PESTEL Analysis and Export Costing Sheet for Successful Entry into International Markets

Part 1 Pestle

Part 1 Pestle

Consider the relevance of the PESTEL with relevant data points explained in context to your product and selected country. 

Use the template given to guide you
only select points relevant to your export Product and Country

 

Part 2 Cost Considerations

Complete a Costing Sheet that lists export cost considerations that you need to know for pricing product for export. What is your analysis and possible pricing strategy.

NOTE: Students DO NOT have to find actual cost in numbers as there is not enough time/resources to do that in this assignment. 

Detailed Instructions

Answers to research questions from the research proposal will help you determine the nature of opportunities and threats in the macroenvironment. These questions are examples of some of the types of issues that can be considered in your PESTEL analysis. This tool can also be used in risk assessment. The goal of this assignment is to Reflect on Research Objectives that  were addressed in your group.

PESTLE is an acronym for Political, Economic, Social, Technological, Legal and Environmental factors, which are used to assess the market.   A PESTLE tool can also help develop a strategic plan for business direction. The analysis considers the broad environmental (external risk/opportunities) that may impact business operations and profitability. When deciding to enter a foreign market by exporting a product, businesses need to consider several factors and understand the larger forces shaping their choices.

Is the internal strategy and operations aligned with the dynamic demands of the international business landscape? A solid understanding of PESTEL helps avoid strategies that may be destined to fail given the circumstances of the environment against the risk threshold(tolerance) of the organization.

The purpose of this assignment is to further understand potential for export success of your product to ONE country selected. The research and assessment will also be useful for the completion of the final presentation and recommendation

Refer to our lectures and the textbook for relevant content on what to include on your export costing sheet. **This is not a quantitative task; you only need to list sample categories that should be included on a costing sheet.  (It is not necessary to estimate actual dollar amount of cost.)

 

PART 1 – PESTEL Research

Political Factors

The political environment can have a significant influence on businesses. In addition, political factors affect consumer confidence and consumer and business spending. This is particularly important for companies entering new markets. Government policies on regulation and taxation can vary from state to state and across national boundaries. Political considerations also encompass trade treaties. Such treaties tend to favor trade among the member countries but impose penalties or less favorable trade terms on non-members.

Part 2 Cost Considerations

Economic Factors

Managers also need to consider macroeconomic factors that will have near-term and long-term effects on the success of their strategy. Inflation rates, interest rates, tariffs, the growth of the local and foreign national economies, and exchange rates are critical. Unemployment, availability of critical labor, and the local cost of labor also have a strong bearing on strategy, particularly as related to the location of disparate business functions and facilities.

Sociocultural Factors

The social and cultural influences on business vary from country to country. Depending on the type of business, factors such as the local languages, the dominant religions, the cultural views toward leisure time, and the age and lifespan demographics may be critical. Local sociocultural characteristics also include attitudes toward consumerism, environmentalism, and the roles of men and women in society. Making assumptions about local norms derived from experiences in your home market is a common cause for early failure when entering new markets. Norms can change over time, often caused by shifting demographics due to immigration or aging populations. (Can also include CSR and ESG)

Technological Factors

The critical role of technology is discussed in more detail later in this section. For now, suffice it to say that technological factors have a major bearing on the threats and opportunities firms encounter. For example, new technology may make it possible for products and services to be made more cheaply and to a better standard of quality. New technology may also provide the opportunity for more innovative products and services, such as online stock trading and remote working. Such changes have the potential to change the face of the business landscape. New Digital Pressures?

Environmental Factors (include) Corporate Social Responsibility (CSR)  & Environment Social Governance (ESG) (sustainable strategies)

The environment has long been a factor in firm strategy, primarily from the standpoint of access to raw materials. Increasingly, this factor is best viewed as both a direct and indirect cost for the firm. Environmental factors are also evaluated on the footprint left by a firm on its respective surroundings. For consumer-product companies like PepsiCo, for instance, this can encompass the waste-management and organic-farming practices used in the countries where raw materials are obtained. Similarly, in consumer markets, it may refer to the degree to which packaging is biodegradable or recyclable. Considerations: Climate change, Weather, Pollution, Availability of non-renewable goods, Workplace efficiency and Environment-related laws

Legal Factors

Finally, legal factors reflect the laws and regulations relevant to the region and the organization. Legal factors can include whether the rule of law is well established, how easily or quickly laws and regulations may change, and what the costs of regulatory compliance are. For example, Coca-Cola’s market share in Europe is greater than 50 percent; as a result, regulators have asked that the company give shelf space in its coolers to competitive products in order to provide greater consumer choice.