PESTL Analysis Assessment Task

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Assessment Task

Winegold Pty Ltd is an Australian-owned multinational wine manufacturing company that has major operations across Australia. The company was founded in 2010 in New South Wales and has since rapidly gained market share in Australia to become one of the country’s largest wine producing companies with exports to many parts of Asia and Americas. Consequently, the company is now exploring the feasibility of expanding their operations to Sweden.

Given that this is a new venture into unchartered territory, Winegold Pty Ltd is seeking your assistance as a management consultant to advise them on the political, economic, socio-cultural, technological and legal environment (PESTL) of Sweden. You are required to:

  1. Write a concise, clear and well edited report of no more than 1,500 words outlining the external environment (PESTL) of Sweden
  2. Conduct a SWOT analysis of the external environment (PESTL)
  3. Present recommendations based on the SWOT analysis

You are strongly encouraged to access the documents that are uploaded under the ‘Assignment – Individual Report Folder of the FUNM1100 Moodle unit page specifically ‘Individual Report Structure’.

Submission Requirements

A significant focus of this assessment is about finding and using information (information literacy skills); therefore you are required to consult and fully reference at least SIX sources of information (Any combination of books, edited books, www, journal articles from the full-text databases, current affairs magazines, newspapers etc.). Although you can use www references, you should be discerning about the validity of those sources and how robust the information is.

You must use the Curtin Chicago 17th B Author-Date Referencing Guide to acknowledge your sources of information (both in-text and as a reference list at the end).

The report must include the following sections:

  • Title page
  • Table of contents
  • Executive summary
  • Introduction,
  • PESTL Analysis

Political Environment,

Economic Environment,

Socio-cultural Environment,

Technological Environment,

Legal Environment,

  • SWOT Analysis
  • Conclusion
  • Recommendations
  • Reference list

Word count over the limit will not be marked. This will be strictly enforced.

The assessment must be submitted in electronic format. Electronic submission of the assessment needs to be made to the submission point on the Unit Moodle page. The submission time is indicated by the date and time that electronic submission is recorded in Moodle.

Must read: Enterprise Risk Management Techniques

PESTL Analysis Example

2.0 Political Environment

2.1 Government Stability Ask the following questions for relevancy for every component you analyse.

  1. Is the information relevant to Winegold?
  2. If yes, then is it positive or negative?
  3. If no, then redo your research i.e. your information is irrelevant Irrelevant information is usually descriptive .

2.2 Government Relations

2.3 Analysis

3.0 Legal Environment

3.1 Business Laws

3.2 Labour Laws

3.3 Analysis

4.0 Economic Environment

4.1 Currency Exchange Rate

4.2 Economic trends/forecast

4.3 Analysis

6.0 Technological Environment

6.1 Technological Infrastructure

6.2 Communication Networks

6.3 Analysis

5.0 Socio-cultural Environment

2.1, 3.1, 4.1, 6.1 Components of political, legal, economic, technological environments

2.2, 3.2, 4.2, 6.2 Components of political, legal, economic, technological environments

2.3, 3.3, 4.3, 6.3 Analysis Opportunity “O” or Threat “T”

Sweden political environment

Sweden legal environment

Etc.

Analysing the components of that environment

Research/search: key words

2.0 Political environment

Sweden government stability (2.1) +

Sweden government relations with Australia (2.2) +

Analysis (2.3) O

1,500 word 1,350 < x < 1,650 50% – 750 words

3.0 Legal Environment

Sweden Business Laws (3.1) +

Sweden Labour Laws Australia (3.2) +

Analysis (3.3) O

4.0 Economic Environment

Sweden currency exchange rate Australia (4.1) + Swedish krona

Sweden economic trends/forecasts (4.2) –

Find a third component to analyse

Sweden inflation rate –

Analysis (4.4) T

6.0 Technological Environment

Sweden technological infrastructure (6.1) +

Sweden communication networks (6.2) +

Analysis (6.3) O

2.3, 3.3, 4.3, 6.3 Opportunity (O) or Threat (T)

