Pestel Analysis- Mms and Mba

7/29/2019 Pestel Analysis- Mms and Mba

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P E S T E L - ANALYSIS

- Influences International Business as well as Domestic

Business – But How ?

1. People not serious / dedicating themselves for Country’s

Growth for eg. India V/s Japan, China, Germany, Australia.

2. Government and Judiciary taking advantage of People’s Non-

Participation in Country’s Progress / Day to Day Activities.

3. A political System ( Say Janlokpal Oriented) that is stable,

honest, efficient, and dynamic and which ensures political

participation to the people and assures personal security to

citizens, is a primary factor for economic development.



Contd……………………….

• Contd……………….POLITICAL

• Democracy :

a) 2 basic political systems are in existence all over the world,

namely, democracy and totalitarianism.b) In its pure sense, democracy refers to a political arrangement

in which the supreme power is vested in the people.

c) Democracy may manifest itself in any of 2 fundamental

manners. If each individual is given right to rule and vote onevery matter, the result is pure democracy which may not

happen.



Contd………………….PESTEL

- Hence the republican pattern of Government follows

whereby the public, in a democratic manner, elect

their representatives who do the ruling.

- A representative democracy rests on the assumptionthat should the elected representatives fail to

perform adequately, they will be voted down at the

next election.

- In practice, free markets, property rights and

democracies do not guarantee economic growth.



Contd…………PESTEL

- India, for example is the World’s largest democracy yet

experienced slow growth with destruction of the purchasing

power of rupee till date.

- The So-called Asian Tigers – Hong kong, Singapore, South

Korea and taiwan for example built strong market economies

in the absence of democratic practices.

- China being a Communist Country has transformed since

1974 stage by stage and today being the strongest economy in

the World leaving Japan and S Korea Behind.

- Totalitarianism also called as authoritarianism wherein

accountability is avoided - Say for eg., India.



POLITICAL RISKS AND COVERAGE

• ROLE OF NON - LIFE Insurance Companies

1. Indian Corporate is increasingly exposed to kidnapping andransom ( K & Rs) risks. India Ranks among the top 10countries in the world with growing kidnapping cases.

Approximately over 4,000 incidents of kidnapping occurannually.

2. Risks are going to intensify with increase in the number of Indian Companies expanding their global presence in areassuch as Africa, Sri Lanka and Middle East. Existing Risks in

Iraq, Iran, Israel, Afghanistan, etc.

3. Risks through sea water in transit – Pirates / extortion cases.

4. Using private guards may cheaper than insurance premiums.



ECONOMIC ANALYSIS

• Status of GDP in a Country V/s. Demand V/s. Exports V/s. Imports.

• Status of BOP in a Country

• Purchasing Power of a country’s currency

• Natural Resources in a Country

• Quantum of population in a country

- Several international agencies including the Organisation for Economic

Cooperation and Development ( OECD ) and the United Nations classify

countries by their economic status. But the best known system of

classification is the one recommended by the World Bank in which 211

economies with a population of at least 30,000 are ranked by their levels of

gross national income (GNI) per capita. These economies are then classifies as

low-income ( LIC ) , Lower Middle Income ( LMC), Upper Middle Income

(UMC), High Income OECD and other High Income Countries.



ECONOMIC Contd……………………..

• LIC Countries are defined as those having a per capita GNI in

2000 of $ 735 or less ; LMC countries have incomes between $

736 and $ 2995 ; UMC countries between $ 2996 and $ 9265

and high income countries have incomes of $ 9266 or more.

• Generally speaking, LIC, LMC, and UMC Countries are called

developing countries and rest are developed countries.

• Rates Of Grown / Inflation / Interest Cost / Savings and

Investment / Fiscal Stability/ Financial System ( FSM )

• Industrial Policy/ Monetary Policy/Fiscal Policy ., etc.

• India V/s. EU V/s USA V/s. China ( Last 7 Years )

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Pestel Analysis- Mms and Mba