market Structure and Availability of Capital at Reasonable Rates – The

quantitative easing policy of Federal Reserve has led to liquidity flooding all across the
global financial markets. Mgv Fish can borrow cheaply under such circumstances. But
this strategy entails risks when interest rate will go up.

- Government Spending – As mentioned in the political factors, government of the

country is running deficit budgets. The implication for Mgv Fish is that it can boost sales
of its product in short run but also expose Mgv Fish to medium term forex and currency
depreciation risks.

- Level of Household Income and Savings Rate – Increasing consumption and stagnant
household income in United States had led to credit binge consumption. It has
decimated the culture of savings as people don’t have enough to save. Mgv Fish needs
to be careful about building marketing strategy that is dependent on “Purchase on
Credit” consumer behavior.

- Employment Rate – If the employment rate is high then it will impact Mgv Fish
strategies in two ways – it will provide enough customers for Mgv Fish products, and
secondly it will make it expensive for Mgv Fish to hire talented & skillful employees.

Environmental factors are fast gaining traction not only among consumers but also among
regulators and policy makers. Climate change and changing ecosystem is leading to the
extinction of more than 20% of species on the planet by the turn of this century.

Environmental Factors that Impact The Aquaculture Industry in the Philippines:

Creating Social Values at Marina Gana Vida

- Paris Climate Agreement and Commitment of National Government under the Agreement –
What are the commitments of the country under the Paris Agreement and what is the general
level of consensus regarding Paris Climate Agreement in the country. For example Trump not
standing by US commitments created an environment of uncertainty.

- Corporate Social Responsibilities Culture – Are Mgv Fish present CSR efforts applicable in the
new market or does it needs to have new initiative to cater to the prospective market.

- Level of Consumer Activism Regarding Environmental Concerns – Mgv Fish needs to know
the level of consumer activism regarding environmental concerns is. It will help Mgv Fish in
both developing environmentally friendly products and thwarting PR stumble blocks.

- Influence of Climate Change – How climate change will impact Mgv Fish business model and
supply chain. For example if the supply chain is not flexible it can lead to bottlenecks if
shipments from one part of the world are delayed because of sudden climate shift.

- Influence and Effectiveness of Environmental Agencies – The role of environment standards

enforcement agencies is critical in safeguarding norms. But often in emerging countries these
agencies delay the process as a tactic to extract bribes. Mgv Fish should be aware of presence of
such practices in a country.

- Focus & Spending on Renewable Technologies – How much of the budget is spend on
renewable energy sources and how Mgv Fish can make this investment as part of its competitive
strategy.
- Per Capita and National Carbon Emission – What is the per capita carbon emission of the
country and what is the overall level of carbon emissions of the country. This will help in better
predicting the environment policy of the country.

What are Legal Factors in PESTEL / PEST Analysis

Legal factors often govern – conditions to enter the market, laws to operate in the market, and
procedure to resolve any dispute with other stakeholders. If the legal system is not strong then
Mgv Fish can face numerous challenges – from consumer petitions to shakedowns from
authorities.

Legal Factors that Impact The Aquaculture Industry in the Philippines: Creating
Social Values at Marina Gana Vida

- Adherence to Common Law – Is the country following common law which is uniform for all
parties – whether domestic or international. If there is arbitrariness in the judicial process then
Mgv Fish can’t be sure of the judgments.

- Laws regarding Monopoly and Restrictive Trade Practices – As a new player Mgv Fish
shouldn’t be worried about the monopoly and restrictive trade practices law.

- Transparency in Judiciary System & Processes – Transparency is essential for fair and
consistent decision making. If the process is consistent and transparent then Mgv Fish can plan
ahead with greater conviction.

- Independence of Judiciary and Relative Influence of Government – The judiciary independence

often reflect both strength and credibility of the institutions in the country.

- Health & Safety Laws – What are the health and safety laws in the country and what Mgv Fish
needs to do to comply with them. Different countries have different attitude towards health and
safety so it is better for Mgv Fish to conduct a thorough research before entering the market.
- Business Laws – Before entering into new market – Mgv Fish has to assess what are the
business laws and how they are different from home market.

- Employment Laws – What are the employment laws in the country and are they consistent with
the business model of Mgv Fish. For example Uber employment system is not consistent with
French laws and it is facing challenges in the country.

