PESTLE ANALYSIS

PESTLE analysis, which is sometimes referred as PEST analysis is a concept in marketing principles. Moreover, this concept is used as a tool by companies/organizations the world over to track the environment theyre operating in or are planning to launch a new project/product/service etc. PESTLE is a mnemonic which in its expanded form denotes P for Political, E for Economic, S for Social, T for Technological, L for Legal and E for Environmental. It gives a birds eye view of the whole environment from many different angles that one wants to check and keep a track of while contemplating on a certain idea/plan. The framework has undergone certain alterations, as gurus of Marketing have added certain things like an E for Ethics to instil the element of demographics while utilizing the framework while researching the market. There are certain questions that one needs to ask while conducting this analysis, which give them an idea of what things to keep in mind. They are: What is the political situation of the country and how can it affect the industry? What are the prevalent economic factors? How much importance does culture has in the market and what are its determinants? What technological innovations are likely to pop up and affect the market structure? Are there any current legislations that regulate the industry or can there be any change in the legislations for the industry? What are the environmental concerns for the industry? All the aspects of this technique are crucial for any industry a business might be in. More than just understanding the market, this framework represents one of the vertebras of the backbone of strategic management that not only defines what a company should do, but also accounts for an organizations goals and the strategies stringed to them.

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PESTLE ANALYSIS OF ASIA

Overview of Asian Subcontinent: North-East Asia - Japan, Korea, Taiwan, China South-East Asia - Myanmar, Laos, Thailand, Cambodia, Philippines, Vietnam, Malaysia, Brunei, Singapore, Indonesia, East Timor Southern Asia - Nepal, Bhutan, Bangladesh, Pakistan, India, Sri Lanka

Brief History of Asias colonization and its impact: India, Burma (now Myanmar), Malaysia, Hong Kong, Singapore previously colonized by the British Macau colonized by Portugal Indo-China colonized by France Indonesia colonized by Holland (Dutch) Taiwan and Korea colonized by Japan Philippines colonized by Spain and U.S.A.

Apart from Thailand and Japan, no country in the Asia-Pacific region was spared from Western influence. Four hundred years of Spanish presence and another 50 years by Americans has resulted in a Westernized culture in the Philippines. Many Dutch words have crept into the Indonesian language. Legal systems in India, Malaysia, Singapore and Hong Kong are still based on the foundations of British law. The chaebol system in South Korea is very similar to the Japanese keiretsu system.

Association of South-East Asian Nations (ASEAN) Formed in 1967 - today comprise of Thailand, Malaysia, Singapore, Indonesia, Philippines, Brunei, Myanmar, Laos, Vietnam and Cambodia. Set up as a group for closer economic, social and cultural cooperation. Trade between ASEAN partners (except Singapore), is still not very significant. Economies of ASEAN countries dominated by Chinese, although they form only about 6% of the regional population. ASEAN Free Trade Agreement (AFTA) was launched in 1990. It was supposed to convert ASEAN into a free trade zone or at most 5% duty by 1st Jan. 2003. Raw or unprocessed agriculture was included under AFTA. No progress made in the area of services. EAEC EAEC _East Asian Economic Caucus is an economic grouping without Westerners. Comprise of ASEAN and Northeast Asian economies. No significant progress in this alliance.

Newly Industrialized Economies (NIEs) Consist of South Korea, Taiwan, Hong Kong and Singapore. Most successful economies in the world with sustained growth rates of 7-8% p.a.(until the 1997 economic crisis and the 2001 global downturn). The only economies in the developing world those are likely to catch up with industrialized countries in terms of technology, infrastructure and per capita income. One of the key drivers of the economies of Taiwan and Singapore is the electronics industry.

