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By # Group 5Janmey Patel ( 202 )Nikhil Arora ( 206 )Shashank Mohore ( 228 )

Aniket Gupta ( 229 )

Parandeep Chawla ( 231 )

PESTEL ANALYSISOF

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>> Objective

>>Brief on PESTEL Analysis

>>Ease of doing business in UK on :1. Political Front2. Economic Front3. Social Front4. Technological Front5.

Environmental Front6. Legal Front

>>Conclusion

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To study the ease of doing business in United Kingdom by analyzing thecountry on political, economic, socio-cultural, technological,

environmental and legal fronts.

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Political factorsEconomic

factors

Socio-culturalfactors

Technological factors

Legalfactors

Environmentalfactors

It is a strategic planning technique that provides a useful framework foranalyzing the environmental pressures on a team or an organization.

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Political factors Global, regional, local and

national .Political parties differing policies

Integration with other jurisdictionsGlobalisation

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Official Name United Kingdom of Great Britain and NorthernIreland

Capital London

Population 62.2 million

Area 244,108 sq km

Currency Pound Sterling

Religion Church of England (Anglican), RomanCatholic, Church of Scotland (Presbyterian),Muslim

Literacy App. 100%

Languages English, Welsh, Scots and Gaelic

Major Cities London, Manchester

Climate Moist with moderate temperatures

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Political Map

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The political environment is one of the most important factorsaffecting the operations of a business.

Political forces are said to be part of the macro-environment.

All the factors of the macro-environment are external to anorganization, and completely beyond its control.

Political factors are concerned with the overall situation of politics in acountry, which can, in turn, be associated with the situation ofgovernment.

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Type: Constitutional monarchy.

Branches: Executive--monarch (head of state), prime minister (head ofgovernment), cabinet. Legislative--bicameral Parliament: House of

Commons, House of Lords; Scottish Parliament, Welsh Assembly, andNorthern Ireland Assembly.

Judicial--magistrates' courts, county courts, high courts, appellate courts,House of Lords, Supreme Court.

Subdivisions: Scotland, Wales, Northern Ireland (municipalities,counties, and parliamentary constituencies).

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1979 - 1997 : The Conservative government (Margaret Thatcher andJohn Major) was a firm believer in the privatisation of publiccorporations.

1997- till date :The Labour government that had been in power firstunder Prime Minister Tony Blair and then under his successor, GordonBrown, lost its majority in the House of Commons in the May 6, 2010election.

At Present Principal Government Officials

Head of State--Queen Elizabeth IIPrime Minister (Head of Government)--David Cameron (Conservative

Party)Deputy Prime Minister--Nicholas Clegg (Liberal Democrat Party)

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Stability of the government

Government type (dictatorship, democratic, monarchy,etc)

Economic policy of the government Trade policy

Diplomatic events in surrounding countries

Lack of political consensus is stifling Greenfieldinvestment in the U.K. The government must agree on a

way forward for renewable if it is to unlock the billions ofpounds poised to flow into the wind energy sector.

SOURCE: guardian.co.uk

http://www.guardian.co.uk/http://www.guardian.co.uk/

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Economic factors

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Gross Domestic Product

As per GDP it is the 6th largest economy and its GDP amounts to

$2.603 Trillion for the period 2011 -12 and its GDP per capita is$39,459.

GDP contributor: Agriculture: 0.7%, Industry: 21.1% & Services: 78.2%

GDP has grown by 0.9% in Q3, 2012 mainly due to London 2012Olympic Games, but shrank by 0.3% in Q4,2012 mainly due to drop inmining and quarrying, after maintenance delays at the UK's largestNorth Sea oil field.

Inflation

Inflation rose to 2.7% in Oct compared to 2.2% in Sep2012 mainly dueto increased food prices & 19.1% rise in educational cost after thegovernment lifted the cap on university fees. For both the months Nov& Dec annual inflation stands at 2.7%.

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Interest Rates

The Bank of England has kept interest rates at 0.5% and held off frommore stimulus measures.

It also decided not to increase its programme of quantitative easing(QE), having lifted it by 50 billion in July to 375 billion

Public Sector Net Debt

Rose from 1009.6 billion in Dec,2011 to 1111.4 billion in Dec,2012.