Socio-cultural environment O

4Os 1T – Yes or

3Os 2Ts – Yes or

2Os 3Ts – No or

4Ts 1O – No

SWOT – Strengths, Weaknesses, Opportunities, Threats

Conclusion

Yes – yes, invest

No – no, don’t invest

Wait – yes invest, but not now, maybe 2 years later when Covid situation is over & when economy becomes better

Relevant information

Any information that’ll lead you to a conclusion or recommendation (yes, no or wait)

Research: Capture INFORMATION & SOURCE (IS)

Recommendations Examples

Recommendations

Assuming the following are the outcome of your PESTL analysis & SWOT analysis:

S (5) – enhance

W (3) – minimise

O (4) – exploit

T (1) – reduce

Above as examples:

(number): number of SWOT e.g. number of strengths is 5 i.e. S (5), weaknesses is 3 i.e. W (3), etc.

Recommendations

Since the proposal or recommendation is for Winegold to invest in Swedenin 2 years’ time, it is recommended that the organisation takes the following actions to prepare itself for investing in the country (this paragraph (yellow) is applicable only if the proposal is yes, invest in Sweden at the Conclusion section. The words in blue has been included for the entire paragraph (blue + yellow) only if the proposal is “Wait” at the Conclusion section)

Should Winegold Pty Ltd decides to invest in Sweden at some future date, it can adopt the following recommendations to make inroads into the Swedish market (this paragraph (green) is applicable only if the proposal is no, do not invest in Swede at the Conclusion section)

  • Invest in more advertisings & promotions of its high quality products & services in Sweden
  • Improve its plans of supply chain processes to make them more efficient so as to reach out to customers more effectively
  • Take advantage of the good working relationship between Sweden & Australia by requesting for more favourable or preferential tax rates on its exports
  • Conduct cross-cultural training for both Australian managers/workers, as well as Swedish managers/workers so as to enable them to understand each other better.

Note:

The above examples are for illustration only. Please use your own words to phrase or rephrase as far as possible the recommendations you are going to provide.

.Also read: Business Intelligence & Data Mining

Individual Business Report Sample

Individual Business

Report FUNM 1100

Student Name:

Student ID:

Class:

Lecturer’s Name:

Executive Summary

The objective of this report is to explore the viability of Puawei Pty Ltd of extending their operations to Canada. The results of the report indicate that opportunities exist in political, economic, socio-cultural, technological and legal environment while the economic and technological environment presents as threats. According to the findings, the opportunities outweigh the threats. Therefore, it is recommended that Puawei Pty Ltd expand to Canada by outsourcing from other Canadian company as the company has no experience in expanding overseas.

Table of Contents

1.0 Introduction 4

2.0 Political Environment 5

2.1 Government Stability

2.2 Government Relations

2.3 Analysis

3.0 Legal Environment 7

3.1 Business Laws

3.2 Labour Laws

3.3 Analysis

4.0 Economic Environment 9

4.1 Current Exchange Rate

4.2 Economic Trends / Forecasts

4.3 Analysis

5.0 Socio-cultural Environment 12

5.1 Hofstede’s Cultural Dimensions

5.2 Analysis

6.0 Technological Environment 14

6.1 Technological Infrastructure

6.2 Communication Networks

6.3 Analysis

7.0 SWOT Analysis 17

8.0 Conclusion 18

9.0 Recommendations 19

References 20

1.0 Introduction

An Australian-owned electronics manufacturer company named Puawei Ptd Ltd is considering to expand their business operations into Canada. Resources required for manufacturing are divided into three categories – raw materials, technology and skills. The objective of the report is to investigate the political, legal, economic, socio-cultural and technological environments (PESTL) of Canada. This report covers the strengths and weaknesses of the company, opportunities and threats of expanding business into Canada and recommendations on expansion. The suggested expansion strategy is outsourcing form Canadian supplier as the company has no experience in expanding overseas.

2.0 Political Environment

2.1 Government stability

Canada is a politically stable country which is governed by a parliamentary system which spans 4 years per election (Ferris and Olmstead 2017). Canada is ranked the 84th percent for Political Stability and Absence of Violence and Terrorism and also 97th percent for Government Effectiveness as stated by The Worldwide Governance Indicators (WGI) project (Edunova 2019).

