Pest Analysis of Sainsburys in a 3rd World Country Essay Example for Free

Pest Analysis of Sainsburys in a 3rd human beings Country EssayInterest rate, economic step-up, monetary and fiscal policy, inflation and the exchange rates are the important economic factors. These factors play a rattling role in a firms business strategy and decision making. Every country has its own culture and the nation has a strong jolt on their living. The social and cultural influences on business vary from country to country. Socialfactors include the cultural aspects and include health consciousness, language, world growth rate, age distribution, career attitudes.Trends in social factors affect the demand for a companys products and how that company operates. For example, the roles of men and women in the society. Furthermore, companies may change various anxiety strategies to adapt to these social trends Technologicalfactors have vital place in swearing analysis. Some markets are labour intensive and some are chapiter intensive. Technological factors determine barriers to entry, minimum efficient production level and influenceoutsourcingdecisions.It is one of the major drivers of globalization and is the base for competitive favor. Innovation is offered to the customers or consumers by means of technology for example internet banking, smart phones etc. It withal enables the firm to produce a product cheaply and to a better quality in standard. Pakistan is the sixth most populated country in the world with over 180 million people. It is estimated that the 25% of the population belongs to the middle income class. It is also estimated that 55% of the Pakistani population is in the 10-40 years age bracket.The upper middle-income class is estimated at 17 million with relatively high per capita income which favours more consumer spending. The average Pakistani consumer spends 42% of his income on viands related products. The upcoming changes in demographic will create opportunities and ch exclusivelyenges for businesses in Pakistan. Pakist ans food retail arena is unorganised and extremely dominated by independent small stores. Over the past few years, some large European food retailers have opened stores in all major Pakistani metropolitan cities like Makro, Metro and Carrefour (Hyper star).Pakistani families are attracted towards these stores due to their strategic location, multiple product range and imported touch on food. Studies also show that there has been a prodigious shift to organized format of shopping from traditional format, in urban areas. This provides a challenging and juicy opportunity to another(prenominal) food retailers to enter the market. Sainsburys provides convenient shopping under one roof, has wide range of products, consumer friendly environment, large storage and discounted prices.These factors give Sainsburys an advantage over other food retailers currently present in Pakistan. If Sainsburys decides to enter in food retail sector then it has to perform a PEST analysis. PEST Analysis of Sainsburys in Pakistan Political Factors The political factors revolve around the current governing in a country. Currently, in Pakistan, the ruling party is Pakistan great deals Party which was democratically elected in 2008. Though it is backed by western powers but still is considered to be a weak government.The sanctioned questions arise such(prenominal) as how stable is the political or is there any government intervention in the economic policy making or laws and legislation protecting the businesses. Unfortunately, due to weak governments in the past, the security and corruption has been the key issues Pakistan has been facing over the the last decade. Which certainly is not a solid sign for any foreign investors. However, giants in food-retail sectors like Metro and Carrefour ( hyper star) have set an example with an increasing growth in profit and enlargement even in such circumstances.Sainsburys may enter in the Pakistani market with its variety of products whic h are available under one roof, as the increasing trend in urban areas shows, there will be high demand for it. Political factors may also include the goods and services which the governments deprivation to provide or be provided. Sainsburys collects much of its revenue by selling its wide range of wines and spirits. Pakistani law prohibits the sale or consumption of any type of wines and spirits within its geographical boundaries, Sainsburys will not be allowed to sell it in their stores which may negatively affect their sales. giving medication of Pakistan ensures that there is foreign investment in Pakistan and it has signed a few trade agreements too. It also provides foreign investors the incentives to invest here. Partial ownership by the Pakistan government usually serves as an insurance policy for the share holders and the investors. Economic Factors Extremely volatile oil prices are the root ca usance of global financial crisis in Pakistan which has also worsened the energ y crisis. These two factors increase the cost of production.High inflation is a key resultant of it As Sainsburys produce much of its products in stores so they may go beyond their feasible region in producing a product. Interest rates are at their peak, economic growth is quite slow and this is due to the low level of lending and purchasing power of the consumer is weak. Though it is a labour intensive country and labour come forth is quite high and also available at low cost than most other countries but unemployment is rising regardless of the above mentioned fact. The gap amongst rich and poor continues to expand and the percentage of poor is increasing everyday.However relatively quite cheaper labour may do a signifi fecest impact in Sainsburys production. It will also bring employment opportunities for young and skilled labour. Heavy loans from financial institutions like IMF and world bank has made the government in debt upto neck and there are no significant changes in sig ht. However financial aid packages in the name of war on terror and from the friends of Pakistan has unploughed the economy from collapsing. Pakistan has integrated with global economy and has brought positive impact on economy with increase in GDP.Despite of the worse conditions, Investing in such a country where cheap labour is available and more than half of the countrys population lies in the labour force, targeting middle-income class-keeping the fact in instinct that government provides support to private investors would not be a bad decision. Social Factors The culture and religion are very close to each other in Pakistan. As mentioned above this will affect the sales of wines and spirits of Sainsburys as it is not only command by the dominant religion and prohibited by law but the targeted class does not accept it too.Health and Education are the two important sectors for any developing nations and Pakistan lack both(prenominal) of them and government of Pakistan fails to allocate the required budget in both the sectors. However, people like to shop and come with families to the big retail stores. There has been a significant shift from traditional to organized format. The studies show that 11% of the population tend to buy long life food related products in advance for a month. Sainsburys provides a healthy and safe environment to work with,which for a change would attract the people to work and shop here.In comparison to the past, women have also started to contribute in the labor force. Language will be a barrier for the citizens of Pakistan as english is not the first language in Pakistan. purchasing imported products is considered a status symbol in Pakistan so there is a high demand for foreign products in Pakistan and is appreciated in the local anesthetic market. According to studies people spend 42% of their income on food related products. So there will be high demand for a food related products provided by Sainsburys. Technological Fac tors Technological expertise is overflowed in Pakistan as the labour supply and demand for IT professionals is high. There has been an improvement in the industrial sector but still the countrys imports are higher than exports. Since it is a labour intensive area and not capital intensive so use of technology higher the cost of production but shift to focus more on labour may help Sainsburys to produce its products relatively cheaper. There is also a trend of buying products online seen. Sainsburys already provides the service of buying its products online which saves much time so the typical 9-5 workforce can also be targeted.