PESTEL ANALYSIS

Macro-environmental factors affecting Splash Corporation, the “Company” are

identified and assessed through PESTEL Analysis below.

Political Factors

 Government regulation
o The continuous quarantines enforced by the government since 2020
greatly affect the business sector especially with the travel
restrictions. This slows down the Company’s operations since its
products and services are being offered throughout the country.

 Tax policy
o Philippines’ corporate income tax rate decreased to 20%-25% due to
the CREATE bill. This increases the Company’s net income after tax.

Economic Factors

 Economic growth rate

o The current economy of the Philippines is low at -8.3 in the last
quarter of 20201. This is attributed to the impact of the pandemic
brought by COVID-19. This affects the public’s ability to purchase
things other than the necessities.

 Unemployment rate and purchasing power of peso

o The unemployment rate briskly increased to 3.36% in 2020 2 – the
highest in the past 5 years. This implies lower capacity of consumers
to purchase the company’s products.

Social Factors

 Sex roles and distribution

o The society nowadays is leading towards gender equality and against
sexism. The generation before This attitude encourages more males
to be open in using and consuming beauty products (which was seen
before as something to be used only by females).

 Attitudes towards saving and investing

o Investing is highly promoted to the society nowadays. People are
becoming more interested in spending their money in investments.
This could affect the Company considering that the products/services
being offered is something easily consumed and may be seen as
something unnecessary.
Technological Factors

 Technological change
o Majority of the things today are done online. People are getting
connected faster through the internet and several social media.
Advertising is being done differently especially that people are
restricted or highly discouraged to go outside.

 Automation
o Due to continuous study of technology, many of the manufacturing
processes can now be done automated. The decision of having some
part of the manufacturing process be converted into automation
entails a lot of factors including the high cost of machineries which
can be covered in the long-run as this results to lower cost per
product manufactured. Another factor is the number of employees to
be retrenched.

Environmental Factors

 Environmental regulations
o Programs such as Zero Waste and small business models operating on
plastic-free system refill and reuse 3 are examples of the actions being
taken by different corporations with their concern regarding the
environment. It is indeed important that companies today look
forward to lessening or avoiding the use of plastic or emission of
gases that harm the environment. Environmental laws or regulations
are already imposed to several parts of the country.

Legal Factors

 Health and safety laws

o Health products offered by the Company undergo several health and
safety inspection before these are carried out to the market. The
Philippines has adopted the ASEAN Harmonized Regulatory Scheme
and the ASEAN Common Technical Documents in the cosmetic
industry.4 Also, companies operating in the industry is required to
obtain a License to Operate prior to engaging in manufacturing,
importation, distribution and sale of cosmetics.4
1
https://psa.gov.ph/content/philippine-gdp-posts-83-percent-fourth-quarter2020
95-percent-full-year-2020
2
https://www.statista.com/statistics/578722/unemployment-rate-in-philippines/
3
https://th.boell.org/en/2020/01/20/philippines-banning-single-use-plastics-
national-level-and-strengthening-existing-laws
4
https://cosmetic.chemlinked.com/cosmepedia/philippines-cosmetic-regulation