Figure 1: Political risk index of Canada

Source: Figure reproduced from The Global Economy (2019).

Based on the graph above, he political risk index of Canada has been increasing over the last few years but drops slightly in 2017. This could be due to the influx of refugees that they have accepted into their country. Overall, Canada is still a safe and stable place for businesses to hold their operations at.

2.2 Government relations

The Australian and Canadian governments have a very good trade relationship with one another and both countries are members of the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (Austrade 2019). Canada is also a member of the Group of Seven (G7) which has Free Trade Agreements with huge nations such as US and Mexico which indicates their friendliness toward foreign investments (Edunova 2019).

https://search-proquest-com.dbgw.lis.curtin.edu.au/docview/1879494603/718D073B810D43CAPQ/6?accountid=10382

https://studynovascotia.ca/canadian-economy-political-stability/

 

The positive political relations may facilitate the company with regards to obtaining resources for their manufacturing plant.

2.3 Analysis

Political stability in Canada and the positive government relations with other large countries exhibit as an opportunity for Puawei Pty Ltd as these conditions point to a suitable environment for conducting operations.

3.0 Legal Environment

3.1 Business laws

Figure 2: Canada Corruption Rank

Source: Figure reproduced from Trading Economics (2019).

The ease of doing business in Canada has dropped throughout the years with Canada ranking in the 22nd worldwide (Trading Economics 2019). On the brighter side, Canada has an extremely low level of corruption, ranking 9th in a least corrupt nation study (Trading Economics 2019).

Both Australian and the Canadian legal systems are based on the English common law which makes it easy for Australian businesses to adapt to since both countries have similar laws. The only exception in Canada is the State of Quebec which based their laws on the French Civil Code (Bullock, 2016).

The high similarity of legal systems for both countries makes it convenient to conduct business in Canada.

3.2 Labour laws

Labour laws in both countries are slightly different, with the maximum number of working hours for a week being 48 hours in Canada (Government of Canada 2017) and 38 hours in Australia (Fair Work 2019). However, both countries have relatively high minimum wages – ranging from $11.00 to $15.00 depending on the province in Canada (RCC 2019), which is comparable to the $18.93 of Australia (Fair Work 2019).

Both countries signed an agreement also known as ‘’the 1957 agreement’’ to avoid double taxation and use similar systems like dividend imputation to do so (IBFB 2008).

https://tradingeconomics.com/canada/corruption-rank

https://www.fairwork.gov.au/how-we-will-help/templates-and-guides/fact-sheets/minimum-workplace-entitlements/minimum-wages

3.3 Analysis

The legal environment poses as an opportunity since both countries have similar laws, it makes it convenient for Puawei Pty Ltd to do business in Canada as they do not have to adapt too much, making it easier to conduct business in Canada.

4.0 Economic Environment

4.1 Currency exchange rate ($)

Figure 3: AUD to CAD Chart

Source: Figure reproduced from XE (2019).

As of 31th March, the currency conversion rate of 1 AUD equals to 0.95 CAD (XE 2019). Based on the graph above, the currency rate for both countries can be considered stable. Currency stability is very important because it will affect the financial status of companies.

Figure 4: USD to CAD Chart

Source: Figure reproduced from XE (2019).

The exchange rate for 1 USD is 1.34CAD (XE 2019). According to the graph above, the highest and lowest points of the graph fluctuate within 0.4. Thus, indicates that Canada’s currency is stable even when pitted against the strong US dollar.

4.2 Economic forecasts

Table 1: Canada Economic Forecasts

Overview Actual Q2 Q3 Q4 Q1 2020

GDP Growth Rate (%) 0.1 0.5 0.6 0.2 0.5 0.6

Unemployment Rate (%) 5.8 5.8 5.8 5.8 6.3 6.7

Inflation Rate (%) 1.5 1.4 1.7 1.9 2.1 2.2

Source: Table reproduced from Trading Economics (2019).

