ASSIGNMENT

NO
1
OF
PESTLE ANALYSIS
IN
INTERNATIONAL MARKETING

SUBMITTED TO:
MAM POOJA
(ASSITANT PROFESSOR)

SUBMITTED BY:
ANMOLDEEP
ROLLNO -141356
MBA4 C

WHAT IS PESTLE ANALYSIS

PESTLE is an analytical tool which considers external factors and helps you to think about their
impacts By understanding your environment, you can take advantage of the opportunities and
minimize threats. This provides the context within which more detailed planning can take place
to take full advantage of the opportunities that present themselves. Meters before venturing into
any country. These parameters are called environmental factors. They determine the direction
and purpose of the international business operations. actorsa

Break up of Key Factors influencing International Business

Political
The current and potential influences from political pressures
E - Economic
The local, national and world economic impact
S - Sociological
The ways in which changes in society affect the project
T - Technological
How new and emerging technology affects our project / organization
L - Legal
How local, national and global legislation affects the project
E - Environmental
Local, national and global environmental issues

Significance of Studying key factors influencing International

Business
The environmental analysis is very important to study because many decisions depend on
environmental factors like:
Selection of a country
Location of the plant
Liaisons with the government
The entry of investment from local bodies
Product launches.
Channel management
The promotion and opening of the outlets

ISSUES AND CONCERNS

1.POLITICAL AND LEGAL FACTORS
This is the most important influence on the regulation of any international business.

How stable is the political environment?

Influence of the Government Policy / Law on your business
Governments position on Marketing Ethics
Governments policy on the economy
Governments view on culture under religion
Political System is responsible for Law Making.

Immediate laws which affect any business in general are Central

Excise, Sales Tax/ VAT, Corporate Income Tax, Personal Income Tax
& Service Tax
Environmental Protection Law
Controls if any on Marketing Strategies

2.Economic Environment of IB
Forms of economic System

Centrally planned economy

Market Based Economy
Mixed economic system

Low income country

Middle income Country
High Income Country

Levels of Income and its distribution

Level of Government Spending

Avenues for Capital Creation
Size of the Capital Market
Role of the Regulator
Type of the Instruments

3. SOCIAL-CULTURAL FACTORS

To understand the significance of culture in international business decisions.

To understand cross cultural behavior and its implication in International business.
To understand the sensitivity of cultural knowledge of host country in order to get
success in business.

4. TECHNOGY FACTORS

Advantage of Technology
In terms of Economies of Scale
New Discoveries & Innovations
Speed & Cost of Technology Transfer
Rate of Obsolescence

PESTLE ANALLYSIS OF INDONESIA

Indonesia is one of the largest countries in South-east Asia, between the Indian Ocean and the
Pacific Ocean which contain mainly mountainous and covered with rain forests, swamps and
consists over 13000 islands. Jakarta is the capital of Indonesia. Indonesia declared its
independence on 17th August 1945 from Japan but Netherlands agreed to transfer sovereignty in
1949. 88% of Indonesians population is Muslim. It has a very large trading environment, with
several countries ranging in products from gas to textiles. 22% of its population live below
poverty line.

PESTEL Analysis:
Political and Legal factors:
Indonesia is considered as Republic country. It declared its independence on 17th August 1945
from Japan so 17th August is the national holiday. Indonesias legal rules and regulations are
based on Roman-Dutch law. Their constitution has abrogated by Federal Constitution in 1949
and Provisional Constitution abrogated in 1950 which restored on 5 July 1959.In Indonesia after
every five year election is being contested for president and vice president post by direct vote of
the citizenry. \

Economical factor
Indonesia's debt-to-GDP ratio in recent years has declined because of increasingly robust GDP
growth which was 6.1% ($915.9 billion) in 2008 compare to 5.5% ($811.1 billion) in 2006 and
compression to the world they are on 54 th position in GDP growth. 14.4% of GDP earning from
agriculture, 37.5% from service sector and the major part 48.1% comes from industry. If we talk
about per capita income, it was $3,500 in 2006 which was increase up to $3900 in 2008 and
comparison to the world it is on the 157th rank in per capita income. \

Social factor:
Indonesia has a large population, which is increasing at a steady rate. It is on the 5 th position all
over the world with total 240,271,522 populations which is growing at 1.13%. The birth rate in
Indonesia is 18.84births/1,000 and the mortality rate is 29.25 deaths/1,000 populations. The total

life expectancy rate is 70.76 years in which for male its 68.26 years and for female its 73.38
years. 52% of total population live in urban areas which are increasing at 3.2% every year.
Indonesia is considered as nation of young people. The total median age is 27.6 years in which
for male it is 27.1 years and for female its 28.1 years If a country has good literacy rate then it
has bright future. Same thing apply on Indonesia. 90.4% of its populations are literate in which
male are 94% and female are 86.8%. 3.6% of their GDP is spent on education. Indonesia is a
multi culture and religion country where people from different religion work there. If we talk
about majority it is a nation of Muslim with 86.1%, Protestant 5.7%, Roman Catholic 3%, and
Hindu 1.8%,

Technological factor:
Indonesia has effective and highly developed transport system with 139 airports, railways with
8529 km and water ways covering 21579 km and major ports are Banjarmasin, Belawan,
Ciwandan etc. It has one of the largest merchant moraine with 971 in which 114 is already
registered in foreign country. The communication system in Indonesia is highly developed which
maintained 17.33 millions of people use landlines where as 83.3 million of people use Cellular
mobiles in the same way there are 13 million of internet users which is good sign for a country. If
we talk about media sources it has 678AM and 43 FM channels. Similarly it has 54 local TV
stations (11 national TV networks; each with its group of local transmitters)

Environmental factor:
Geographical location: Its geographic environment is one of the most complexes and varied in
the world. By one count, it has situated in South-Eastern Asia between the Indian Ocean and the
Pacific Ocean. It has total 1,904,569 sq km area in that land is 1,811,569 sq km and water is
93,000 sq km. Basically it is hot and humid country. At least 669 distinct languages and well
over 1,100 different dialects are spoken.