Question

Please provide a PESTEL analysis on Bayer the pharmaceutical company.

Answer 1

There are quite diverse political variables that can affect the company's competitiveness or chances of survival. The security threats range from sudden changes to civil unrest in existing political systems to major government decisions. In the case of potential multinationals, political considerations may also be included that influence not only the host country but also all countries that have business operations or that may participate in trade with Bayer.

The following considerations should be considered before taking part in any investments in order to properly determine the magnitude of the overall structural political risk that Bayer may be exposed to:• The level of political stability that the country has in recent years.
• Politicians ' credibility and probability of engaging in acts of bribery, as the potential consequences can result in possible impeachment or resignation of high-level government employees.
• The laws imposed by the state, particularly with regard to trade, such as contract law, which determine what Bayer is and is not permitted to do.

• High taxation would prevent companies such as Bayer from growing their profits. • The risk of a hostile country's military invasion can result in company divestment. • Low minimum wage would mean higher income and better prospects of Bayer's survival

Economic factors are all those relevant to Bayer's economy, such as inflation rate shifts, foreign exchange rates, interest rates, gross domestic product, and the current economic cycle level. Such factors, and their resultant effect on aggregate demand, aggregate investment, and overall business environment, have the potential to make a company highly profitable or highly likely to lose. In the PESTEL review, the economic factors are macroeconomic.

• The economic system currently operating in the sector concerned, whether it is a monopoly, an oligopoly or something close to a perfect economic system of competition.
• The country's rate of GDP growth will impact how quickly Bayer is expected to grow in the near future.
• The country's interest rates would affect how much people are willing to borrow and invest. Higher rates would lead to higher investment, which would increase Bayer's growth.

The social factors that affect Bayer are a direct reflection of the society in which Bayer works and include the culture, views, attitudes and values that most people that hold as a group. The impact of social factors is important not only to Bayer's operational aspect, but also to the organization's marketing aspect. A thorough understanding of consumers, their lifestyle, level of education and values in a community, or segment of society, would help to develop the goods and promotional campaigns that would contribute to a successful venture.

• Population demographics, meaning their respective ages and sexes, have a major impact on whether or not they can be targeted with a particular product. Makeup is mostly targeted to women, and targeting a majority of male population would be less population than targeting a majority female population.
• The distribution of classes among the population is of paramount importance: if the majority of the population were a lower class, Bayer would not be able to promote a premium product to the general public; instead, they would have to focus on very niche advertising.

In a very short time, innovation could easily kill an industry's price structure and competitive landscape. It is therefore extremely important to constantly and consistently innovate, not only in the interests of raising potential profits and becoming a market leader, but also in the interests of avoiding obsolescence in the near future. There are multiple instances of innovative products that fully reinvent the norm for an industry as a whole: Uber and Lyft dominate the taxi cab market; smartphones have left an unviable choice for most and so on.

• Competitors ' recent technological advances and breakthroughs, as noted above. If Bayer meets a new technology that is gaining popularity in the industry in question, it is important to monitor the popularity level and how fast it grows and disrupts the revenues of its competitors. This would translate into the level of urgency needed to respond appropriately to innovation, either by matching the technology or by finding an innovative alternative.
• How convenient, and therefore quick, the technology will be disseminated to other companies in the industry, leading to other companies copying Bayer's technology processes / features

Different industries have different environmental protection standards as the norm in their heads. This standard then dictates what each company should aim at, at least, to avoid becoming the target of pressure groups and boycotts due to a lack of environmental awareness. For example, a company in the textile industry is not expected to experience the same level of pollution and deterioration of the environment as an oil company. In the wake of global warming, the new customer, armed with the interest and knowledge he brings, tends to offer his business to businesses he sees as more ethical, particularly about the environment.

• The current weather may have a significant impact on Bayer's ability to manage both asset and finished product transportation. That, in effect, will affect the final product delivery dates for, say, an unforeseen moonsoon.
• Some products would also be rendered useless by climate change. For example, warm winter clothes have much less of a demand in countries where winter has become very mild due to global warming.

Government institutions and mechanisms in a state, while also being legally political and therefore subject to whatever political party holds the majority in a government body, are also legal and should therefore be included in an examination of PESTEL. Sometimes, Bayer's policies alone are not enough to effectively protect Bayer and its staff, rendering Bayer an undesirable place of employment that can repel skilled, talented workers.

• As mentioned earlier, intellectual property laws and other data protection laws are in place to protect the inventions and patents of businesses that only benefit from this knowledge. If the information are likely to be stolen, Bayer will lose its competitive edge and have a high likelihood of failure.
• Government regulations on discrimination to protect employees and ensure that everyone in Bayer is treated fairly and has the same opportunities, regardless of gender, age, disability, ethnicity, religion or sexual orientation.