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PESTLE

The purpose of PESTLE is to help in identifying various external political, economic, social, technological, legal and environmental factors that can affect the business. The study helps in strategic decision-making. The management of the firm use the information gathered to weigh areas of strength and weakness to come up with the right action plan that can secure the interests of the investor (Burnham & Horton, 2013).

PESTLE Analysis of the UK

Political factors

The UK political system is a constitutional monarchy that is controlled by the parliament. The country has a stable and fair government that is anchored on constitutionalism.

The UK has a liberal form of government.

Corruption levels in the UK are relatively lower, which allows businesses to thrive without incurring many costs in paying bribes.

The neighbouring European nations also have stable political systems, thus no fear of instability in neighbourhood affecting the country’s peace and stability.

Strong and stable government.

Democratic decision-making.

A democratic system offers a predictable political environment. The UK has a tradition of holding peaceful elections to change or retain leadership in power. Therefore, business firms can easily predict the outcome of any elections and its implication on the business sector (Brennan, 2012).

Economic Factors

Positive

The GDP is strong, which makes the UK among the top global economies and second largest in Europe.

Liberal economy

Increased foreign direct invents

The economy is highly diversified

The United Kingdom has a stable economic system, which offers a good environment for marketing.

The country is economically developed, which provides a fertile ground for established businesses to thrive.

Trade and commerce in the country are affected by international treaties to which the UK is a party. Recently, England left the Eurozone, thus ushering a new era in its economic life. The EU economic policies will no longer guide the UK trade and commerce.

Negative

The pulling out of the EU has shrunk the UK internal market. Goods from the country will be subject to taxes before entering the Eurozone.

The UK has a good transport and communication infrastructure that makes movements of goods and services easier and effective.

The population has a strong purchasing power due to the economic strength of the country.

In the United Kingdom, the wage rates are relatively higher than most of the European nations and the third world. A company seeking to establish a business there must put into consideration this factor.

The taxation is also high, which makes the cost of running a business firm in UK high.

Social factors

Immigrants’ population in the country has been growing in the last two decades, which contributes to the availability of cheap labour.

The United Kingdom’s population is largely made up of persons aged between 18-45 years; this is a young and active population.

The UK is largely a Christian society, which has a great impact on its culture.

Employment rates are high; only a smaller percent is unemployed.

The UK has open doors to migration, which explains the growing diversity of its population.

Birth rates have dropped, a development that shows how couples give a little time to bringing up children.

High life standards due to strong economy dominate the lives of the UK citizens.

The UK has a dense population, which can offer a good market for manufactured goods and services.

Negative

The UK is facing an increasing number of dependants, mainly from the ageing population.

The cost of education is ever increasing

Social unrest in ghettoes is a recent phenomenon that has affected ethnic groups in the UK. The population of ghetto families is set to remain the same by 2022.

Technological Factors

Technologically, the United Kingdom is s among the leading on the globe. Any need for technological support can be easily accessed.

The UK has quality expertise in IT and science fields

High internal competition in technology in the UK

Negative

The cost of technology is a bit higher in the UK than countries like China and Japan.

Legal factors

The UK has plentiful of laws that govern business, business firms operating within the country have to make sure that they adhere to these regulations to avoid prosecution, fines, and closure of the business through legal action.

The United Kingdom has a highly advanced legal system, which is supported by qualified lawyers and staffs.

The labour laws are also stringent and apply to international and local firms that operate within the country.

Environmental factors

The United Kingdom, just like other industrialized countries is more concerned about climate warming, pollution, and environmental conservation.

Forecast

Politically, UK is set to remain a stable democratic country by 2022. It has a strong political foundation that makes it hard to break down in the next five year. Political stability will guarantee the country peace and stability that is needed to create a good environment for business.

Socially, the population of the elderly is going to double by 2022 due to a relatively the bigger percentages of those aged 50-60 year. Consequently, this will increase dependant level in families. Moreover, it is expected that in the next five to ten years, the population of the immigrants is going to increase. As a result, the county is going to be more diversity concerning culture and socialization.

