PESTLE Analysis of Mackie’s Crisp:
The major section of the report discusses the macro-environmental factors that help the concerned company to expand its business worldwide. The company for this report is Mackie’s. It is a United Kingdom based company, which manufactures chips and exports them to the foreign markets. The Mackie’s came into existence in the year 2009 and then those started undertaking exports from the year 2010. The major issues faced by the company in exporting their manufactured commodities will be discussed in the analysis. The purpose of the report is to understand the important macro-environmental factors that affect the company’s dependence on the international trade and thereby determine the availability of the products in the international markets. The SWOT analysis of the company, the PESTLE and the Porter’s five analysis of the company helps in the better understanding of the company’s macro-environmental conditions. These tools also help to analyze the position of the company in international market.
Macro-Environmental Analysis forms an essential part of any business. These factors do not lie within the domain of a business but can harm the working of a company especially the one like Mackie. One of the primary tools to conduct a macro-environmental analysis is the PESTLE Analysis. A PESTLE Analysis tends to identify the various factors that are present in the external environment of the business and have a direct effect on the working of the given company. Since the external environment of a business is dynamic, these external factors need to be taken into consideration before operating in the business environment. PESTLE stands for Political, Economical, Socio-cultural, Technological, Legal and the environmental factors. For the given company, the PESTLE Analysis of the three given choice of countries will be done. This shall help the business in identifying the various factors, which are present in the respective countries and help in comparison among the different countries. For the analysis, a country is being chosen in the three different continents. For Asia, the country India will be chosen, For North America, Jamaica will be chosen and for Europe, France will be chosen.
|
Factors |
France |
India |
Jamaica |
|
Political |
Although the political environment of France is very strict with the elite group containing most of the power, France as a country is open to investments. It is a liberal country with many incentives being offered to promote business. With Brexit, the United Kingdom is in a turmoil and thus France can be a right choice |
India has turned out to become a super power. There are various tax benefits and the concept of an unexplored market present in India where Mackie can establish itself. However, the country is on a self-production mode, which may form a barrier. |
Since Trump has become the new President, his laws can affect the company’s operations and expansion plans. According to this law, no external company will be given additional facilities, which can stimulate the growth and job opportunities of the nation (Stone 2016). |
|
Economical |
The economic condition of France is very stable. The country was not greatly affected by the recession, which took place in 2007-2008 periods therefore the country is suitable for operations. |
Although India has been doing well, there is vast inequality in the income of the people. Majority of the people earn low wages and may not be able to afford the crisps. Thus, the product will only be consumed by the rich who comprise of only 10% of the population. On the brighter side, there is cheap labor available in India and various tax benefits. |
Jamaica is more of a tourist destination and the economic condition of the country is restricted by legislation. The legislation is enforced on the exported products and the taxes are imposed on the same. Although the economic condition of the country can be labeled as stable, various new policies by Trump can affect the trade. |
|
Socio-Cultural |
The socio-cultural perspective can be reflected in the tastes of the people. Known for good food, the French are open to new tastes and products. |
People in India are not that open to change. They have a pre-set taste, which will enable them to not accept the change in flavor of Mackie crisps. There are various ethical norms that are different in India and have to be considered. |
There is a young population present in the country, which is open to new tastes and products. Hence, from this point of view, Jamaica may be a good choice. |
|
Technological |
The country is technologically advanced and therefore the business of the company can reach the country very quickly. |
India is becoming technologically advanced, however a major portion of the population do not have an access to the advancements. Hence, the business might face problems while reaching out to the company. |
Just like France, Jamaica is quite advanced in terms of technology and therefore the company can take advantage of the advancement and make their move. |
|
Environmental |
There are various laws and legislations present in France which puts restriction on the production and packing facilities. These need to be abided by while doing business in the country. |
India is a developing country and therefore they do not have very strict rules for the protection of the environment. However, the persist on using recycled materials for packaging and other processing steps. |
Jamaica is very strict in terms of packaging and producing while adhering to the environmental laws. Conservation of environment is there ulterior goal and therefore, the company needs to abide by these rules in order to establish connections. |
|
Legal |
As stated earlier, France has a strict set of rules for the establishment of a new business or in cases of export taxes and custom rules. There are various acts pertaining to exports as well as anti dumping laws, which need to be abided by. |
India has strict rules and laws with respect to business in order to protect their economy. They have anti dumping laws, minimum wages and various other business laws pertaining to foreign companies that often make business difficult. However, these laws are simple and can be adopted. |
As Trump became the President, the laws have changed adversely. Trump is totally against foreign products and companies and therefore has formed strict legislations. Export laws have been made stringent thereby making it difficult to export to the country as well as setting up business there. (Handford et al. 2014). |
From this PESTLE, analysis performed on the given three countries the following conclusions and implications can be drawn:
The company is based in United Kingdom and therefore it has been advised that the Mackie should avoid expanding to Jamaica in North America. This is because, as Donald Trump became the president there have been many rules and regulations which have been altered and these are anti-foreign companies and therefore Jamaica should be avoided. (Stone 2016). Hence, it can be stated that India will be the most suitable market. Although the economic stability of the country is not as advanced as compared to that of the other countries, however, the laws are easy to follow and the labor available in cheap. The young population present in the country is open to new tastes and it is advisable that the country should export and invest in India to experience a new market. The number of customers in India is high and diverse which makes the risk a calculated one. It is advisable that the company follows ethical considerations and norms of India in order to become successful.
