Executive Summary
In the modern business environment, companies need to learn how to assess the macroeconomic dimensions that they operate within to determine possible weaknesses and threats that can either improve or limit business effectiveness. This report will focus on the evaluation of three components of PESTEL, including socio-cultural, economic, and technological aspects in regard to the company that produces ‘Pollution Eating Bikes’ and wishes to enter a favorable country for operation. The Indian market was chosen as their focus, due to the severe air pollution in locations such as Delhi and the already-existing public initiatives to popularise the travel by bike. The assessment showed that the environmental conditions in India require the introduction of innovative solutions to the market that can reduce the human impact on the atmosphere and raise awareness of the importance of living a healthy lifestyle. The Indian market has shown the acceptance of new technologies while contributing to their development; however, the technological initiatives targeted at environmental improvement are still lacking. It was further determined that the population highly values living a healthy lifestyle, which also points to the possible prosperity of ‘Pollution Eating Bikes’ in India.
Theoretical Perspective of PESTEL Analysis
A PESTEL (political, economic, social, technological, environmental, legal) analysis is a widespread marketing tool that is used by companies for analyzing and monitoring the external environment that directly affects the success of organizations, as well as a competitive advantage in their industry (FME 2013). It is expected that the result of a PESTEL analysis will identify various possible threats and weaknesses of a company that can be later used in a SWOT analysis.
To evaluate PESTEL as a tool, it is essential to mention its advantages and disadvantages. PESTEL analysis is a tool that has a variety of benefits. It is simple in its usage and can be easily understood (Harrison & Milner 2015). Also, it allows analysts to understand the processes involved in making business decisions while also encouraging companies to improve their strategic thinking. Another benefit of PESTEL implies the possibility of reducing the adverse impact of possible threats to businesses while allowing them to spot new opportunities for their effective exploitation. On the other hand, the tool can be limited due to the possibility of missing important information because of the over-simplification of the involved factors. To be effective, PESTEL analysis should be performed on a regular basis to keep up with the changes in the environment and a company’s goals. In addition, much of the data found as a result of PESTEL analysis is based on assumptions, which significantly undermines the tool’s effectiveness.
Application of PESTEL analysis can involve several areas such as business planning, marketing, product development, research, and organizational structure. For example, when a large corporation such as Nike Inc. plans to introduce a new pair of running shoes to the market, it conducts a PESTEL analysis to specifically assess the external political factors to come up with a strategy. Key opportunities that the company seeks in its analysis include a stable climate in the majority of markets, the expansion of favorable policies of trade, and the enhancement of government support. However, it is noteworthy that the aims of the PESTEL analysis can vary from one company to another based on business goals or values.
In order to guarantee the success of a PESTEL analysis, several important steps should be taken. For instance, for addressing the problem of data coming from assumptions, one should filter the information and rate in by importance. Also, the probability of the identified factors may be assessed for determining whether they will influence the acceptance of a product or service. The final step is making recommendations based on the assessment.
Examination of PESTEL Factors: Indian Market
India is known for its environmental issues, with newspapers writing numerous articles on how the population suffers from this problem. According to Irfan (2017) from Vox, New Delhi has gained the reputation of being the most heavily polluted city on the planet, with air pollution reaching catastrophic levels that are considered hazardous to human health. Importantly, the air pollution map shows that the air pollution in India dominates rural areas where farmers burn crop stubble after harvests are over (except Delhi where smoke from rural areas combines with the rural pollution) (Irfan 2017). Therefore, the Indian market is highly promising for a company that produces ‘Pollution Eating Bikes.’
The three components of a PESTEL analysis were chosen due to their relevance to the product itself as well as the current state of the market. For instance, discussion of the environmental component is essential because the product itself is catered toward improving the state of the environment and because India is known to have issues with the environment. Evaluating the socio-cultural component of PESTEL is important because the attitudes of the population towards health and sustainability are highly likely to influence the success of introducing the ‘Pollution Eating Bikes’ to the Indian market. Lastly, the technological component is relevant to this evaluation because the technological progress that characterizes the acceptance of the new product will determine whether the company has any chances of expanding further.
