PESTEL analysis European Cereal Industry - Case Study Example

PESTLE Analysis: European Cereal Industry al Analysis Political Factors This refers to the situation in which the government or suprapolitical organisation policies influences business operations within the region such businesses are operating (Cohen, 2010). Much of Southern European market and the Scandinavian market is a stable political region with clearly less upheavals. However, the situation in Ukraine and Russia is of great concern to business operations, as it may hamper business operations in those areas (Rachman, 2014).

Western Europe and Scandinavian countries enjoy wide freedoms and democracy, and the current political climate in the region would ensure the smooth growth of the cereal industry. Economic Factors Western Europe and the Scandinavian countries operate on the basis of free market and this allows any business to thrive without any concern on the growth. The European countries have a favorable taxation policy, in fact Denmark economic climate for businesses was ranked number one by the world bank as it lead in ease of credit access and taxation policies.

Generally, the Europe provides tax breaks for international companies, and a firm such as the united cereals can benefit from such an impressive economic climate (Clark, 2007). According to Johnson & Turner (2006), competition for more business presence in each of the European countries has lead to more favorable taxation policies among the countries of Europe. The current harmonized inflation rates for consumer goods across Europe have been recorded at -0.05, and this means that the region provides fertile grounds for any business venture.

A low inflation rate in the Euro region means that the general economic climate provides a stable level of consumption and production of cereal products. The Euro crisis which had gripped European countries in the past five years, seems to be slowly fading away providing more hope for improved economic performance in Europe and hence more disposable income, and through the principle of transitivity implies commercial potential. The cereal industry is labor intensive, and this means that this can become a stumbling block towards establishing a business presence in the region, if considered singly.

Social factors In Europe, breakfast is general considered American culinary import, away from their various breakfast culinary traditions. However, over the years most Europeans have come to accept this food as part of their breakfast that is necessary for people who live in the urban areas who taken their breakfast while rushing to either school or to their workplaces. The social environment of the market is determined by factors such as cultural trends, age, and population analytics amongst others.

Europe has varying social trends which range from favourite shopping channels, to preferred breakfast meals (Naylor, 2012). Despite differing preference for a variety of meals uptake of cereals on a European breakfast table is on the upsurge. Cultural traditions of Russia shun cereal breakfast for porridge. Technological factors Europe is one the most developed regions in the world with huge developments in every technological sphere, and high tech developments in bio-technology, electronics and ICT provide positive platform for growth of the cereal industry (Runiewicz-Wardyn, 2013).

The sales as well as distribution of cereal products by the industry’s players can be enhanced through such positive technological situation. Legal factors Generally the law of contract is more or less the same in Europe and it is the lifeline of businesses in legal parameters. Nonetheless, the European Union has in recent period enacted new VAT laws that affected only digital products and not consumer products such as the cereals (Ross, 2015). The hard wired legal structures in Europe provides an opportunity for most companies to set their operations in Europe, and it is very conducive for the cereal industry, considering the intense competition that is unfolding in this market.

Environmental factors The European Union has strict laws on pollution, particularly carbon emission, although established companies within the industry have been accustomed to these rules (Reynolds, 2010). According to Guay (2014), businesses are forced to pay for environmental damages in Europe. . Reference List Clark, C. R. (2007). Advertising restrictions and competition in the children’s breakfast cereal industry. Journal of Law and Economics, 50(4), 757-780. Cohen, M. J. (2010). Food supply, factors affecting production, trade and access. Guay, T. R. (2014). The business environment of Europe: Firms, governments, and institutions.

Johnson, D., & Turner, C. (2006). European business. London: Routledge. Naylor, T. (2012 September 26). How to eat: Breakfast Cereals. Theguardian. Retrieved on 23rd February 2015 from http://www.theguardian.com/lifeandstyle/wordofmouth/2012/sep/26/how-to-eat-breakfast-cereal Rachman , D. (2014 March 17). Unrest in Europe raises global concerns. ft.com. Retrieved on 23rd February 2015 from http://www.ft.com/cms/s/0/5df7c230-9fb0-11e3-b6c7-00144feab7de.html#axzz3SX1gokcd Reynolds, N. (2010).

 Factors influencing business relationships in agri-food chains: An analysis of selected german chains in european comparison. Lohmar: Eul. Ross, E. (2015 January 6). Six month grace period for business affected by new EU VAT laws. Theguardian. Retrieved on 23rd February 2015 from http://www.theguardian.com/small-business-network/2015/jan/06/grace-period-businesses-affected-new-eu-vat-laws Runiewicz-Wardyn, M. (2013). Knowledge flows, technological change and regional growth in the European Union.

Cham: Springer.