Pestle Analysis

Bismita Shrestha

16644720

1. Introduction

Pestle analysis will be an instrument for the most part utilized for considering those outer or macro nature's domain of benefits of the business longing on to make or expand in the business. Pestle factors have noteworthy impacts upon those achievement or disappointment of benefits of the business. Pestle incorporates Political, Economic, Social, Technology, Legal Also Environmental factors. Political elements incorporate business theory & regulation, benefits of the business taxation, profession concurred upon for major exchanging squares. Economic factor incorporate interest rates, inflation, GDP for every capita. Socio-cultural elements incorporate demographic factors, social & religious standards & practices, work/leisure chance part. Technology factors incorporate accessibility and likelihood of new technology, correspondence with clients & different stakeholders of the business. Legal elements incorporate distinctive laws including: Discriminating, Consumer, Employment, and so forth throughout this way, observing and stock arrangement of all instrumentation may be enhanced. Environmental components incorporate climate & atmosphere change, which might particularly influence commercial enterprises for example, tourism, farming, & protection operator (Clayton, 2016)

2. Objectives

The main aim of this individual essay is to consider those possibilities about securing an aggregate manufacturing industry in the UK with respect to PESTLE analysis tool and time arrangement assumption patterns up to 2020 for one determinant of each component. For my research, I have chosen The Kabra Group, Nepal   which started as a small in house biscuit manufacturing unit named as Kwality Biscuits Industries Pvt.Ltd. for catering the local market. Kabra Group has been Nepal's largest manufacturer of Biscuits, confectionery, and packaging materials for the past 25 years. (Kabra Group, 2017) Now, I will anlayse the feasibility of Kabra Group in the UK.

3. Time series forecast for PESTLE components

3.1 Political Factors:

One of the main components of political factor is corporate tax rate which the Kabra Group has to focus before establishing its industry in UK. At Summer Budget 2015, the government announced a decline in the Corporate Tax rate from 20% to 19% for the Financial Years beginning 1 April 2017, 1 April 2018 and 1 April 2019, with a further reduction from 19% to 18% for the Financial Year beginning 1 April 2020. (HM Revenue & Customs, 2017) [pic 1]

Source: Trading economics\HM Revenue & Customs

  3.2 Economic Factors:

According to Trading Economics, interest rate in the Uk is expected to be 0.25 percent by the end of this quarter. From the graph it is estimated that Interest Rate in the United Kingdom to stand at 0.50 in 12 months time. (Trading Economics,2017)

[pic 2]

Source: Bank OF England\ Trading economics.

3.3 Socio-Cultural Factor:

One of the determinants of Socio-cultural factor is demography. From the below graph it is predicated that the population of UK to grow 70.5 million by 2030. Thus, there will be more chances for the Kabra Group to increase its market share.

[pic 3]

 Source: MarketOracle.co.uk

3.4 Technological factor:

 The graph below shows the forecast for DSL, FTTx and overall broadband subscribers in the latest update of UK broadband forecasts. It is projected that a total of 23.88 million broadband lines by end 2016 and 25.41 million by the end of 2020. (Point Topic,2017)

[pic 4]

Source: Point Topic

3.5 Legal factors:

The graph shows the increase in national minimum wage in UK. From the graph, the minimum wage in 2016 is £7.20 per hour and it is predicated to raise up to £9 per hour by 2020.

[pic 5]

Source: HM Treasury \ BBC

3.6 Environmental factor:

The below graph represents the updated UK aviation CO2 forecast. Department of Transport (2011) forecast UK aviation CO2 emissions to grow steadily without further government intervention over the next 20 years, growing from 34 MtCO2 in 2010 to 48 MtCO2 in 2030 in the central case.

[pic 6]

Source: Department of transport emission forecast, 2011

4. Discussion:

After analyzing each determinant of every components of PESTLE, the risk, cost and the benefits linked with Kabra Group while establishing the manufacturing business in UK can be determined. Firstly, political factor, the UK government had declined the corporate tax rate from  20% to 19% in the financial year 2017 to encourage to invest on other sectors such as technology, marketing and so on which will be helpful for Kabra Group to settle their business in the UK market. UK corporate tax rate is low as compared to U.S that is 38.9% and Argentina that is 35 %.( Tax foundation, 2017)

In economic factor, the interest rate of UK is extremely low than previous year that is 0.50 %and it is predicated to be 0.25% in 2017 which is very low compared to U.S that is 0.75% and China that is 4.35%. (Trading Economics, 2017) Thus, low interest rate will decrease the cost of raw materials and decrease the cost of production which automatically increases the profits of the company. So, Kabra Group has high chance to be successful in UK market.  

The population of UK is increasing rapidly from 2000. UK population forecast to grow 70.5 million by 2030 from 62.2 million by Mid 2010 with growth rate of 13.3%. (MarketOrcale, 2014). With the increasing population there is both benefits and risks for Kabra Group. Benefit is that Kabra Group gets more opportunity to increase its market share where as the risk is that there will be difficult to get skilled employees to deal with technical operation.  According to UK Commission for Employment and Skills (2014), the manufacturing sector is projected to experience a further decline in its share of total employment, from 8 to 7 per cent of the total, despite a recovery in output levels, which enable it to maintain its share of total output.