Socio-Cultural Component
Socio-cultural variables include population characteristics such as demographics, age distribution, beliefs, values, health consciousness, etc., which may be used in order to determine how well the population will receive a product or service (del Marmol 2015). As of July 2017, the population of India was 1,281,935,911 people as reported by Index Mundi (2018), a data portal that collects statistics and data on a variety of topics. The median age of the population is 27.9 years, with the growth rate constituting 1.17% (Index Mundi 2018). 33.5% of Indian citizens live in urban areas, with the annual rate of urbanization reaching 2.28% (Index Mundi 2018). Knowing the demographic variables of the Indian population is important for the company due to the need of determining whether the citizens will be accepting of the new product. For example, the median age of the population is 27.9 years, which means that the active mode of transportation is expected to be received well.
In a discussion about the socio-cultural characteristics of the Indian population, it is essential to mention the level of health-consciousness as this will directly influence the acceptance of the new product. As mentioned by Thomas (2017) in the Quartz India article, 48% of surveyed consumers reported that living a healthy lifestyle was more important to them than traveling, marriage, or better time management. Therefore, the introduction of an innovative product that encourages consumers to stay active is likely to promote positive lifestyle practices.
Bicycles have become essential means of transportation that Indian citizens use for short-distance travel (Agrawal 2016). They have acquired a reputation for tools that bring both societal and individual benefits. From both the societal and individual perspectives, bikes in India are less expensive, they do not harm the environment, produce less traffic and noise (which are significant problems for India), and improve citizens’ health through consistent exercises. Also, India has developed such a bicycle infrastructure that allows citizens to travel through bike-sharing services, especially for short-distance trips.
When evaluating citizens’ attitudes toward riding bicycles, it is essential to mention that the opportunities for ‘Pollution Eating Bikes’ are vast. Citizens are used to riding bikes as one of the key modes of transportation that keep them fit while allowing them to get from one destination to another and avoiding traffic. In recent years, the efforts to popularize the use of bikes have taken new turns with the introduction of bike-sharing programs. For instance, in Bhopal, a private-public partnership (government paying for 30% of the cost operations) introduced a bike-sharing initiative that generated revenue through usage fees, ads, and sponsorships (Misra 2016). Another example of a similar program is Uber’s key competitor, Ola, introducing a bike-sharing campaign, which initially started as a service for university campuses. Users could find the nearest bike to them using a mobile application and unlock it by using a unique code, locking it after the commute is finished. These examples pointed to the possibilities of ‘Pollution Eating Bikes’ collaborating with similar services not only to promote the product but also to establish relationships with local governments of Indian cities.
Environmental Component
As mentioned previously, India has been at the center of worldwide attention in regard to the poor environmental conditions classified as dangerous to life. The problem of inadequate quality of air has become such an issue that United Airlines “canceled its flights to India’s capital because of poor air quality. Visibility was so bad that cars crashed in pileups on highways and trains had to be delayed and canceled” (Irfan 2017, para. 3). For ‘Pollution Eating Bikes,’ the environmental component revealed that the product could bring a significant advantage for overcoming the challenges associated with poor air quality. Additionally, despite the continuously growing levels of air pollution, the government of India has done too little to introduce effective policies for pollution abatement (Greenstone, Harish, Pande, & Sudarshan 2017). The introduction of the new product that has proven to reduce the levels of pollution can encourage the government to look into innovative initiatives for collaborating with brands, as in the example with the bike-sharing service in Bhopal.
Technological Component
With the continuous development of technology in India and the widespread accessibility of the Internet, India is transforming into a technology hub. The country has been ranked among the top three most beneficial ecosystems for starting up a business. According to Ramkumar’s (2016) report for Tech in Asia, the rapidly-growing tech sector in India contributed to economic growth, job creation, improvement of the population’s access to resources, and facilitation of a decrease of poverty.