POLITICAL FACTORS Political systems in Asia can vary from democratic to totalitarian. Democratic system may have multiple centers of power, none of which is powerful enough to completely control decision making. Examples of democratic systems in the Asia region: India, Indonesia (a new democracy). Totalitarian systems have political power which is highly concentrated in a small elite group. Examples of totalitarian systems: Myanmar, Laos. China is a mixture of capitalism and socialism, whilst Vietnam is a socialist state. Some Indian extremists are against their government encouraging the presence of foreign companies. Political instability can have a deterrent effect on foreign investments e.g. few foreign investors dare venture into Indonesia now. Instability also means a higher degree of political risk, like unexpected introduction of import controls and expropriation of foreign assets e.g. Myanmar. Differences in political opinions and strained relationships between countries affect business. Example, Muslim countries do not buy goods from Israel, human rights activists in Western countries boycott goods made in sweat shops

LEGAL FACTORS While most Asian governments encourage Foreign Direct Investments (FDIs), there are often rules and regulations governing foreign investments, such as: Investment granted only on a joint venture basis (as in many construction companies). Local content requirement may be must. Export/import requirement (e.g. in Myanmar for every $100 worth of goods exported, only $20 worth of imports is allowed) Transfer pricing controls. Marketing of products may be subjected to the following controls: Safety standards, registration, labeling requirements Price controls (especially for essential products like cooking oil, rice) Advertising content (scantily clad Caucasian models are not allowed in Malaysia), sales promotion techniques Exclusive dealerships (e.g. it is very difficult to change a dealer in South Korea, once the appointment is made)

ECONOMIC FACTORS Each Asian country has its own currency. The convertibility of a currency determines how difficult it is to convert one currency to another. Full convertibility means that both residents and non-residents can purchase any amount of foreign currency. Hard currencies are usually fully convertible, e.g. US$. Soft currencies are non-convertible, e.g. Kyat (Burmese) and Dong (Vietnamese) currencies. Governments impose various exchange restrictions to control their limited supplies of foreign exchange. Examples of exchange restrictions are: Licensing - exchange rate fixed by government licenses which require all recipients and exporters who receive foreign exchange to sell to the central bank at the official buying rate. Multiple exchange rates exist. Import deposit requirement. Strict Quantity controls. Currency exchange rates can be greatly affected by political changes e.g. the Indonesian rupiah changes substantially with each major political development. Also regional economic groupings (AFTA, EAEC, etc.) impact economies of both member and non-member countries. Chinas entry into WTO has a profound effect on the other SE Asian economies.

SOCIAL FACTORS Management orientations can be either 1) Ethnocentric - home country is superior. Whatever methods used to market products at home should be applicable to foreign countries too. 2) Polycentric - each host country is unique. 3) Geocentric - has a world view - sees similarities and differences in home and host countries. Managers with a geocentric orientation seek to create a global strategy that is fully responsive to local needs and wants. Examples of companies with a geocentric orientation - General Electric, Hewlett Packard. Asians, generally speaking, have certain similarities when compared with Westerners, but within each Asian nation there are differences. The main elements of social/cultural factors affecting this subcontinent are: Religion, Values and attitudes, Language (both verbal and non-verbal), Customs and Manners. All these factors vary greatly across the subcontinent according to the country in question. They all have varying cultures and festivals. Their manner of working too varies greatly. The major population of Asian countries is younger and hence provides for a formidable work force. However, there is a wide gap among the social classes in major countries of the subcontinent. Most cultures in Asia are family oriented than work. The major religions followed here include Hindu, Buddha, Muslim, Christian etc. and the languages spoken include Mandarin, Hindi, English, Malay and many other regional languages.

TECHNOLOGICAL FACTORS Japan and Singapore are some of the highly developed countries in Asia with highly developed IT, infrastructure and communications. Singapore, for example, has embarked on a major, government sponsored research into life sciences. In recent years an expansion in Asias infrastructure has been impressively achieved. In lowincome countries, telecommunication, sanitation and water supply registered the highest rates
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of increase. In middle-income economies, the growth between the years 1975-1990 had concentrated mainly in the power and telecommunications sectors. The capacity more than doubled during that period. But access to water and sanitation is still lacking for significant shares of the population. For water, one-quarter and for sanitation, one-third of the population still remains unserved. In the areas of paved roads occurred the most dramatic expansions during this period for both income groups. Expansion of infrastructure coverage has occurred in low, middle as well as high-income economies of Asia in recent decades for both rural and urban areas. In terms of access to drinking water, sanitation and power, urban populations are significantly better served than rural populations. The Asian infrastructure market is probably the most exciting infrastructure market in the world today. The World Bank estimates that the Asian economies will need to acquire infrastructure equalling the existing infrastructure of the United States and of Europe over the next twenty years. This market is naturally by no means homogenous. Some countries have come further than others and as a consequence the infrastructure needs of their economies are very different. Singapore is busy investing in high-end telecommunications, while Vietnam still needs to invest heavily in the areas of water supplies, roads, and electricity. Nevertheless, there are certain similar opportunities and risks involved in being active in the infrastructure markets of most Asian countries. These similarities are based on the fact that the Asian economies are all seeing a considerable amount of growth, and that economic policies and infrastructure policies in these countries follow a roughly similar course. Only the infrastructure markets of Japan, South Korea, Taiwan, and Singapore can be said to have achieved significant maturity.

