PESTEL of international markets

Week 5 Johanna Fahy

1 .Layers of the business environment Exhibit 2.

 Why do firms need to pay attention to the external environment? uncertainty  changing  source of the THREATS to future  source of OPPORTUNITIES for growth .



What is the government's position on marketing ethics? 4.PESTEL         Political Factors. The political arena has a huge influence upon the regulation of businesses. and the spending power of consumers and other businesses.How stable is the political environment? 2. What is the government's policy on the economy? 5.Will government policy influence laws that regulate or tax your business? 3. You must consider issues such as: 1. Does the government have a view on culture and religion? 6. Is the government involved in trading agreements such as EU or others? .

Gross Domestic Product (GDP) per capita 6. You need to look at: 1. 4. Employment level per capita. Long-term prospects for the economy 5. 2. Marketers need to consider the state of a trading economy in the short and long-terms. and so on (in which field they spend more? . Interest rates. The level of inflation 3. This is especially true when planning for international marketing. Consumer Confidence.        Economic Factors.

         Sociocultural Factors.What is the dominant religion? 2.Do the population have a strong/weak opinion on green issues? VALUES LEVELS OF EDUCATION TASTES / PREFERENCES .What are attitudes to foreign products and services? (Cuba) 3. It is very important that such factors are considered.What are the roles of men and women within society? 6.Does language impact upon the diffusion of products onto markets? 4. The social and cultural influences on business vary from country to country.How much time do consumers have for leisure? 5.How long are the population living? Are the older generations wealthy? (Germany in EU) 7. Factors include: 1.

Government expenditure on research? (on R&D) . books via the Internet.       Technological Factors. Customer Relationship Management (CRM).How is distribution changed by new technologies e. etc? 3. Does technology allow for products and services to be made more cheaply and to a better standard of quality? 2. banners.g. Consider the following points: 1. new generation mobile telephones.g. etc? 5. etc? 4. and is a major driver of globalization.Do the technologies offer consumers and businesses more innovative products and services such as Internet banking. Technology is vital for competitive advantage.Does technology offer companies a new way to communicate with consumers e. auctions. flight tickets.


McDonald¶s Macro Environment International Dimension ‡ Restaurants in 115 countries ‡ About two-thirds of sales from outside the United States Political-Legal Dimension ‡ Government food standards ‡ ‡ General posture toward business regulation Sociocultural Dimension ‡ Demographic shifts in number of single adults and dual-income families ‡ Growing concerns about health and nutrition External environment General environment Technological Dimension ‡ Improved information technology ‡ More efficient operating systems McDonald¶s Economic Dimension ‡ Srong / weak economic growth ‡ UnemployMent levels ‡ Inflation levels Internal environment Task environment .

 . PEST is a well-known and widely applied tool when considering the external nature of the domestic market. However. International PEST Analysis would consider: How easy will it be to move from purely domestic to international marketing? Would your business benefit from inward foreign investment? What is the nature of competition within each individual market.  An International PEST Analysis. and how will companies from other nations compete when you meet with them head-to-head in unfamiliar countries? Many other factors that are specific to your organization or industry. it is equally as useful when applied to the nature of the international business environment.

reuters. and what is their view on encouraging foreign competition from overseas? http://www.     Political Is there any historical relationship between countries that would benefit or hinder international business and your marketing efforts? What is the influence of communities or unions for trading? medium=feed&utm_campaign=Feed:+reuters/oddlyEnoughNews+(News+/+US+/+Oddly+Enough) .g. The European Union and its authority over European laws and regulation. What kind of international and domestic laws will your business encounter? What is the nature of politics in the country that you are targeting.

There are of course the usual economic indicators that one needs to be aware of such as inflation.    Economic What is the level of new industrial growth? E. What is the impact of currency fluctuations on exchange rates. as well as many others. levels of employment. the predisposition of consumers to spend savings or to use credit.share a common currency? E. . Polish companies trading in Eire will use Euros. national income.g. China is experiencing terrific industrial growth.g. Gross Domestic Product (GDP). and do your home market and your new international market .

 Not just a list of influences  Need to understand key drivers of change  Drivers of change have differential impact on industries. and organisations  Focus is on future impact of environmental factors  Combined effect of some of the factors likely to be most important . markets.

Are technologies at different stages in the Product Life Cycle (PLC) in various countries? E. Technology Do copyright.g. is there a form of barter? Will cultural norms impact upon your ability to trade overseas? E.g.g. electrical items that run on non-domestic currents could be dangerous. China and Jordan do not always respect international patents.g. intellectual property laws or patents protect technology in other countries? E.g. What are the cultural norms for doing business? E. religion and society are of huge importance.    Socio-cultural Culture. Putonghua is very difficult for many Western people to learn. Does your technology conform to local laws? E. versions/releases of software or medical technologies     .

restricting the quantity of a product that can be imported into a particular country. Governments sometimes act in favour of their own domestic industries rather than allow competition from overseas. Tariff barriers are charges imposed upon imports . There are a number of fences that companies need to plan for when initialising international business.  Tariff and Non-Tariff takes many forms and includes unnecessary hold-ups and red tape. Non-tariff barriers are trickier to spot. However they are normally transparent and you can plan to take them into account.e. even they are a form of import taxation. Tariff and non-tariff barriers are still very common. This could mean that your margins are reduced so much that trading overseas becomes too unprofitable. . Quotas are another form of non-tariff barrier i. Bureaucracy is a hurdle often encountered by exporting companies .