Public Sector Net Borrowing

Rose from 0.6 billion in Dec 2011 to 15.4 billion in Dec 2012.

Disposable Personal Income

Rose from 237835 million in Q2,2012 to 238842 million to Q3,2012.

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Bond Market

UK Government Bond Yield for 10 Year Notes declined 6 basis pointsin Dec,2012 which means it became less expensive to borrow moneyfrom investors.

Stock Market

Stocks in the UK had a positive performance in Dec,2012. The UKStock Market (FTSE 100), rallied 257 points or 4.23% in the month.

Consumer Confidence Index

Consumer Confidence Index fell to 38 in Dec,2012 from 40 in Nov,2012.

Mainly due to cost of living which continued to rise at more than twicethe rate of underlying wage growth and also due to ongoing Euro

crisis.

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Unemployment Rate

Unemployment Rate in the United Kingdom decreased to 7.70% in

November of 2012 from 7.80% in October of 2012.

Trade Deficit

Trade deficit decreased from -3.7billion in Oct 2012 to -3.5billion inNov 2012.

Exchange Rates

The GBP-USD spot exchange rate depreciated by 1.27% during Dec2012.

British Pound per USD Dollar is 0.6324 for the year 2012.

$ th

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Exports : $481 billion, 2012 ( 12th as per World Ranking)

16%

10%

9%

8%

8%7%

6%

Others(manufacturedgoods, food,

beverages,tobacco)

36%

By Products Transport Equipment

Chemical Products

Machinery &Equipment

Computer, Electronicand Optical Products

PharmaceuticalProducts

Refined PetroleumProducts

Basic Metals

E $481 billi 2012 ( 12th W ld R ki )

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Exports : $481 billion, 2012 ( 12th as per World Ranking)

13%

45%

42%

By CountryUnited States

Euro Area Countries(Switzerland, Belgium,Ireland, France,Germany,Netherland, Italy,Spain )

Rest of the World

I t $646 billi 2012 ( 7th W ld R ki )

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Imports : $646 billion, 2012 ( 7th as per World Ranking)

83%

12%5%

By Products Manufactured Products(Computer, Electronic andOptical Products, Transports

Equipment, ChemicalProducts, Food andBeverages, Chemicalproducts,Apparel, Textiles andLeather)Raw Metals & Fuel

Others

I t $646 billi 2012 ( 7th W ld R ki )

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Imports : $646 billion, 2012 ( 7th as per World Ranking)

8%

7%

6%

12%

7%

6%5%

49%

By Country

China

United States

NorwayGermany

Netherland

France

Belgium

Others

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Socio-cultural factorsLink with business Demographic factors Aging population Family life

Changes in lifestyle Education levels Labour force Work place Etiquettes

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Total population 63.2 million

Life expectancy ratio 80.4Year

Aging Population

Smaller labour forcesupporting the growingpopulation of retired workers.

This is forecast to get worseover the next 20 years

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A number of social factors haveincreased the flow of workers into

the UK.The UK has an ageing population.

Without immigration, the labourforce would be shrinking

Many migrants also moved to theUK to improve their standard ofliving.

Unemployment rate 7.7% (Sep-Nov2012)

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On average 2.4 people live as afamily in U.K. which is smallerthan most other European

countries.

Number of single-personhouseholds increased to 29 percent of all households.

It is estimated that by 2020 therewill be more single people thanmarried people.

Around 46% of children in Britainare born to unmarried (cohabiting)parents.

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The English are said to be reservedin manners, dress and speech. They

are famous for their politeness &self-discipline

They have Etiquette on Dos &Donts, Greeting and other social

custom.

Social class as the grouping ofpeople by occupations.

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Time keeping

Meetings

Presentations

Report Lunch time

Bad behaviours

Dress code

Peer group interaction

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Technological factors

Spreading of and breakthroughin new technology

Research & Development (R&D) New materials, products and processes Information Communication

and Technology (ICT) changes. Rates of obsolescence

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Technological innovation backed by excellent research.