ENVIRONMENTAL FACTORS Throughout the Asia-Pacific region, rapid economic and population growth creates serious social consequences from environmental problems of urban excess, deforestation, overfishing, global warming, air pollution, and limited safe water supplies. The Asian economic crisis has aggravated this trend. Economic policies have encouraged growth in some sectors while ignoring damage to others. Further, little regard is given to sustainability of the exploited resources. The social costs in terms of health, economic efficiency, and cultural dislocation are immediate, while the long-term costs of environmental rehabilitation are humbling. Left unbridled, environmental damage can lead to economic decline.

PESTLE ANALYSIS OF SOUTH AFRICA

Africas opportunities and challenges are inherent within the global and Continental Political, Economic, Socio-cultural, Technological, Legal and Ecological (PESTLE) environments. In pursuing programs that will address Africas peoples expectations, an analysis of the global and Continental environment is essential.

POLITICAL FACTORS It is universally recognized that improved governance is vital to development and combating poverty. However, governance reforms in Africa are slow and easily reversible. While some African countries have made advances in eradicating corruption and improving accountability and transparency through citizen participation in government as well as advances in the realm of press freedom, governance still faces tremendous challenges. Furthermore, whereas some African countries are politically stable, recording positive progress in terms of governance and combating corruption, others have significantly deteriorated. Though the public sector plays a critical role in governance reforms, private sector contribution is equally substantial. Additionally, the quality of political governance (human rights, rule of law and democratization) as well as public and private sector management, play a vital role in achieving the MDGs. The fluidity and impact of geopolitical and global economic power shifts represent great opportunities for Africa. The Continent has long been marginalized in global force such as the G8 and in the United Nations Security Council as well as in the financial institutions that impact on the Continents future. With the shifting economic and political power, these institutions are now evolving, and there is growing interest in multilateralism, providing the opportunity to ensure that Africa is adequately represented in the international for a that help to shape our future.

