Heidi Hellström

Master of Science in Economics, Senior Lecturer

Vaasa University of Applied Sciences

COMPANY

INTERNATIONALIZATION (5CR)

PESTEL / PEST / PESTLE

ANALYSIS

DEFINITIONS

• P for Political

• E for Economic

• S for Social

• T for Technological

• L for Legal

• E for Environmental

POLITICAL

POLITICAL

This is concerned with how political developments, regionally, nationally and internationally might affect a business’s strategy.

• Employee protection: health/safety, discrimination, minimum wage

• Consumer protection: truth in advertising, high-pressure sales tactics, sales agreements

• Competition protection: unfair trade practices, monopoly, mergers & takeovers

POLITICAL

• Is the country democracy or dictatorship?

• Free markets or government controls?

• Company customers: public or private sector?

• How stable is the excisting government?

ECONOMICAL

ECONOMIC

• Economic growth

• Taxation international trade

• Exchange rate (ex. Sweden)

• Inflation

• Buying power (ex. Finland)

• Willingness to spend and spending patterns

• General economic forces

• Business cycle ->

What competitive advantage might a business gain

by social changes taking place outside of the

business?

SOCIAL

SOCIAL

• Aging population, reduced birth rates, longer life expectancy

• Changing role of women in the workplace

• Improved Education – better skilled workers

• Early retirement, more leisure time

• Rising divorce rates, more “single” households

• Job security

• Immigration creating a wider range of consumer tastes

PERSONAL FACTORS MEASURED IN FINLAND

• Population: 5,5 million (2014)

• Men / women

• Households (families, singles etc.)

• Birthrate

• Nbr of marriages

• Nbr of > 65 yrs and nbr of < 30 yrs

• Average expected lifetime (m/w)

TECHNOLOGICAL

TECHNOLOGICAL

• Changes in physical

sciences

• Internet

• Energy use and costs

• Government and Industry

focus on tech

• Government spending on

research

• Investments

• Technology transfer

(Poland, China…)

• Intellectual property rights

(not in Finland – Russia

case)

• Patents

• Trademark registration

LEGAL

LEGAL

• Employment law

• Health and Safety

• Taxation: both corporate and consumer

• Other regulations

• International trade barriers

• Strength of the rule of law

LEGAL FORCES EXAMPLE

See the link:

Usually brand names face much more issues, that

never assumed in advance

FROM THE COMPANY POINT OF VIEW

• Must obey laws both home country and the country, itoperates

• Laws can affect to the location choises

• eWorld – law and the internet

• Common law (UK, USA, Canada, Australia etc): based on jugde´s decisions

• Religious laws (ex. Koran)

• Domestically oriented laws (the company is forced overseehome country laws and rule the laws, where it operates

FROM THE COMPANY POINT OF VIEW

• Laws directed against foreign companies

• Or then just cultural topics that are good

to know

• Consumer protection laws

ENVIRONMENTAL

ENVIRONMENTAL

• How people’s perception and reaction to environmental issues

can affect a business

SOURCE

Griffin, Ricky W. & Pustay, Michael W. 2007. International Business: A Managerial

Perspective. 6th edition or newer. Upper Saddle River, NJ : Pearson/Prentice Hall