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Literature Review: Theoretical and conceptual perspectives of PESTEL

Discuss about the Analysis of Drone Delivery Canada Corp.

Drones are the examples of emerging technology. This is called Unmanned aerial vehicle technology or UAV. This is used to increase maneuverability and reduce weight. In the recent year's application of drones has been increasing rapidly (Kim et al. 2018). This technology is applied to rescue people from any dangerous condition. Apart from this drones are used for research, aerial photography, and inspection and keeping security. Skycart is a drone manufacturing company and going to establish a joint venture business with Drone Delivery Canada Corp, which is a Canada based drone manufacturing organization. This study deals with the PESTEL analysis in the context of Canada where Skycart is going to start drone manufacturing business.

PESTEL refers to political, economic, social, technological, legal and environmental factors in the context of any business. PESTEL analysis highlights the external environment of a business. In order to get an entry in a new market or in a new country, it is crucial for any business organization to make an analysis of each external factor. However, in any country, there is a regulatory restriction, specific economic condition, social condition and technological advancement. Those external factors have a great impact on a business while going to introduce a business in a specific country (Moss et al. 2016). Hence, PESTEL analysis is helpful for an organization to measure the political, social, economic and technological condition of a country that may affect their business. Every business organization looks for a country that is not probed yet. By using PESTEL analysis an organization is able to identify whether the specific country has any potential or not for a profitable business. Effectiveness of a specific market in a particular country can be determined by PESTEL analysis. This analysis enables an organization to take strategic planning and get necessary data that will be favorable for their business. PESTLE analysis is a strategic planning and it is a very cost-effective process. In the context of Skycart PESTLE analysis will be helpful to exploit opportunities in Canadian drone industry by acquiring in-depth information about the market. There are many debates over the PESTEL analysis. As argued by Nevitte (2017), PESTEL analysis has certain limitations as the external factors are changed over the time. On the other hand, PESTEL analysis is carried out based on the assumption. Despite these limitations, PESTEL analysis is a useful strategic approach to identify the current market in a new country.

PESTEL as the Strategic Marketing Tool

Marketers use the PESTEL as the strategic marketing tool to reveal the external environment of a country. In order to carry out a foreign investment in a country PESTEL is required to follow (Li and Li 2016). This also helps the marketers to monitor the positive and negative aspect of the political, economic, social, legal and environmental factors. PESTEL is an essential tool of strategic management (Lans 2016). By following this technique the marketers are able to focus on the planning of a business as well as the corporate objectives. By following the PESTEL analysis the marketers are able to understand the way through which they can use their resources in foreign country. In order to assess the core objective of an organization it is crucial for all business to reveal the strategies that are used in an organization. Therefore, it is important to reveal the technological opportunities and the legal situation of a country. By using the PESTEL tool an organization is able to identify what technologies are available in a country. Apart from the technology, which resources are significant for a new business in a foreign country can be analyzed by PESTEL. In order to carry out a business in a foreign country it is crucial for the foreign investors to reveal the impact of external factors on their business. However, the legal obstacle is a big barrier for the foreign investors. They need to understand the rules and regulations of a country while penetrating in this market.

Critical external factors have a great impact on corporate strategy. For this reason, it is vital for every business to have a clear idea about the external factors of an organization. PESTEL analysis is not just a tool for measurement it also leads an organization to get competitive advantage in new country as well as in the global market (Kim et al. 2018). PESTEL analysis is considered as the major aspect of strategic management. However, the entire process should be completed within the time by gathering proper data of external market. This tool allows an organization to understand how the political, legal, social, technological and environmental factors impact on a business in a foreign country. However, all these factors do not leave equal effect on a business. It is based on the nature of country. Businesses those are technology-oriented are influenced by technological factors in a country (Arku 2014). Analysis of PESTEL shows an overall impact on the business of an organization. In order to address a new market PESTEL analysis is effective. For foreign investors if the external factors leave a negative impact on their business then it is difficult for them to survive in this market. Hence, PESTEL analysis helps the foreign investors to identify whether their investment in a new market is a smart decision or not. For the drone manufacturers PESTEL analysis is important as it will allow them to reveal the availability of the technological factors in a country as technology has a great impact on drone manufacturing process.