Canada has a low GDP growth rate which indicates that the economic situation of Canada is weak. Increasing unemployment rate may be great for the company as the new operation needs labor. The inflation rate will then affect the purchasing power of the Canadian dollar (Trading Economics 2019). These negative indicators indicate that Canada’s economy is experiencing recession.

https://tradingeconomics.com/canada/forecast

4.3 Analysis

Overall, even though the currency exchange rates are stable, the indicators in the economic forecasts shows negative impacts on business. Thus, the economic environment can be concluded as a threat to future business operations.

5.0 Socio-cultural Environment

5.1 Hofstede’s Cultural Dimensions

Figure 5: Hoftstede’s Dimension Comparison

Source: Figure reproduced from Hofstede Insights (2019).

Hofstede’s Cultural Dimensions

Australia Canada Implications

Collectivism vs Individualism

Individualism Individualism Canadians answer only to themselves and have a high sense of self- reliance.

Power Distance Low PD Low PD Canadians are less formal with regards to workplace hierarchy and communicate openly

Uncertainty Avoidance Moderate uncertainty avoidance

Moderate uncertainty avoidance

Canadians embrace the unknown and are willing to try something different

Time Orientation Short time orientation

Short time orientation

Canadians focus on instant gratification rather than deferred gratification.

Femininity vs Masculinity Moderate Masculinity

Moderate Masculinity

Canadians prefer a balance between work and life

90

36

51

21

61

80

39

48

36

52

0

10

20

30

40

50

60

70

80

90

100

Individualism Power Distance Uncertainty Avoidance

Time Orientation Masculinity

Australia

Canada

5.2 Analysis

According to the chart above, there are many similarities between Australia and Canada with regards to the Hofstede’s dimensions. Socio-cultural environment poses as an opportunity as Puawei does not need to make much changes with it managerial style and functions as what works in Australia should work in Canada.

6.0 Technological Environment

6.1 Technological infrastructure

In terms of technology and innovation, Canada has slipped from 9th to 12th placing in recent years. Countries like Australia and Japan are continuing to improve while Canada lacks behind (The Conference Board of Canada 2018). In spite of the Canada’s efforts to enhance its unenlightened commercial innovation performance, the situation continues to exasperate (Toronto 2015). This may affect labour productivity and cause manufacturing processes not to operate at their maximum potential due to the lack of technological infrastructure.

In Puawei’s situation, being a smartphone company means that it needs a high level of innovation because the smartphone technology moves at a very fast pace. Setting up a business in Canada may be detrimental to the company’s R&D sector.

6.2 Communication networks

Figure 6: Smartphone Penetration Rate in Canada 2014-2013

Source: Figure reproduced from Statista (2019).

Since Puawei is in the smartphone business, it is also important to look at Canada’s smartphone user penetration. According to the chart above, Canada has a high percentage of smartphone penetration and this already high figure is expected to increase in the next few years.

https://www.conferenceboard.ca/press/newsrelease/2018/05/14/canada-falls-in-conference-board-s-innovation-rankings-as-weaknesses-persist

Figure 7: Number of internet users 2000-2016

Source: Figure reproduced from Statista (2019).

Smartphones are complemented with internet service and in 2016, online services reached 81.19% of the entire population (Statista 2019). The graph above shows that the time Canadians spent online are increasing gradually every year. This shows that the online service market is huge and will grow bigger.

Figure 8: Fixed broadbrand Internet prices

Source: Figure reproduced from Dobby (2016).

The chart above shows that the prices of internet services in Canada are approximately the top of numerous developed countries.

6.3 Analysis

Even though the high-level penetration of internet users present itself as an opportunity, the low level of innovation and high prices for internet services in Canada presents as a threat to the business. Therefore, we conclude that Canada’s lack of innovation with regards to it technological infrastructure will affect Puawei which relies on innovation in the smartphone industry to keep a competitive age will suffer.