Pielke Jr (2009) affirms that the environmental laws can be altered in the next five years if the UK becomes a party to a new regime that might be negotiated in the international system to curb global warming. However, the expected changes might not impact much on the business industry because there are already laws the govern pollution and environmental conservation (Burnham & Horton, 2013).

The legal systems governing business are set to remain the same by 2022. The UK continues to be one of the stable liberal economies in the world, and is likely to remain the same in the next five years.

The implication of the findings on the UK domestic market in terms of risk, costs, and benefits for setting up a manufacturing base in the UK

The finding of the UK’s political, economic, social, technological, and legal environment points out to different potential risks that a company that is set to establish its business in the country must take into consideration (Burnham & Horton, 2013). The cost of production is higher due to advanced development, high literacy levels, lack of enough low skilled labourers, and high taxation. The new company shall have to consider the labour cost in relationship to its availability. Mitsubishi Aluminium Co. shall have to consider these factors before setting up its business in the UK.

The new company risks struggling with the burden of high-cost labour.  This is a problem for a company that may need a heavy supply of unskilled or semi-skilled labour force. It is much cheaper to manufacture and produce well in countries such as China and India than the UK because the former have a high supply of labour, thus low wages.

The environmental regimes and regulations is another hurdle that a manufacturer has to face. Business firms are required to comply with environmental laws in their operation within the country. Big manufacturing firms engage in environmental conservation practices as part of their corporate social responsibility. Consequently, this adds to some of the costs that a company must be ready to address.

Moreover, high taxation risks are there for non-European countries. The country has some degree of protectionist laws that give priority to local firms that foreign. In this respect, a clear understanding of the UK trade and commerce regulations is critical to avoid pitfalls.

The cost of setting up a business in the UK include securing permits and meeting all state regulations that govern local and international firms that operate within its borders.

Benefits

Setting up a business in the UK has some advantages that are beneficial to the investor. One, the country’s dense population offers a ready market for the manufactured goods. Consequently, the enterprise will have to satisfy the local demand before exploring the international. Secondly, the country has a strong and advanced science and technology and experts. The availability of quality labour force offers the company an opportunity to go for the best brains without many difficulties.

Workers are paid well, business thriving, and a lot of money in people pockets. Consequently, the high pricing goods still have enough customers due to the strong economic state of the UK. The UK has a ready market for manufactured goods, which is a beneficial factor for the company that intends to set up business there.

Moreover, the UK has a stable political system that offers healthy business environment. A company doing business in this country does not fear of political instability. Democracy is valued and cherished by its citizens, which creates an environment that is politically secure for business investment for Mitsubishi Aluminium Company. Political factors influence the business environment in various ways, thus an area of concern for investors.  There are various political factors about the UK that should concern a company that intends to operate in the region.

The UK is a liberal; it allows free trade. Companies are not greatly restricted in favour of local firms. Mitsubishi Aluminium Company only needs to manufacture a quality product and do good marketing to break into the market. Liberal policies also favour fair trade practices, a factor that the new firm shall have to take as an advantage.

 

 

Reference

Burnham, J., & Horton, S. (2013). Public management in the United Kingdom: A new introduction. Houndmills, Basingstoke, Hampshire; New York, NY: Palgrave Macmillan.

Sansford, C. E. (2009). Development of UK/EU/EPPO Pest Risk Analyses for Phytophthora kernoviae, P. ramorum and P. lateralis. Phytophthoras in Forests and Natural Ecosystems, 205.

Pielke Jr, R. A. (2009). The British Climate Change Act: a critical evaluation and proposed alternative approach. Environmental research letters, 4(2), 024010.

Brennan, B. (2012). The United Kingdom. In Rare Tumors In Children and Adolescents (pp. 109-112). Springer Berlin Heidelberg.

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