Question

Pretend that you are a consulting firm. You are to assume that your chosen company intends to venture into a foreign market, like England. Your goal is to help your chosen company have a good idea about the industry (and/market) they intend to move into. Provide a country risk analysis of your chosen company venturing into England. Include what is the general attractiveness of this country for foreign companies? And what are the risks of doing foreign companies in this country?

Answer 1

PESTEL Assessment-UK

Political factors -

The UK is one of the most powerful nations in the world. Political stability is its strength; however, Brexit has caused uncertainties . Few analysts believe that Brexit will lead to chaos , whereas some others feel that it will open doors to enormous opportunities for the nation.

It has long been a popular destination for FDI. Several businesses from across the world have invested in a variety of sectors in the UK. Sports, technology, real estate ,grocery, etc. have drawn an immense interest from overseas.

The current tax rate on company profits is 19 per cent. However, the government declared a reduction to the corporation tax in the 2016 budget .

Economic factors-

It is the 5^th biggest economy globally by nominal GDP . The recession of 2008 had put the economy in difficulty; however, the state took necessary steps to enhance the economy.

British households encountered few challenges in 2017. Prices escalated at fast rates as the weak pound augmented the cost of importing products to the UK. However, wages didn’t go up in line with the augmented prices. The current minimum wage rate for persons aged 25 & above is £7.50 / hour which will increase from April 2018.

The rate of inflation rose to 3.1 per cent in November 2017. Its worth mentioning that the Bank of England has fixed a 2 per cent inflation target. It escalated its key ROI in November 2017. The rate has augmented from 0.25 per cent to 0.5 per cent . Its unlikely that there’ll be another fast increase; however, several analysts feel that the age of low ROI is over.

Social factors-

It has a large consumer market. The population was 65.6 million in 2016. Births continue to be more than deaths & the populace is anticipated to reach 74 million by 2039. The populace is getting older also. In 2016, 18 per cent of persons were aged 65 & above, whilst 2.4 per cent were aged 85 & above. This has repercussions on both the labour market & the medical care system. However, there’re a lot of prospects for organisations to cater for the requirements of older populace. Real estate, holiday, health care & several other firms have already profited from this category of the populace.

It has historically been impacted by the conception of social class; however, the populace is multicultural. Over time, firms have developed a variety of new goods & markets to cater to the requirements of various races & religions. There are still several prospects out there for firms to explore.

It is one of the top 10 nations perceived to have the most educated populace globally. . However, its worth noting that the costs of living & costs of higher education are escalating.

Technological factors-

Its one of the most technologically advanced nations globally. London is a preferred hub by both financial & technological establishments. Firms are frequently developing innovative technologies to deliver the best solutions to their consumers. The advanced technical infrastructure presents entrepreneurs unlimited prospects to do business here.

Environmental factors -

Economic acts impact the environment; however, England has made considerable improvements in lessening the negative impact. The government, newspapers, local councils, charities & others have undertaken a variety of initiatives to develop environmental awareness .

England sometimes encounters challenging weather circumstances. Yet, weather plays an essential role in tourism. Billions of tourists from across the world come to England, particularly in the summers. In fact, tourism is booming in England and contributes £127bn per annum to the economy.

Legal factors-

The Employment Act (1996) safeguards rights of employees. Maternity leave and paternity leave, minimum wage rate, sick pay, & some other privileges are legally protected. Additionally, the Equality Act (2010) protects persons from any discrimination.