5C Marketing Analysis of The Aquaculture Industry in the Philippines: Creating Social Values at
Marina Gana Vida

4P Marketing Analysis of The Aquaculture Industry in the Philippines: Creating Social Values at
Marina Gana Vida

Porter Five Forces Analysis and Solution of The Aquaculture Industry in the Philippines: Creating
Social Values at Marina Gana Vida

Porter Value Chain Analysis and Solution of The Aquaculture Industry in the Philippines:
Creating Social Values at Marina Gana Vida

Case Memo & Recommendation Memo of The Aquaculture Industry in the Philippines: Creating
Social Values at Marina Gana Vida

Blue Ocean Analysis and Solution of The Aquaculture Industry in the Philippines: Creating Social
Values at Marina Gana Vida

Marketing Strategy and Analysis The Aquaculture Industry in the Philippines: Creating Social
Values at Marina Gana Vida
.VRIO /VRIN Analysis & Solution of The Aquaculture Industry in the Philippines: Creating Social
Values at Marina Gana Vida

PESTEL / STEP / PEST Analysis of The Aquaculture Industry in the Philippines: Creating Social
Values at Marina Gana Vida

Case Study Solution of The Aquaculture Industry in the Philippines: Creating Social Values at
Marina Gana Vida

SWOT Analysis and Solution of The Aquaculture Industry in the Philippines: Creating Social
Values at Marina Gana Vida

References & Further Readings

Ali Farhoomand, Shiu Kau Wong (2018), "The Aquaculture Industry in the Philippines:
Creating Social Values at Marina Gana Vida Harvard Business Review Case Study. Published by
HBR Publications.

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Marketing & Sales

Digital Strategy

Operations Management

Social factors such as demography trends, power structure in the society, women
participation in workforce etc have immense impact over not only the country's
economy but also on workforce talent availability and level of consumer demand.

Social Factors that Impact- The Aquaculture Industry in the Philippines:

Creating Social Values at Marina Gana Vida

- Attitude towards Savings – The culture of saving in US and China is totally different
where savings rate in China is around 30% , it is well below 15% in United States. This
culture of consumption and savings impact both type of consumption and magnitude of
consumption.

- Demographic Trend – The demographic trend is one of the key factors in demand
forecasting of an economy. For example as the population of USA and EU is growing old
the demand for products mostly catering to this segment will grow. Mgv Fish should
consider demographic trends before new product developments and integrate features
that cater to this segment. As population is ageing it will require less tech intensive
products.

- Education Level in Society – Education level of the society impacts both the quality of
jobs and level of income. High level of education often results in better jobs, higher
income and higher spending on complex and aspirational products.

- Attitude towards Health & Safety – The attitude towards health and safety is often
reflected in the quality of the products and cost structures of manufacturing processes.
Mgv Fish has stringent norms for health and safety norms so in emerging economies it
may have to compete with players who don’t have high cost structures that of Mgv Fish.

- Societal Norms and Hierarchy – What sort of hierarchy and norms are acceptable in
society also influence the types and level of consumption in a society. In highly
hierarchical societies the power of decision making often reside at the top

- Attitude towards Leisure – Mgv Fish should conduct an ethnographic research to

understand both attitude towards leisure activities and choice of leisure activities.
Experience economy is one of the fastest growing segments both among millennials
and among baby-boomers.

- Level of Social Concerns & Awareness in Society – Higher level of social concerns in
the society often result higher consumer activism and pressure from non-governmental
organizations, & pressure groups.

- Power Structure in Society – Mgv Fish should carefully analyze both - What is the
power structure in the society? How it impacts the demand in the economy. For example
the power structure in US economy is slowly moving towards the older generation as
that generation has higher disposable income compare to the younger generation.

What are Technological Factors in PESTEL / PEST Analysis

Technology is fast disrupting business models across various industries. Some of the
technology trends that are impacting the macro environment are – developments in
artificial intelligence, use of machine learning and big data analytics to predict consumer
behavior, growing importance of platforms over service providers etc.

Technological Factors that Impact The Aquaculture Industry in the

Philippines: Creating Social Values at Marina Gana Vida

- Mobile Phone & Internet Penetration – Mgv Fish should assess the level of internet
and mobile phone penetration in the country as it will it in building a requisite business
model based on local needs and realities.

- Acceptance of Mobile Payments and Fintech Services – One of the areas where US are
lacking behind China is Mobile Payments. Mgv Fish should assess what are preferred
choice of mobile payments in local economy and chose the business model based on it.

- Integration of Technology into Society & Business Processes – Uber failed in China
because it tried to enter before smartphone were widespread in China. Mgv Fish should
build a strategy that can integrate societal values, infrastructure, and Mgv Fish business
model.

- Research and Development Investment Levels – If there is high level of investment in

technology development sector then there are high chances of building a self sustaining
ecosystem that drives innovation. Mgv Fish can leverage such a situation to hire the best
people in business.

- Property Rights & Protection of Technology Oriented Assets – Mgv Fish should analyze
the legal status of various property rights and intellectual property rights protections
that are common in US.

- Cost of Production and Trends – Mgv Fish should assess - What are the cost of
production trends in the economy and level of automatization. We at EMBA Pro believe
that in near future the sector most disrupted by technological innovation is
manufacturing and production.

- Transparency & Digital Drive – Mgv Fish can use digitalization of various processes to
overcome corruption in the local economy.
- Empowerment of Supply Chain Partners – Mgv Fish should analyze areas where
technology can empower supply chain partners. This can help Mgv Fish to bring in more
transparency and make supply chain more flexible.