Discussion of the PESTEL Factors that Skycart Needs to Consider While Entering into Canadian Drone Industry

Drone manufacturing is a technological innovation. Skycart is going to establish a joint venture with Drone Delivery Canada Corp. In order to start this business, they need to consider political, economic and technological factor during PESTLE analysis of Canada.

Political condition of Canada is stable and it is a democratic country. Canada is ruled by parliament government. Canada government has taken democratic principles in the context of foreign investment (Export.gov 2018). The foreign investors need to follow Investment Canada Act while going for a joint venture or invest in Canada. Canada is considered as the fifth largest sector of foreign direct investment in North America. Therefore, leaders in Canada stay almost for 10 years. This ensures the political stability in Canada. Such stable political condition in Canada will give a good opportunity to Skycart to invest in drone manufacturing in this country. On the other hand, Drone Delivery Canada Corp is a popular drone manufacture in this country (Dronedeliverycanada.com 2018). Thus, by making a joint venture with this organization Skycart will be able to accelerate their business in this country. As argued by Rutty et al. (2017), Canada government has some restriction on foreign investment as the foreign investors need to make a joint venture with the licensed organization otherwise they may face the legal issue. As commented by Moss et al.  (2016), Canada government offers low taxes for the foreign investors. This will bring a good scope for Skycart to invest in Canda. Apart from this Canada government has given more opportunities to the drone manufacturer to in invest in this country as the government believes that drone will give a strong protection to this country from terrorist. This will be a great opportunity of Skycart to invest in this country.

Legal factors play an important role in influencing the foreign business in a country. However, Skycart needs to follow the Data Protection Law in Canada 2017 while applying drone for any purpose. This is a major need, which is required to fulfill by drone manufacturer. Incompliance with this Act may lead Skycart to face legal issue.

Foreign investors in Canada need to follow AIEE or Agreement to Implement Employment Equity while going to start a joint venture business in this country. According to AIEE Act, the organizations who are involved in a joint venture program needs to pay $1M to the government as per the contract (canada.ca 2018). However, according to this policy, it does not matter how much each member of this joint venture contributes and how much profit is gained from this business. This policy may create an issue for Skycart while developing a joint venture business with Drone Delivery Canada Corp as they have to pay huge tax despite facing loss in their business. Hence, it can be said that Canada government offers low tax and the stable political environment are beneficial for Skycart to invest in this country. On the other hand, AIEE policy will bring some challenges for this organization.

Canada is considered as the most developing countries in terms of science and technology. Canadian people have much addiction towards the internet and most of the people use internet for their business purpose and education in this country (Jenkins 2017). As per the statistical data approx 28 million people in Canada focus on internet for their business and education purpose. This data ensures that Skycart will get a chance to use technology in their drone manufacturing process. However, drone is a technological innovation thus; to manufacture this product technological assistance is mandatory for Skycart.

RFID technology or radio-frequency technology is popular in Canada. This Technology is used in warehouse drone (Tyler and Ingelson 2018). This will be a good opportunity for Skycart to improve the use of drone in manufacturing by utilizing RFID technology. Such technology is incorporated in drone for industrial use. In smart factory such latest technology is used in drone to carry out the industrial operation. By using such technology in drone Skycart will be able to improve the plant safety in many manufacturing organizations in Canada. RFID technology is used widely and most popular in U.S and Europe. In order to improve the efficiency of transport this technology is used in U.S and Europe. The development of RFID technology is occurred in U.S. Britain uses this technology in aircraft to improve the transportation process. However, Skycart will use this technology in their drone manufacturing in terms of inventory management. They will provide drone with RFID technology to the manufacturers to improve their tracking system in warehouse.

In order to improve the use of drone and manufacturing of drone in Canada a five step recommendations is provided in the context of Skycart.