Political
The Porter’s five helps in understanding the factors that the company might face while marketing the product. The intensity of competitive rivalry of the product in the international market is high due to the existence of the numerous companies in the same industry (Spence2015). The threat of the new entries in the industry as well as in the global market is high due to the demand of the products and the profitability of the same. On the other hand, the threat of the substitute products is moderate as there lays a question of acceptability of the new products by the consumers. The bargaining power of the suppliers is again high as there are many companies belonging to the same industry in the market. Similarly, the consumers are also provided with many options of the companies from the same industry to choose from which consequently increases bargaining power of the customers.
Ethnocentric, Geocentric, Polycentric and Regiocentric, refers to the approaches undertaken by the international human resource management in order to understand the necessity of the placement of the type of employees that are required for the internationalization of business. The Ethnocentric approach refers to the hiring of the employees from the home country where the organization is based. The Geocentric approach refers to the hiring process where the most suitable candidate is being selected in order to meet the requirements of the organization irrespective of the nationality that the person belongs to (Kangand Shen2016). The Polycentric approach refers to the hiring process in which the personnel are selected from the host country based on the qualification and the preferential job role that the person can perform to meet the expectations of the organization. TheRegiocentric approach refers to the hiring process in which the employees are hired based on the regions and the subparts of the host country (Myers2015).
In cases where the business decides to expand its operations whether nationally or internationally. The need to follow a specific approach given above or a combination of them. The concerned company for this report, Mackie aims at making the most out of the employees and therefore undertakes ventures in the host countries. In order to undertake the exports efficiently and employ the right person for the right job, Mackie focuses on the approaches of the International Human Resource Management (IHRM). As the company is based in UK, it is recommended that Mackie must take ethnocentric approaches for operating successful business in France (Jordan and Lawrence 2012). This will help the company in retaining the outputs of the company and thereby retain the economy of the nation. On the other hand, Mackie must consider the polycentric approach while operating in the Jamaica market. The policy prohibits the entry of any foreign companies in the American market in order to retain the economic condition of the states and to maintain a uniformity of the job that are being provided to the Americans. In order to outnumber the law, the company employs the Americans. India enriched with diverse cultures and social practice, which is based on the regional differences, therefore the regiocentric approach, will be the most suitable for performing the firm’s business operation in India. (Hjartardóttir. and Lundeborg2017).
Economical
The issues faced by the international human resource management are based on the diversity of the culture and the heritage of the people. The globalization of the organizations and their involvement in the international trades has helped the organizations in taking hold of a diverse range of employees. The human resource is one of the major strengths that help the company to prosper. The issues such as the compliance with the international employment laws, cultural and social diversity are the major among the all issues. On the other side, some of the major challenges of the IHRM are the employee retention, ethical and legal employment according to the host nation, culturally and socially diverse staff management and others (Stash, Bookman and Morris2012).
Culture is an important phenomenon that helps in the process of making the gradual development of the company based on the resources that are being provided. It helps in the proper functioning of the systems determined by the four dimensions that are being related to the culture. As opined by Hofstede the major four dimensions are the approaches of the individualism and collectivism, uncertainty avoidance, power and distance, masculinity and femininity (Minkovand Hofstede2012).
The chosen country for the organization’s international expansion is the India and the first dimension for India refers to the collectivism. People living in India are the member of the collectivistic society and therefore are the believer of harmony, conformity and belonging. The cultural or social practices of these countries dominate the individualism (Cushen et al. 2012). People of this country tend to maintain the conventional and standard rules for living. The uncertainty avoidance is high in the consumers of this country. Considering the fact of the power and distance, the Indians consider the power to be the integral and central part of the society and this central power dominates the people of the society. In fact, most of the collectivistic societies are the followers of the high power distance. Lastly, in terms of masculinity and femininity the gender diversity is strong and apparent. In addition, people here have tough values for their livelihood and morality. Therefore, the company must comply with the cultural orientation of India for the international business expansion within the same context.
Conclusion:
Therefore, it can be concluded from the above discourse that the for Mackie’s Crisp the most suitable country for the internationalization of its business is India. However, the discussion through different analysis presents the major challenges and issues that are available in the market of India, with primary reference to the culture of the country and the human resource aspect. In addition, the discourse also discusses the cultural dimension of the chosen international country for effective internationalization of the business.
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