ECONOMIC FACTORS This strategic plan is being finalized at a time of multiple shocks to the global economy. The current global economic crisis is the most serious since the Second World War, with Africa shouldering a disproportionate burden of the adverse effects of the crisis The financial crisis and the ensuing credit crunch, combined with rising inflation worldwide and the consequent slowdown in demand in many advanced economies have engendered significant uncertainty about the short-term outlook for the world economy. While Africa is not quite as strongly exposed to the risks of the global economic crisis, as is Asia, there will, however, be significant indirect effects if Official Development Assistance (ODA) is curtailed and exports, foreign direct investment and Diaspora remittances are reduced. Furthermore, the situation will worsen if commodity prices remain volatile and other economies adopt inward looking and protectionist policies. There is therefore need to develop and stabilize the financial markets in Africa With the world economy faltering, and global institutions under immense stress and change the importance of regional blocs or groupings is strikingly clear. Africa has made progress onwards economic blocs that enlarge national markets and develop harmonized regulatory frameworks an policies conducive to investment and export development. However, progress towards regional integration has been hampered by poor transport and communication (e.g. air, road and rail) interconnectivity. Poor transport infrastructure has been a major stumbling block.
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SOCIO-CULTURAL FACTORS During the past ten years, Africa made significant progress in social and economic development. Despite the improvements, the worlds second largest and second most populous Continent is still in development crisis. Thirty-four (34) African countries feature among the 50 least-developed countries on the United Nations list; and African countries occupy the bottom 20 spots on the UN index for quality of life. In much of the Continent, a third of the people are underfed and more than 40 per cent live in conditions of poverty. The opportunity offered by Africas human potential is being wasted by high mortality rates which could be prevented, such as deaths among children and mothers resulting from HIV/AIDS, drug and alcohol abuse, crime and violence, among others. In much of Africa, 1 out of 22 women falls victim to maternal mortality, compared to 1 out of 8,000 in industrialized countries. Diseases such as HIV/AIDS (Africa is most affected by this pandemic); tuberculosis and malaria erode economic growth and undermine human development. There are 50 million African migrants, one in three worldwide. Africans are burdened by lack of basic infrastructure and access to health services, low levels of education and illiteracy and by gender inequalities. The Continents population is growing fast, and is expected to spiral from an estimated 924 million in 2006 to 1.3 billion by 2025 and 2 billion in 2050 at current annual growth rate (2.7%). The current global economic crisis coupled with the sharp rise in oil, energy and food prices, unemployment and fragile peace and security, have led to low levels of progress towards attaining the MDGs targets. Despite economic growth, Africas performance in terms of the MDGs targets remains slow. According to the 2007 AfDB/OECD report, some progress was made in achieving the MDGs targets as these data demonstrate: Gender equality: 40%, Hunger: 40%, Access to water: 40%; Primary education: 25%, Maternal mortality: 20%, Tuberculosis: 17% and Child mortality: 15%. Indeed, more needs to be done if Africa is to fully attain the MDG targets. These challenges should not dampen African nations determination to change things for the better. Many African governments and societies, working in concert with the international achieving the development targets set in the Millennium Development Goals (MDGs), including advances in health, literacy, equality and nutrition. There is renewed commitment by African Governments, coordinated by the African Union, to work together to transform the Continent for the better. AUCs social development endeavours are built on a human cantered approach that seeks to promote human rights, human dignity and social justice, foster employment, alleviate poverty and improve access to social services; thus, enhancing the quality of life of the people, particularly the vulnerable and marginalized groups.

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TECHNOLOGICAL FACTORS In the past decade, growth in Africas manufacturing sector was very low and, in some cases, negative. The sector has not shown many signs of technological upgrading. Its structure remains dominated by low-level processing of natural resources and the manufacture of simple consumer goods destined for the domestic market. Consequently, manufacturing has slowed down the economic growth of the region. The ability to create, acquire and adapt new technologies is a critical requirement for competing successfully in the global marketplace. This includes access to technology and technological capacity building with focus on technology transfer, uptake and adoption. The African Continent has not kept pace with global technological advancement. Africa's technological gap could be the source of its increasing economic deterioration because other developing regions are constantly upgrading their own technological capabilities in line with the global marketplace that is becoming increasingly liberalized and competitive. Technological competitiveness is predicated on the effectiveness with which countries enhance their capacities. Firms in African countries often lack the expertise to determine which new skills, technical knowledge and organizational techniques are required to make newly imported technologies function at optimal levels. Changes in traditional mindsets are required to create interactions and linkages with other firms and institutions, build technical know-how and overcome the problem of leakage of trained workers. The changes in the international outlook have huge implications for the future of the African Union. Africas prosperity depends, now more than ever, on improving peace and security, conflict prevention, accelerating human development, economic development and integration, market and infrastructure development, continued improvement of governance standards and enhancing political integration and cooperation. There is need to ensure that Africas voice is heard loud and clear in the international foray that shape our collective future. Pursuing these objectives is a core function of the African Union. Through the launch of African Union Space Agency, Africa will be able to negotiate better offers for satellite construction, space launches and technology transfer; and share data, scarce facilities and infrastructure much more than individual small countries can do on their own. Security issues such as images of a specific location or of a specific resolution can easily be resolved by inter-governmental agreement.

LEGAL FACTORS Faced with various opportunities and challenges in the international arena, Africa needs to speak with one voice. However, some Member States still see one another as competitors, rather than as markets for their products. In view of its small national domestic markets, Africa needs to harmonize the rules and regulations that facilitate intra-African trade and investments and promote market access for African products. To this end, the AU will provide the necessary platform for adoption of relevant legal instruments that support regional and continental integration, and for promotion of ratification and entry into force of all outstanding legal instruments adopted by the Assembly of the Union.

