PESTAL ANALYSIS WITH EXAMPLE

1. MAYURI VADHER

3. An Overview Of Liberalization, Privatization and
Globalization
• Liberalization refers to relaxation of government restrictions in areas of
economic policies. Thus, when government liberalizes trade it means it has
removed the tariff, subsidies and other restrictions on the flow of goods and
service between countries.
• The term “Privatization” refers to “The transfer of ownership of property or
businesses from a government to a privately owned entity.” Privatization in
India generally is in the form of disinvestment of equity. In general, here
privatization has not led to 100% transfer of control from public sector to
private sector unit.
• globalization is the increasing economic interdependence of national
economies across the world through a rapid increase in cross-border movement
of goods, service, technology and capital. It is a process which draws countries
out of their insulation and makes them join rest of the world in its march
towards a new world economic order.

4. Reasons for implementing LPG
• Excess of consumption and expenditure.
• Growing inefficiency in the use of resources.
• Over protection to industry.
• Mounting losses of public sector enterprises.
• Low foreign exchange reserves.
• Burden of national debt.
• Inflation.
• Technological impairment.

5. Liberalization
Advantages
•Increase in rate of economic growth.
•Increase in competitiveness of industrial
sector.
•Reduction in poverty and inequality.
•Increase in Efficiency.
•Better Stock Market Performance.
Disadvantages
•Pressure by IMF and World.
•Depending on Foreign Debt.
•Dependence on Foreign technology.
•Problem of Unemployment.

6. EXAMPLE: Liberalization: Infosys
• Political
– Flexible and strengthen gov
rules
– More govt projects
– Outsourcing from US
• Economical
– Growing domestic market
– Currency fluctuation.
• Social
– English
– More technical education
• Legal
– Security of data
– Software technology park
scheme tax benefits
• Technological
– IT revolution after 1991
– Low cost technologies
• Environmental
– Energy utilization, water
consumption.

7. Globalization
Advantages
•Improves the efficiency of resource,
reduce the capital output and increase
labour productivity, update technology.
•Increase in Trade in Goods and Services
•Increase in industrialization
•Commodities at lower price with high
quality
•Increase in jobs and incomes
Disadvantages
•Globalization is helping the developed
economies more than the developing
economies.
•Flood of Multinational companies and
Chinese goods.
•Loss of domestic industries in income

8. EXAMPLE: Globalization: Tata motors
• Political
– The Singur Controversy
– “Save Farmland” movement .
• Economical
– high interest rates
– price pressure from
competitors.
• Social
– Generates local employment.
– supports around 600 NGOs.
– high standards of education to
students.
• Legal
– Cases against car explosion.
– Government norms for
production.
• Technological
– Tata Technologies Limited
FOR R&D
– Tata faced a technological
hurdle .
• Environmental
– invested huge sums of money
in its R&D section to produce
eco-cars.
– “Green Earth, Clean Earth”
campaigns.

9. Privatization
Advantages
•Modernize and diversify business.
•Making public sector units more
competitive.
•Improving the quality of decision-
making
•Help in reviving sick units which have
become a liability on the public sector.
•Better results in terms of revenues and
efficiency and productivity.
Disadvantages
•Monopoly.
•The limited resources of the private
individuals.
•There is lack of transparency in private
sector
•Privatization results in high employee
turnover

10. EXAMPLE: Privatization: Tata Communication PVT.
• Political
– Govt teriff
– Safety and privacy regulation.
• Economical
– Inflation rate, price control
– competition
• Social
– Lifestyle change
– New trends
• Legal
– Anti-corruption law.
– Radiation from mobile tower
• Technological
– Internet, Wi-Fi, video
conferencing
• Environmental
– invested huge sums of money
in its R&D

12. Introduction
• PESTLE is an analytical tool which considers external factors and helps you to
think about their impacts
Why to use PESTLE
The overriding question:
– Is this an attractive industry?
If so:
– What do we need to do to take advantage of, or position ourselves against, as
we move ahead with our strategic thinking and planning?

14. PESTEL Framework
• Political
– Government pressures
– Differences in countries, states,
and regions
– Influences from political
pressures
• Economic
– Growth, Interest rates
– Employment levels
– Currency exchange
• Sociocultural
– Norms, culture, values
– Lifestyle changes
• Technological
– Innovation
– Research & development
• Environmental
– Global warming
– Sustainability
– Pollution
• Legal
– Court system
– Legislation
– Hiring laws
3–14

15. EXAMPLE: Foreign entrance: MC’D
• Political
– Violation of religious laws
• Economical
– Price of burgers.
• Social
– Sensible food for Indian
people depending on
traditions
• Legal
– Elimination of beef, pork
• Technological
– Promotion via social media
– Toys in meal, I am loving it,
effective SCM
• Environmental
– Styrofoam containers and
restaurant abuse of the
environment.

16. Advantages
• Provides a simple and easy-to-use framework for your analysis.
• Involves cross-functional skills and expertise.
• Helps to reduce the impact and effects of potential threats to your organization.
• Aids and encourages the development of strategic thinking within your
organization.
• Provides a mechanism that enables your organization to identify and exploit new
opportunities.
• Enables you to assess implications of entering new markets both nationally and
globally.

17. DisadvantagesDisadvantages
• The process has to be conducted regularly to be effective and often organizations
do not make this investment.
• Organizations often restrict who is involved due to time and cost considerations.
This limits effectiveness.
• Users’ access to quality external information is often restricted because of the cost
and time needed to collate it.
• Assumptions often form the basis for most of the data used, making any decision
made based on such data subjective.