PESTEL (Political Economical Sociable Technology Environment Legal) evaluation is one of the macro tactical analysis techniques to critically examine the business enterprise strategy, evaluate the product, etc. This technique is utilized to analyse the at all times macro-environment factors which impact the decisions being used by the management of any company. New Laws, administration procedures, demographic changes, tax changes and trade barriers are few types of macro changes (De wit, 2004).
Political factors make reference to the Government insurance policies which bring about the amount of economic intervention. Monetary factors include taxation charges, inflation, interest levels, exchange rates and inflation. The Community factors are dependant on ethnic issues and the universal people approach towards the merchandise and strategies. Technology plays important role in the life span of people in the current time as a swiftly changing needs of people results in the new technologies getting into fore frequently. Environmental factors have gained importance in the recent years where in fact the impact of the new strategy is analysed based on how it is impacting the environment. Legal factors are related to the legal surrounding of the firms. As the world becomes a website for the functions of the businesses, the different legal environment across the geographies helps it be a challenging factor for strategic examination (Porter, 2008).
PESTEL Evaluation of Drinking water as business product
Edmund S Muskie (Muskie, 2008) quotes -
"Top quality drinking water is more than the dream of the conservationists, more than a political slogan; high quality drinking water, in the right number at the right place at the right time, is vital to health, recreation, and economic development. "
Political Analysis
The administration of the land comes with an important role to experience within the operation of manufacturing water in bottles in conditions of legislation. Potential fines are place by the federal government for the manufacturers in the event they fail to meet the standard of regulations. Some of the politics factors which cause the results of the Water in bottles processing Companies to vary materially from the expected aims in their total annual declaration (Grundy, 2002):
Mercurial character of the non-alcoholic business Environment because of the Government laws benefiting the new entrants on the market. These factors are the pricing stresses, new competitive products, the strategy and the ability of competitors to get the market talk about in the neighborhood and global market segments, their branding efforts. These competitive attempts squash away the customer's mind share from the prevailing operators hence making the business environment change frequently.
As it may affect any business, the changes in the guidelines and regulations by the Government in a variety of functions affects the way business would operate. For example, change in taxation requirements like new duty laws, tax rates, or revised interpretations of the tax laws, adjustment of accounting criteria, and new or altered environmental regulations in global and local restrictions (Grundy, 2006).
The capability border of the existing companies as well as the new entrants depends upon the political conditions of the business environment. How the Government of the land helps the foreign ventures and where sectors as well as the support provided by them to forge strategic alliance has a strong potential to make a difference in the success and failure of any company like the Bottling water company.
Environment Analysis
The along swinging economy is one of the factors, which can make a business successful or a big failure. If the market is strong, any well been able industry increases with the current economic climate. However, with the recent recessionary pattern, the business enterprise environment is now a difficult spot to survive for any company which is not cash wealthy and doesn't have the necessity appeal. The premium selling point of the high quality bottled water might not exactly be as high as compared to the necessity charm. Still, the negative development and nose-diving GDP of the country can drastically impact the progress of the company.
One of the features of the existing negative development rate is usually that the borrowing interest rate is also low. Hence, Bottled Water Company can borrow funds to research on the new technology and products. As the price of conducting the research would be less, the company would be able to bring new products in the market with low cost. This might make people purchase buying the bottled water as the price would be less with a high quality of water in bottles. Thus, even though the business environment is much less conducive, there are few advantages which is often used.
The recent recessionary development seems to have subdued as the recovery of the economy is being forecasted by the economists. It is merely a matter of time when the overall economy achieves the high levels. It is expected that the consumers would soon reassume their common spending habits by visiting high streets, eating dinner out at restaurants, car shopping etc. This is not to discount the actual fact that some are still cautious in conditions of extra cash but as the lower inflation rate goes on, the consumer's self-confidence would return to their normal level. Thus, the effort of the company should be to borrow now to invest in R&D and then devote to marketing the products in the growing economy.
Sociological Analysis
Now-a-days, everyone wants to remain healthy. The damaging ramifications of the alcoholic drink are not hidden from anyone. More and more people are moving over their lifestyle to enable them to remain healthy. This change of thought process has added to the higher offering on the water in bottles, and diet colas. The market talk about of the non-alcoholic beverages has increased at the cost of alcoholic drinks. Nothing you've seen prior the average person needed the Water in bottles and healthy products approximately they want now. Regular health pills from respected doctors advice against alcoholic drinks and urge people to switch to less glucose and bottled water in their diet to stay healthy.
The age group of consumers in 37 to 55 is highly delicate about their diet plan. As they are reaching their later years, the matter for longevity comes to fore. As can be summed up, this factor would continue to improve the demand for the water in bottles and healthy beverages over the time to come (Slack, 2009).
Technological Analysis
The synergy achieved through the right mixture of advertising, marketing and promotional programs can't be dismissed. The interplay of the three activities results efficient marketing of the products. Internet and tv will be the new marketing stations opened up because of this of the new technology. These programs have managed to get possible to truly have a focused marketing for the consumers which is a major achievement compared to mass marketing. The special effects possible through these stations make a product look attractive.
Few technological advancements in the area of product packaging like plastic containers and cans have managed to get convenient for the consumers to buy the products. This helps it be easier to hold and dispose off.
The automation technology in the area of producing water in bottles has increased the efficiency of the bottling seed. The express of the art work technology implemented by the bottling company ends up with the same level of quality and less reliance on the man electricity in production means an effective utilization of the resources. The man power can be used in other functions rather than manual bottling (Driver, 2001).
Environment Analysis
The matter for the surroundings keeps growing as several countries across the globe have introduced fines for pursuing environment un-friendly creation routines. The Bottling companies would need to review their production and presentation strategies by producing new solutions in these areas. Only from then on, they would have the ability to remain in the business (blowfield, 2008).
Legal Analysis
There have been recent changes in regulations which mentions the amount of chemicals allowed in the water in bottles. The impact of the legislation is higher as the non-compliant corporation would be forced to shut shop. The deadline of compliance is three years by EU countries and the companies would be asked to take their product off the shelf if they are unable to adhere to the norms (Hill, 2009).
Conclusions
As the PESTEL macro environment analysis confirms, there's a huge opportunity in terms of packaging and marketing the bottled water. The rate of few brands (Davis, 2010) like Bling h2o - advertising at $40+ per 750 ml container, Hawaiian profound seawater advertising at $33. 50 per 2 oz container is a living testimony to it. The business case of Bottled water industry is strong with a favourable macro environment and hence proves the declaration created by Muskie.
