Question

4. Suppose that a French defence manufacturer with several highly sophisticated medium-weight fighter jets is trying to enter an attractive foreign market. The political environment in that country is highly volatile, with the government and opposition parties enmeshed in perpetual conflict and legal disputes. In addition, the foreign government has a rather cumbersome and long-winded approval process for foreign manufacturers who want to sell their products. Conduct a hypothetical PESTEL ANALYSIS, as discussed in class. You may focus on factors that are important to the French defence manufacturer from your point of view.

Answer 1

PESTEL Analysis

It is a framework or marketing tool to analyse the macro environmental factors that effect the business. In PESTEL the Words stands for

· P – Political

· E – Economic

· S – Social

· T – Technological

· E – Environmental

· L – Legal

Political

These are all about the interference of government in Economy. Mainly it includes Government policy, political stability or instability, foreign trade policy, Tax policy, Commercial law. Political factors often have an impact on organisations and how they do business. In the given scenario the government and opposite party are enemy in relation. So, it effects the approval for manufacturing of defence equipment’s in private sector. Here also the approval from foreign government take long time approval mode. So, it is also affecting the product.

Economic

These factors have impact on how an organisation does the business and also how profitable they are. The factors are economic growth, interest rate, exchange rate, inflation. In the above scenario the demand of aircraft in market is a big factor.

Social

This area involves the shared belief and attitudes of population. These are population growth, age distribution, carrier attitudes. These factors cannot directly affect the situation mentioned.

Technological

This mainly include New ways of producing, New ways of distributing, New ways of communicating. In the given situation the technology implemented in aircraft is most modern and is flexible for new updating. Otherwise it has no market demand.

Environmental

It is a new concept derived because of the pollution increasing in our nature. In modern marketing it has an important role. The amount of pollution effecting is important here.

Legal

It includes health and safety, equal opportunities, advertising standards, consumer rights and laws. These factors also effect the given scenario.