pestle analysis of europe
DESCRIPTION
Europe project- GlobalizationTRANSCRIPT
1 continent
World’s largest economy
One currency
500 million people
High buying powerGDP per capita: € 31.600
CMU-Presentation – Hans-Andreas Fein & Associates, Stuttgart/Germany – www.andyfeinmarketing.com
Page 6
Europe as “Patchwork” of Nations
Spain
Portugal
France
UnitedKingdom
Ireland
Italy
Greece
Germany
Belgium
Netherlands
Sweden
Finland
Poland
Austria
Czech Rep. Slovakia
Hungary
Cyprus
Denmark
Romania
Bulgaria
Luxembourg
Lithuania
Lativa
Estonia
Turkey
Ukraine
Belorus
Russia
Switzerland
The Benefit of Doing Business in Europe• Benefit from buying power of 450 million people
• All types of industries and technologies established
• Best platform to access to Eastern Europe / Russia
• Compete/cooperate with tech drivers in many
industries
• Get know how on environmental / energy
saving tech’s
• Use your management skills
(speed/flexibility/Internet)
• Exchange business practices, processes and
expertise
• Get friends in the world of globalization on
your side
Major Issues for Businesses in Europe• Standards, standards, standards – EU Directives
• Deregulation of telecom, energy, postal, railway etc.
• Production moves to Eastern low wage
locations
• Strong competition by China imports (and
from India)
• IAS-Accounting standards / Group balance
sheets
• Basel II – New rating standards by the banks
• Shareholders versus stakeholders debate
The Daily Challenges for Businesses
• Standards, standards, standards – EU Directives
• 35 hours week / paid vacation (high productivity)
• High labor costs, in particular social security costs
• Corporate taxes, in particular for private companies
• High lease for office space and private housing
• High gasoline prices/airfares ( oil prices and eco-tax )
• Relatively high fees for power, gas, sewage, postage
• Traffic problems, in particular on the German roads
• Costs for security (for IT and for buildings)
*EUROPEAN SUBCONTINENT
PESTEL ANALYSIS
*POLITICAL & LEGAL
*In Europe, companies are affected by legislation at EU and national levels.
* The EU is similar to a confederation, where many policy areas are federalised into common institutions capable of making law.
*However the EU does not, unlike most states, control foreign policy, defence policy or the majority of direct taxation policies.
*These areas are primarily under the control of the EU's member states although a certain amount of structured co-operation and coordination takes place in these areas.
*The constitutional basis and organisation of the European Union is based on its treaties.
*The EU itself as a legal personality and a set of governing institutions empowered by the treaties. However sovereignty is not invested in those institutions, it is pooled with ultimate sovereignty resting with the national governments.
*EU laws exist at two levels: (i) regulations that are binding on member states and (ii) directives that are binding only through enactment of a law within the member state in line with the directive.
*The role of competition policy, then, is to encourage competition in the EU by removing restrictive practices and other anti-competitive activities.
*ECONOMIC
*The EU has established a single market across the territory of all its members.
* 17 member states have also joined a monetary union known as the Eurozone, which uses the Euro as a single currency.
*Structural Funds and Cohesion Funds are supporting the development of underdeveloped regions of the EU.
Economic motives of the EU:
* Internal market
* Competition
* Monetary union
* Financial supervision
* Energy
* Infrastructure
* Agriculture
* Environment
*SOCIAL
*A major demographic change that will continue to affect the demand for products is the rising proportion of people over the age of 45 in the EU, and the decline in the younger age group.
*The rise in one-person households, households with no children and the growth in dual-income families.
*More people are living alone by choice, through divorce or bereavement.
*The proportion of couples who have no children has also increased.
*The free movement of workers around the EU has also encouraged the growth of subcultures.
*TECHNOLOGICAL
*The policy priorities in new EU members have been increasingly devoted to research and development (R&D) and innovation as the key drivers of productivity growth.
*Imitation and innovation are used as modes of technological development in many instances.
*Most of the countries in EU are developed and have access to latest technology.
*An increase in the size of the science-based manufacturing industries leads to higher intra-industrial trade between the countries.
*Some of the worlds best technical institutes are present in European continent.
