b. consider whether the company is compliant with code of environmental policy
c. consider the production and usage of output considering environmental congeniality
Hiking Company
Tuesday, February 22, 2022
6:52 AM
Question [10 marks Two marks for each factor of PESTEL]
Hike is globally renowned brand that manufactures and distributes world class
apparel and equipment used in hiking and mountaineering sports. The company
is headquartered in Italy serving all of Europe and North America.
Recently the GM Marketing of Hike visited the northern areas of Pakistan and
saw that the country has tremendous potential for adventure based tourism in
Gilgit Baltistan.
He also observed that a lot of local as well as foreign tourists visit the northern
areas for hiking expeditions and adventure sports. Upon his return to Italy, he
has suggested to his CEO that the company should enter the Pakistani market to
sell their products. The CEO has asked for a proposal before a final decision can
be made.
You are required
to develop an external analysis as part of his proposal to launch in Pakistan. You
may quote examples to support your findings.
Key features of the question
1. Renowned brand
2. producing hiking equipment and world class apparel
3. headquarters in Italy and serving all Europe and North America
4. Good market identified in Pakistan
5. a good customer base of local and foreigner hikers
1. External Analysis needed
1. Political Factors
• Political environment of Pakistan will have a huge impact on the business
strategy of the company
strategy of the company
• being a multinational company the company might face legal restrictions
over:
○ minimum employment of locals
○ capital repatriation
• the government has encouraged tourism in recent past through the following
measures to attract foreigners and local tourists:
○ security
○ infrastructure that supports tourism
○ proper tour guides and other accessories
• Pakistan has some highest peaks of the world and the government is also
promoting the hiking activity and might be inclined to give different subsidies
to companies setting up local production units. Subsidies might include tax
incentives and help in other infrastructural improvements
• considering the need of foreign reserves all political parties would support
the tourism and hiking industry hence long term strategic planning is possible
with consistency in the approach of governments towards the industry
Economic Factors
• Growth in stock markets over the year (and stability) indicates that a
corporate setup of the company would not be bad
• affordability of the equipment will be a factor to consider since a very low
per capita income is observed specially in areas where the company's
product will be used
• Low end product might captured the market but it's quality may result in
certain critical litigations later
• GDP growth has remained slow pre and post covered scenario so huge
investment might be a risky proposition
Social Factors
• 60% of the country's population consist of youth (age ranging from 16 to
26) . This fact is beneficial for the company as
○ adventure sports I like by young people so a good market can be created
in Pakistan
○ The company wishes to sell the products in Pakistan but would later
might setup the production setup in Pakistan. A strong workforce can be
build and mobilized for the company's advantage with the young
population
• tourism activities have increased a lot after reduction in the risk perception
of the society
• law and order situation have improved a lot in northern areas with consistent
efforts of law enforcement agencies of the country
Technological Factors
• Initial focus should be on technologies that would help the company in
selling and distributing its equipment
• technology is related to production and assembly lines will not be a concern
since the company is not producing in Pakistan .
• social media platforms like Facebook, Twitter, Instagram and other media
would be used for marketing the products
• due to a huge reach of Internet in Pakistan with almost 90% population using
the Internet facility the company would be easily able to throw the idea to
their target market
• With the success of success technologies like Uber and Careem, the company
will find itself technology adaptive population
Legal Factors
• The company should consider laws relating to the following factors:
○ incorporation of companies
○ repatriation of dividends
○ corporate taxes on foreign companies
○ minimum wage laws
○ minimum local employees
○ copyrights of the products the company would be selling
Infotech
Question [PESTEL for Information Technology and Telecom Company]
InfoTech is a manufacturer of spare parts of information and communication
technology products such as smart phones, computers and network devices.
InfoTech is exploring new markets to diversify and expand its business. Some
planning experts have identified People’s Republic of Highland.
Highland is also one of the fastest growing countries in relation to technological
advancement and adoption since it has a literacy rate of 70% and most of the
workforce are university graduates.
Highland remained under the shadows of its neighbor for a long time and remained
more inclined towards a communist political ideology. Only recently the country
has started encouraging foreign companies to invest in business and commercial
infrastructure.