7.0 SWOT Analysis

Strengths Puawei Pty Ltd has:

Profuse financial capitals·

Long history in manufacturing business·

Striking smartphone design·

Good company image·

Weaknesses Puawei Pty Ltd has:

No experience in expanding overseas·

Deficient knowledge about international business·

Weak marketing capability·

Insufficient manpower resources·

Opportunities Canada has: Political Environment

Stable and safe environment·

Friendly relationships with neighbouring countries Legal Environment·

Low level of corruption·

Similar legal systems with home country Economic Environment·

Stable currency Socio-cultural Environment·

Similar cultures with home country Technological Environment·

High number of internet users·

High numbe·r of smartphone users

Threats Canada has: Economic Environment

Higher currency·

Bad economic forecast Technological Environment·

Low level of innovation·

High prices of internet services·

8.0 Conclusion

According to the results of the research, the external environment which includes political, legal, and socio-cultural environment presents itself as opportunities while economic and technological environment presents itself as threats. Overall, the strengths and opportunities outweigh the weaknesses and threats. It can be concluded that a promising future presents positive business prospects for Puawei Pty Ltd.

9.0 Recommendations

According to the results od the report, it is advisable that Puawei Pty Ltd expand their operations into Canada by following recommendations:

Expand only manufacturing department to Canada·

Retain Research and Development departments in Australia·

Train a Canadian manger to oversee the process due to similar cultures·

Invest in a manufacturing plant that has lower minimum wage·

Reference List

Bullock, Lara. 2016. “Northern Exposure.” Lawyers Weekly.

Canada – Economic Forecasts – 2019-2021 Outlook. n.d. Trading Economics. 01/04/2019.

https://tradingeconomics.com/canada/forecast

Canada Corruption Rank. n.d. Trading Economics, 01/04/2019

https://tradingeconomics.com/canada/corruption-rank

Canada Corruption Rank. n.d. Trading Economics, 31/03/2019.

https://tradingeconomics.com/canada/corruption-rank

Canada Falls in Conference Board’s Innovation Rankings, As Weaknesses Persist. n.d. The

Conference Board of Canada, 01/04/2019.

https://www.conferenceboard.ca/press/newsrelease/2018/05/14/canada-falls-in-

conference-board-s-innovation-rankings-as-weaknesses-persist

Canadian Economy and Political Stability. 2019. Edunova, 01/04/2019. https://studynovascotia.ca/canadian-economy-political-stability/

Country Comparison. n.d. Hofstede Insights, 28/03/2019.

insights.com/country-comparison/australia,canada/

Dobby, Christine. 2019. “How Canada’s Internet, wireless rates compare with international

prices.”

wireless-rates-compare-with-international-prices/article31379589/

Ease of Doing Business in Canada. n.d. Trading Economics, 03/04/2019.

https://tradingeconomics.com/canada/ease-of-doing-business

Export Markets – Canada. n.d. Austrade, 31/03/2019/

markets/Countries/Canada/Doing-business

Ferris, J Stephen and Derek E. H. Olmstead. 2017. “Fixed versus flexible election terms:

explaining innovation in the timing of Canada’s election cycle.” Constitutional Political

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Hours of Work. n.d. Government of Canada, 28/03/2019.

IBFD. 2008. “Convention Between Canada and Australia for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with respect to taxes on income.” Australia – Canada Income Treaty.

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https://tradingeconomics.com/canada/corruption-rank

https://tradingeconomics.com/canada/corruption-rank

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https://www.conferenceboard.ca/press/newsrelease/2018/05/14/canada-falls-in-conference-board-s-innovation-rankings-as-weaknesses-persist

https://studynovascotia.ca/canadian-economy-political-stability/

https://www.hofstede-insights.com/country-comparison/australia,canada/

https://www.hofstede-insights.com/country-comparison/australia,canada/

https://www.theglobeandmail.com/report-on-business/how-canadas-internet-wireless-rates-compare-with-international-prices/article31379589/

https://www.theglobeandmail.com/report-on-business/how-canadas-internet-wireless-rates-compare-with-international-prices/article31379589/

https://tradingeconomics.com/canada/ease-of-doing-business

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Last Updated on October 13, 2020 by Essay Pro