*ENVIRONMENTAL
Five environmental issues are of particular concern:
*Combating global warming
*Pollution control
*Conservation of energy and other scarce resources
*Use of environmentally friendly ingredients and components
*Use of recyclable and non-wasteful packaging
Globalization Strategyfrom Viewpoint of a European
Manufacturer
build sales subsidiariesin the key markets
grow R & D centerand build start up factory
follow key customersto US or China
shift less complexmanufacturing to
Eastern Europe
Figure 2: Almost half of the global goods trade involves Europe(merchandise trade in 2008, US$ billion)
* Trade (services)
Figure 2.19: India and the United States have more sophisticated services exports than the European Union members and candidates
(Service EXPY, 1990–2007, and shares in service exports EXPY, 2007)
Note: In the right panel, traditional services are in blue shades, modern in yellow and brown.
Source: Lundstrom Gable and Mishra (2011)
Note: In the right panel, traditional services are in blue shades, modern in yellow and brown.
Source: Lundstrom Gable and Mishra (2011); see Chapter 2.
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* Factory Europe has become brainer
Figure 2.9: Advanced and emerging Europe are trading more sophisticated intermediate goods
(EXPY for intermediate goods, thousands of US$, 1996–2008)
Note: Trade in intermediates is defined by the BEC nomenclature.
Source: World Bank staff calculations, based on UN Comtrade, and WDI
21
11
12
13
14
15
16
13
14
15
16
17
1996 1998 2000 2002 2004 2006 2008 1996 1998 2000 2002 2004 2006 2008
Exports Imports
EU10 with EU15 World BGR+ROM with EU15 WorldSEE with EU15 World World with EU15
Trade in intermediate goods of:
* European workers are less mobile
Figure 15: Europeans are less mobile, even within their own countries
(labor mobility, share of working-age population that has moved, 2000-2005)
Source: Bonin and others (2008); and OECD (2005 and 2007); see Chapter 6.
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* European Convergence
See Spotlight One.
* The making of “Brand Europe”
Figure 5: European enterprises have delivered jobs, productivity, and exports
(performance of European sub-regions and benchmark countries, 1995–2009)
Note: Growth rates in employment and productivity are compound annual growth rates. Average values by group are shown. China and Japan are also included in the calculation of East Asia regional average.
Source: World Bank staff calculations, based on WDI and ILO (2010);
24
1.3
1.3
0.4
-0.7
0.6
-0.1
1.2
-0.1
1.0
1.7
2.4
1.4
1.0
3.0
3.0
4.1
6.6
1.6
1.2
7.8
2.0
0.4
50.2
49.4
57.5
39.6
32.8
38.7
11.2
13.4
26.7
64.0
23.2
EFTA
EU15
EU12
Bulgaria+Romania
SEE
Eastern partnership
United States
Japan
China
East Asia
Latin America
-1 0 1 2 0 2 4 6 8 0 20 40 60
Employment growth, percent Productivity growth, percent Exports, percentage of GDP, 2009
* Entrepreneurial structures must be suitable for a big market
Figure 7: Smaller firms contribute half of value added in the EU15 South, but just a third elsewhere
(contributions to value added by size of enterprises, 2009)
Note: The numbers in parentheses are the total value added expressed in billions of constant 2005 U.S. dollars. The EU15 comprises Denmark, Finland, Sweden, and the United Kingdom (North); Austria, Belgium, France, Germany, and the Netherlands (Continental); and Greece, Italy, Portugal, and Spain (South). The EU12 comprises Estonia, Latvia, and Lithuania (North); the Czech Republic, Hungary, Poland, the Slovak Republic, and Slovenia (Continental); and Bulgaria and Romania (South).
Source: World Bank staff calculations, based on Eurostat; see Chapter 4.
25
* Doing business is now most difficult in the EU15 South
Southern and Eastern Europe must make it easier to do business
(principal components index of the ease of doing business in 2011, scaled from 0 [poor] to 100 [excellent])
Note: Averages are computed using principal component analysis. EFTA here comprises Iceland, Norway, and Switzerland. The EU15 comprises Denmark, Finland, Ireland, Sweden, and the United Kingdom (North); Austria, Belgium, France, Germany, Luxembourg, and the Netherlands (Continental); and Greece, Italy, Portugal, and Spain (South). The EU12 comprises Estonia, Latvia, and Lithuania (North); the Czech Republic, Hungary, Poland, the Slovak Republic, and Slovenia (Continental); and Bulgaria, Cyprus, and Romania (South).
Source: World Bank staff calculations, based on Doing Business; 26
90.7
82.879.5
76.0
87.2
74.4
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