The European Innovation Scoreboard ranks the UK, one of theinnovation leaders, with innovation performance well above that of the

EU average and all other countries.

The UK has claim to 23 Nobel prizes in the life sciences. (medicineand chemistry). UK researchers produce 16 research papers per US$1million of research funding (compared with 9.2 papers in the U.S. and3.6 in Japan).

According to Global Information technology report 2012 UK hasadvanced in Business ICT usage ranking.

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In terms of NRI (Network Readiness Index), UK has been up by fivepositions.

The UK also ranked 10th in how its regulatory environment encouragesgrowth of the IT sector.

Ranked 13th for innovative business that use the technological resourcesto the fullest.

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Identified Potential Growth Areas:

Biotechnology and Pharma Sector

Sensors and Computing

Agricultural TechnologyAdvanced material

Eco infrastructure

Energy Technologies

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Consumers need more convenient shopping and technology plays a vitalrole in enhancing user experience and cost effectiveness. Self checkout, instore media, intelligent scales and shelves, electronic advertising displays-these are just some recent innovations in retailing (Fiorito et al., 2010).

Technology is a major macro-environmental variable which has

influenced the development of many of the Aldi products. The new technologies benefit both customers and the company:

customer satisfaction rises because goods are readily available, servicescan become more personalized and shopping more convenient.

The launch of the Efficient Consumer Response (ECR) initiative providedthe shift that is now apparent in the management of food supply chains

(Data monitor Report, 2003). Aldi stores utilize the followingtechnologies: Wireless devices Intelligent scale Electronic shelf labeling Self check-out machine

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Global warming Pollution factors Green energy Energy conservation Recycling Natural resourcedepletion

Environmental factors

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The issue of waste management and recycling is acute inLondon - the capital produces 17 million tonnes of wasteeach year.

forecast to rise to 26.5 million tonnes in 2020

The existing organisational arrangements however arecomplex with a number of waste disposal authorities atsub-regional and local levels.

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37% of household waste was recycled in 2008/09.

There was a 235% increase in household recycling inEngland between 2000/01 and 2009/10.

23 million tonnes of household waste was generated in2009/10, of which 9.4 million tonnes was recycled, reusedor composted.

In 2009/10, compost was the largest component of recycledwaste, comprising 40% of the total.

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In 2009, 48 million tonnes of C&I waste was generated inEngland, a decrease from 67.9 million tonnes in 2002/03.

52% of C&I waste was reused or recycled in 2009,compared to just 42% in 2002/03.

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Glass

Recycling glass products uses 40% less energy thanmaking glass products from all new materials.However, not all glass containers can be recycled.

Paper

Paper is the number one solid waste product in theU.K., and it takes 60% less energy to make paper from

recycled paper than from fresh wood. Recycled paperalso uses fewer chemicals, bleaches and dyes

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Created Under the Royal Warrant in 1970.

Primary function to advise the Queen, Government,Parliament and the Public on Environmental Issues.

Closed on April 1, 2011 as part of the Coalition GovernmentsSpending Cuts.

The Commisions report covered both the Natural and theBuilt Environment.

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Commitment to reduce emissions of carbon dioxide by80% by 2050 (compared to 1990 levels)

Despite increased awareness of environmental issues,

nearly one-quarter (24 per cent) of adults aged 16 and overin England in 2007 left their television on stand-byovernight.

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Legal factors Competition laws Labour marketlegislation

StandardsInformation disclosure

Intellectual property lawsLaws can be an opportunity as

well as a problem.Eg car emission laws

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The United Kingdom has three Legal Systems:1. English Law, which applies in England and Wales.

2. Northern Ireland Law, which applies in Northern

Ireland.3. Scots Law, which applies in Scotland

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The Supreme Court came into being in October 2009,replacing the Appellate Committee of the house of Lords.

Highest Court of the Land for all criminal and civil cases in

England and Wales and Northern Ireland and for all civilcases in Scots Law

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A Company may be Incorporated under the CompaniesAct 2006 or under the European Company statute.

Formation occurs through a series of procedures with the

Registrar at the Companies House.

Fee for registration varies from 18 to 100 (for same dayincorporation).