The government of Highland wants to promote the booming IT industry and
therefore is keen to find out more about InfoTech and its business.
Before the management of InfoTech makes a decision, they want to analyze to
business environment it will operate in. What are the elements of the business
environment that InfoTech should focus on?
Solution
Key features of the question
1. The company manufacturers IT and communication products
2. the company is currently exploring new markets to diversify and expand
3. highland a new country identified for this purpose
4. key features of the country
a. fastest growth in technology in recent past
b. 70% literacy rate
c. workforce are mostly university graduates
d. in post communist ideology was followed by the government
e. recently the country is welcoming foreign investments
f. government wants to promote booming industry and scheme to evaluate the
d. in post communist ideology was followed by the government
e. recently the country is welcoming foreign investments
f. government wants to promote booming industry and scheme to evaluate the
InfoTech company and operations
Political Factors
1. The company should consider the fact that government was observing communist
ideology in which businesses are closely controlled by the government
2. in communist ideology heavy taxes are imposed on foreign companies and they are
not allowed to own assets independently
3. a better way would be to create joint ventures with local companies rather than
independent investments to have a greater control over the business
4. highly educated population would ensure abundance of skilled labor which is ideal
for a business like infotech
5. recently the government is encouraging information technology business and might
provide other incentives to flourish which is a good sign for infotech
6. the economy the fast growing economy which would be needing technology
products and would prove to be a good market for info tech
Economic Factors
1. Since the country is a growing country it's GDP and economic growth would be
healthy
2. the level of foreign direct investments appears to be increasing because of change
in the attitude of the government
3. in growing economies like Highland when the business activities are increasing and
proving profitable, saving is discouraged and interest rates remains low. the cost of
doing business reduces.
4. In growing economies inflation is generally controlled and with high competition
prices do not increase for raw materials and finished goods
5. A positive involvement of government would also ensure its interest in exporting
the products produced in the country so infotech might get good tax and other
incentives
Social
1. With more than 70% of literacy rate and a huge number of university graduates
comprised of young professionals would definitely be adopting technology at faster
rate as compared to the other countries
comprised of young professionals would definitely be adopting technology at faster
rate as compared to the other countries
2. The company should study the demographics Of countries population in terms of
age, gender and social classes. This would give us a useful insight into the size of the
market for technology related products
Technological Factors
1. Consider whether technologies the company is working on for future have a market
in highland
2. since the country has a 70% literacy rate the understanding of technology would be
quite high as a result the company would be able to expand its product line
Legal factors
1. being close to a communist labor laws and regulations in highland would be highly
affected by the philosophy
2. there might be some strict laws regarding the
a. foreign direct investments
b. owning of assets
c. tax burden on foreign companies
d. minimum number of local workers
e. minimum wages
3. the company should also consider that its product could be copied or technology
could be imitated by the competitors so laws related to copyrights, patents and
licenses must be considered
4. laws related to insurance , labor and employment terms must be considered
5. international trade regulations and international regulations on payments and
remittance of dividend must be considered before going ahead
Froot Limited
Monday, August 8, 2022
6:18 PM
Political factors
1. since the company is a multinational and operates in different parts of the world
varied political factors like government policies legislations in different countries
could influence its operating business
2. taxes and duties on imports and exports would affect the profitability
significantly
3. since the company is the producer of juice concentrate the government
supporting agricultural activity would definitely provide incentives to such
company
4. since the company exports which helps the balance of payment of the government,
the company would get tax incentives which would increase sales and reduce its
cost
5. since the company produces juice concentrates and would also be producing
packing material that includes unsafe material as far as the environment is
concerned so the government might impose certain restrictions and penalties
Economic Factors
1. Recent COVID-19 pandemic lockdown has affected tremendously the prdocuts
that have a lower shelf life like that of Froot
2. consumer spending and consumption have worsened across the country as well as
globally which has affected the sales of the company
3. throughout supply chain including distributors wholesalers and retailers
restaurants markets have a reduced customer footfall which has led to a
reduction in demand for the products of the company
4. With the situation getting better now restaurant, commercial places are getting
open again