Priorities of researchers for improving the technological sector in India have also included the increased attention to environmental initiatives (Tiwari & Tiwari 2015). With the green revolution and the development of biotechnologies, India opens opportunities for brands such as ‘Pollution Eating Bikes.’ At the moment, the government lacks cost-effective initiatives that could combine technologies and the care for the environment and the quality of air in particular. The company can facilitate innovation in the sphere of environmental improvement through collaborating with governmental stakeholders interested in the promotion of sustainable technologies.
With regard to the latest bike technologies, the Indian officials have made plans in transferring a portion of Japan’s know-how to the country for addressing the extensive pressure from the Chinese sector. At the moment, India is the second-largest bike producer in the world after China, and in order to address the needs of the growing industry, the officials are planning to involve the Japanese to invest in it. Therefore, the outlook for bike technologies development in India is positive, with ‘Pollution Eating Bikes’ leading innovation in the industry.
Management Recommendations
As shown from the analysis of the socio-cultural component included in the PESTEL analysis, the median age of the Indian population (27.9 years) points to the fact that bicycles are suitable transportation methods, and in combination with new ‘Pollution Eating’ technologies, can acquire massive popularity. High rates of air pollution point to the need for capturing the attention of Indian consumers by promoting the message of sustainability and introducing the innovative product to the market. Bicycles that clean the air while cycling has the potential to capture the Indian market; however, the company should consider collaborating with local politicians or social stakeholders to raise awareness of air pollution. Since it was shown that India is open to innovation and contributes to the development of technologies that are used worldwide, the introduction of the high-tech bicycle that can remove pollutants from the atmosphere may gain massive popularity (Kelly & Fussel 2015). The company should consider working with local scientists on the development of updates for the bike, as getting a perspective from Indian nationals can only benefit the company due to the need of adapting the product to the needs of the target market while ensuring that the bike will be well-received by potential customers.
Thus, the practical foundation on which the management decisions will be made should consider three components of the PESTEL analysis:
- The cultural values and attitudes of the population toward bicycles as transportation tools;
- The state of the environment for determining the need for pollution clearing solution;
- The role of technologies in contributing to new product development in the sphere of sustainable innovation.
While it is unlikely that the innovative bikes will completely solve the environmental problems that India faces, the introduction of the product to the market is a large step toward beginning to build sustainable cities and roads (Hart 2017). For ‘Pollution Eating Bikes,’ capturing the Indian market of sustainable transportation offers a variety of opportunities. The analysis showed that the population is welcoming of bicycles as a means of transportation while local governments are open to collaboration with organizations that want to integrate new systems of traveling by bike into urban infrastructures, as evidenced by the case of bike-sharing in Bhopal. On the other hand, India itself is lacking is the sphere of technological development to address the country’s environmental needs (air pollution in particular), which also points to the vast opportunities of ‘Pollution Eating Bikes’ capturing the market.
Reference List
Agrawal, K 2016, Delhi ‘a role model’ of urban India: Part 1, Educreation Publishing, New Delhi.
Del Marmol, T 2015, PESTEL analysis: understand and plan for your business environment, 50 Minutes, New York.
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Greenstone, M, Haris, S, Pande, R & Sudarshan, A 2017, ‘The solvable challenge of air pollution in India’, in India policy forum, National Council of Applied Economic Research, New Delhi, pp. 1-34.
Harrison, S & Milner, D 2015, Cambridge international AS and A level business studies revision guide, Hodder Education, Cambridge.
Hart, A 2017, ‘Anti-smog bikes: could pedal power clean China’s polluted air?’ The Guardian.
Index Mundi 2018, India demographics profile 2018.
Irfan, U 2017, ‘How Delhi became the most polluted city on Earth’, Vox.
Kelly, F & Fussell, J 2015, ‘Air pollution and public health: emerging hazards and improved understanding of risk’, Environment Geochemistry and Health, vol. 37, no. 4, pp. 631-649.
Misra, T 2017, Can bike sharing survive in India?, Web.
Ramkumar, V 2016, ‘Why India is the fastest growing tech hub in the world’, Tech in Asia.
Thomas, M 2017, ‘For Indians, living a healthy life trumps travelling the world or making better friends’, Quartz India.