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Parameter United Kingdom IndiaEase of Doing Business Rank 7 132

Starting a Business 19 173

Dealing with ConstructionPermits

20 182

Getting Electricity 62 105

Registering Property 73 94

Getting Credit 1 23

Protecting Investors 10 49

Paying Taxes 16 152Trading Across Borders 14 127

Enforcing Contracts 21 184

Resolving Insolvency 8 116

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Customs duty is assessed on the fair market value.

Import prices for products entering the UK from non-EU statesgenerally consist of: Cost, Insurance, Freight and Duty, with VAT of 15%levied on the aggregate value.

The commercial invoice value is usually accepted as the normal price,but if an unrealistic value has been declared, HM Revenue andCustoms (HMRC) reserves the right to assess a fair market value forduty purposes.

In addition to customs duties on imported goods, an excise tax is leviedon in-country sales of alcohol, tobacco, and road vehicles, and on salesof oil and petroleum products

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A limited range of goods requires import licenses, whichare issued by the UK Department for Business, Enterpriseand Regulatory Reforms Import Licensing Branch.

These include firearms and explosives, nuclear materials,controlled drugs and certain items of military equipment

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The UK has no significant trade or investment barriers andno restrictions on the transfer of capital or repatriation ofprofits. The very few barriers that exist area lmost allattributable to UK implementation of EU Directives and

regulations

Strengths Opportunities

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1) Has the economic resources to survive

Reductions in barriers to trade therefore

increasing trade partners

2) Good industrial relations Fill skills gap from migrants( Proposed policy on

CAP on migration however may be otherwise)

3)Political willingness to adapt to changing world Larger market in which to trade

4)Good education system compared to most countries

5)English as first language and is the world language

therefore improves business.

6) Recovering economy

7)Improved management system

Weaknesses Threats

Increased competition due to cheaper labour etc

1) Strong pound makes exports expensive

Businesses relocated abroad due to cheaper costs

2 )Skills shortage Reduced E.U. spending on UK as new countries require

investment

3)Not enough R+D Cheaper imports from abroad

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The easiest place to set up and run a business in Europe: The World Bank found

that it takes 13 days to set up a business in UK, compared to the Europeanaverage of 15 days. It ranks the UK first in Europe and fifth in the world tosetup a business.

Source: Doing Business 2012.

The best place in Europe for doing business: The World Banks Doing Business2012 ranks the UK fifth in the world on Ease of Doing Business making thehighest ranking country in Europe. Source: World Bank. Doing Business 2012

The least number of barriers to entrepreneurship in the world: The OECD notedthat the UK is fifth in the world for Product Market Regulation, has the least

barriers to entrepreneurship in the world and has the third least barriers to tradeand investment in the world. Source: OECD, 2012.

One of the most stable political environments to do business (IN SPITE OFCOALITION GOVT.) According to Transparency International, the UK is oneof the most transparent (least corrupt) countries in the world. It has a higher

rating than France, Belgium, USA and Japan.

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Stable regulatory environment: The UK has a consultative approach to the

formulation of regulation, so there are no surprises for business.

Speaking in the international language of business: operating in English gives

firms in the UK a natural advantage when communicating globally.

Springboard to Europe: The UK is the number one gateway to Europe, giving

easy access to the 27 member states of the European Union, the world's largest

single market, with its population of nearly 500 million.

Number one location forEuropean headquarters: More overseas companies set

up their European headquarters in the UK than anywhere else. (Source:

European Investment Monitor)

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Outstanding transport links: The UK offers world class transport links.Heathrow's new Terminal 5 is now open and working efficiently. Additionalexpansion is planned for international airports at Stansted and London City; forsea container terminals at London Gateway and Felixstowe; and for the railnetwork, with investment in London Cross Rail and rail freight infrastructure.

Magnet forforeign investment: In 2012, the UK attracted 432 new investmentsand expansion of existing investments, the highest in Europe. (Source:

European Investment Monitor, December 2012)

Productivity rapidly increasing: Historically, the UK had lower productivitythan its main competitors, but this is changing and the UK has closed the gapwith many countries and overtaken others

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