4/4/2023

Managerial & Financial Analysis

CAF-06

MUHAMMAD ASHRAF REHMAN

PhD Scholar, M-Phil(IT), MBA(MIS), BCS(H)

PESTEL
• Political Analysis: Government’s temporary Policies
• Economics Analysis: Economic condition of country (Inflation, Unemployment,
Recession, Growth, Balance of payment)
• Social Analysis: Culture, Society, Customer’s liking and disliking.
• Technological Analysis: Use of technology (due to Govt. influence or
competitor’s move)
• Environmental Analysis: Natural environment only (Dual impact)
• Legal Analysis: Law of country (Law, Legislation, Act., Registration body of
Govt.)

Analys The Env-Car company Using PESTEL

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The Env-Car company was formed ten years ago by pioneering work of Professor
Saloji of Spire University, a university in the country of Finland. Over a number of
years he had patented processes that allowed him to use Lithium-ion batteries to
power an electric car, which could travel up to 200 kilometers, after recharging.
He set up Env-Car to put into commercial production.

Coincidentally, an area in the south of Finland was suffering from major industrial
decline. This area was centered on the former Lags Lane factory of Jet-Cars,
which had recently been shut down by its parent company, bringing to an end 60
years of continuous vehicle manufacture on that site. Many skilled car production
workers had been made redundant in an area that already suffered significant
unemployment. Grants and interest-free loans from the government allowed
Env-Car to purchase and re-furbish part of the Lags Lane site and take on a
hundred of the skilled workers made redundant by Jet-Cars.

There are two other cars available in market. A Petrol-fuelled car (Kyutia 215) and
a hybrid car (Xdos-HybridC). Petrol currently costs $5 per liter in Finland.

The Evn-Car can be re-charged from a domestic electricity supply. However, to

supplement this, the government has recently funded the development of 130
charging stations for electric cars spread throughout the country. It has also given
businesses tax incentives to switch to electric cars and is heavily taxing cars with
high CO2 emissions because of the detrimental effect of excess CO2 on the
environment. Government has also enacted a number of laws on car safety
which Env-Car has to comply with.

Finland itself remains a prosperous, developed country with a well-educated

population. The Env-Car model is largely bought by ‘green’ consumers in Finland,
who are prepared to pay a price premium for such a car. Env-Car is also popular
in the south, where the residents are proud of their car making tradition and
grateful to Professor saloji.

An external environmental analysis of a country considers political, economic, socio-cultural,

technological, legal and environmental (ecological) forces that affect Evn-Car.
Political Analysis
Evn-Car has been the beneficiary of government policies which have been aimed at nurturing green
technology by giving tax incentives, grants and interest-free loans. It has also placed heavy taxes on
cars with high CO2 emissions. Very importantly, Govt. has also funded the development of 130
charging centers throughout the country where the Cars can be re-charged. Govt. supporting the
business in all aspects, which will enhance sales of Evn-Car.
Economics Analysis
Although there is high unemployment in the south along with industry decline, but Env-car gaining
benefits. Government giving grant take on a hundred of the skilled workers made redundant by Jet-
Cars.
Social Analysis
The consumer just purchases a different car. However, the Evn-Car appeals to a segment of buyers
who are prepared to pay a premium price for the ‘cleaner’ product. Although the price of the
product is relatively high, the buyer does not actively seek out cheaper alternatives. They know that
these alternatives exist but they do not purchase them because of their green ideals.

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Technological Analysis
Technological innovation is at the heart of Evn-Car and the company needs to monitor
technological trends for at least two reasons. Firstly, for potential alternatives to lithium-ion
batteries that could seriously affect the viability of their whole product. Secondly, the company
has to be on the look-out for improvements in lithium-ion batteries that could make them
cheaper, lighter or more powerful.
Environmental Analysis
Underpinning the green consumer market is the belief that environmental damage is caused by
CO2 emissions and that preserving natural resources for future generations is important. Evn-Car,
scientists discover that emission of CO2 is actually necessary for the planet’s survival. Similarly, if
people become increasingly pessimistic, less concerned about their children’s future, they will be
in big problem.
Legal Analysis
Finally, the government has enacted a number of general laws on car safety that have to be
complied with by Evn-Car. Further legislation is expected, so the company must monitor this. It
may increase the cost of production.

ICAP’s Paper
Mar-2023 (Q # 6) M-10

Star Business School (SBS), a renowned world-class education provider, is offering a range of degree
courses in business, accounting, finance, human resource, hospitality management, marketing, and
supply chain management. The school boasts a strong faculty, high-quality research, state-of-the-art
infrastructure, and a zero-tolerance policy for quality education.
BS has been receiving grants from the government to support its futuristic educational activities.
However, due to political instability and a deteriorating economic situation in the country, the
educational sector has experienced a decline in grants over the past year. Further, it has been under
consideration that the grant shall be given to a university only on the recommendation of the Higher
Education Commission and its related bill has recently been placed before the National Assembly.
In order to remain competitive, BS has invested heavily in the latest software and technology for its
education program, to ensure smooth delivery of lectures both online and in-person. It is also
reserving seats and offering scholarships for international students, and is working on student and
faculty exchange programs with world-class universities. SBS's long-term plans include launching
various online programs for international students and opening facilitation offices in countries with a
high potential for collaborations and international students.

Required:
Conduct PESTEL analysis on the information provided for SBS.