Canada government has given facility to the foreign investors to increase the drone manufacturing process in this country as drone helps to rescue the people and protect the country. However, drone is used to take picture of anyplace to measure the safety of a country. Hence, dissemination of the information is a big challenge of drone use. This may lead Skycart to face legal issue while entering Canada market. In order to deal with this issue Skycart needs to follow the Data Protection Act policy and rules of AIEE Act. This will help this organization to remove issues regarding the breach of confidentiality and the joint venture business. Implementation of this recommendation may face problem if sudden changes in government policy take place. This will alter the operation process of Skycart. This issue can be reduced by measuring the government stability in Canada. If the government is stable longer then the policy will not change. As a result, Skycart will carry out their drone manufacturing business in this country without any legal obstacle. Finally from the above recommendation it has been found that by following this policy Skycart will be able to carry out their drone manufacturing business in Canada without any legal obligation.

Drone is used to capture picture to ensure the safety of a location. However, often changing weather affects the work of drone technology. In order to reduce this issue Skaycart can introduce matternet one, which is a new type of drone. This drone is adjustable with weather condition and capture the picture easily. Drone often crashes, which is a major drawbacks of the implementation of new type of drone. This obstacle can be reduced by using obstacle avoidance strategy. By incorporating such obstacle avoidance feature in drone Skycary will be able to protect their new drone technology from crashing. Application of matternet drone will be an innovative approach for Skycart in Canada, which will beneficial for them to get high response in Canada market.

Conclusion

The above study focuses on the establishment of joint manufacturing in the context of Skycart. However, Skycart is going to start a partnership business with Drone Delivery Canada Corp. It has been received that Canada’s political, economic and technological factors have a great impact on this foreign direct investment. Canada’s stable political environment is good for Skycart to get easy entry in this country while inconsistency of the government policy will be a great challenge for this organization. Therefore, high GDP of Canada and technological innovation will be beneficial for Skycart to introduce their drone manufacturing business in this country.

References

Arku, G., 2014. Competition and cooperation in economic development: Examining the perceptions of practitioners in Ontario, Canada. Journal of Urban Affairs, 36(1), pp.99-118.

canada.ca. 2018. Federal Contractors Program – Joint Venture Suppliers – IPG-086. [online] Available at: https://www.canada.ca/en/employment-social-development/programs/laws-regulations/labour/interpretations-policies/joint-venture.html [Accessed 23 Mar. 2018].

Dronedeliverycanada.com. 2018. Dronedeliverycanada.com. [online] Available at: https://www.dronedeliverycanada.com/innovation/ [Accessed 24 Mar. 2018].

Export.gov. 2018. Canada - 1-Openness to, and Restriction on Foreign Investment. [online] Available at: https://www.export.gov/article?id=Canada-Openness-to-Foreign-Investment [Accessed 23 Mar. 2018].

Jenkins, A., 2017. Canada’s Innovation Agenda: The same old story? Or a new way forward?.

Kim, S.J., Jeong, Y., Park, S., Ryu, K. and Oh, G., 2018. A Survey of Drone use for Entertainment and AVR (Augmented and Virtual Reality). In Augmented Reality and Virtual Reality (pp. 339-352). Springer, Cham.

Lans, C., 2016. Worldwide Opportunities on Organic Farms (WWOOF) as part of the existing care economy in Canada. Geoforum, 75, pp.16-19.

Li, E.X. and Li, P.S., 2016. Immigrant enclave thesis reconsidered: Case of Chinese immigrants in the enclave and mainstream economy in Canada. Journal of International Migration and Integration, 17(1), pp.131-151.

Moss, P.T., Smith, R.Y. and Greenwood, D.R., 2016. A window into mid-latitudinal Early Eocene environmental variability: a high-resolution palynological analysis of the Falkland site, Okanagan Highlands, British Columbia, Canada. Canadian Journal of Earth Sciences, 53(6), pp.605-613.

Nevitte, N., 2017. The North American Trajectory: Cultural, Economic, and Political Ties among the United States, Canada and Mexico. Routledge.

Rutty, M., Scott, D., Johnson, P., Pons, M., Steiger, R. and Vilella, M., 2017. Using ski industry response to climatic variability to assess climate change risk: An analogue study in Eastern Canada. Tourism Management,and marketing 58, pp.196-204.

Tyler, M.E. and Ingelson, A., 2018. Sustainable Energy Mix+ Fragile Environments in Canada’s Northern Coastal Zone: Is Technology Enough?. In Sustainable Energy Mix in Fragile Environments (pp. 163-181). Springer, Cham.

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