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ENVIRONMENTAL FACTORS To achieve continent-wide sustainable development, Africa must preserve its natural environment; and indeed, what we do today must in no way be allowed to compromise the natural environment in which we shall work tomorrow. On this score, while we seek to improve the quality of our lives, we should not upturn the balance of nature as has happened with the activities that triggered climate change. Climate change is at the root of floods, droughts, desertification and global warming, and poses a major threat to rising prosperity in Africa. Whereas it is the developed countries that produce the Green House Gases (GHGs) responsible for climate change, it is the developing nations such as those in Africa that face the worst consequences of climate change, because African nations are more vulnerable to its physical effects than developed nations, as their livelihoods are dependent primarily on rain-fed agriculture. This could well become a direct cause of conflict, as communities compete for scarce resources. The GHGs emission rates observed in African countries remains negligible due to their low level of industrialization. Indeed, it is estimated that the Continent as a whole produces 3.6 per cent of total emissions and only 4 per cent of CO2 emissions. Thus, to mitigate the effects of climate change on the Continent, Africa must gain access to sufficient global resources including access to innovative forms of carbon financing, payment for environmental services and new areas for avoidance of deforestation and reduction of land degradation. Fundamentally, Africa must speak with one voice, against GHGs emissions.

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PESTLE ANALYSIS OF EUROPE

POLITICAL & LEGAL FORCES In Europe, companies are affected by legislation at EU and national levels. Let us first examine EU-wide laws before discussing the impact of national laws on business life. European Union-wide laws 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. A major influence at European level is EU competition, which is based on the belief that business competitiveness benefits from intense competition. The role of competition policy, then, is to encourage competition in the EU by removing restrictive practices and other anti-competitive activities. This is accomplished by tackling barriers to competition through rules that form a legal framework within which EU firms must operate. The objects of these legal rules are to: prevent firms from colluding by price fixing, cartels and other collaborative activities competition is encouraged by preventing firms joining forces to act in a monopolistic way prevent firms from abusing a position of market dominancethey are discouraged from taking such actions as monopoly and discriminatory pricing, which could harm small buyers with little bargaining power control the size that firms grow to through acquisition and mergerthe objective is to prevent firms acquiring excessive market power through acquiring, or merging with, other firms within defined markets, and thereby reaping monopolistic profits restrict state aid to firmsit can be in a nations interest for its government to give state aid to ailing firms within its boundaries; on a broader scale this can give artificial competitive advantages to recipient firms, which may, for example, be able to charge lower prices than their unsupported rivals; recipients may also be unfairly shielded from the full force of the competitive pressures affecting their markets. ECONOMIC FORCES The economic environment can have a critical impact on the success of companies through its effect on supply and demand. Companies must choose those economic influences that are relevant to their business and monitor them. The general state of both national and international economies can have a profound effect on a companys prosperity. Economies tend to fluctuate according to the business cycle, although more enlightened economic management in recent years has reduced the depth of the contraction in some countries. Most of the worlds economies have gone through a period of significant growth since the mid1990s, driven partly by productivity gains brought about by developments in computing and telecommunications technologies. This growth was followed by an economic slump in 2009, referred to as the credit crunch. Within an economy, different sectors experience varying growth rates, leading to changing degrees of market attractiveness. Undoubtedly, the services sector has experienced the fastest growth and become the dominant force in most western economies. For example, among the 25 EU countries, services account for over 70 per cent of gross domestic product, which is a measure of the total value of goods and services produced within an economy.

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Low growth rates are reflected in high unemployment levels, which in turn affect consumer spending power. The recent recession has caused unemployment rates to rise and consumer spending to fall. The move by eight central and eastern European countries to join the EU in May 2004, and their earlier change from centrally planned to market-driven economies has far-reaching marketing implications. The EU is a massive, largely deregulated market in which barriers to the free flow of goods, services, capital and people among the member states are removed. One objective is to lower the costs of operating throughout Europe and to create an enormous free market in which companies can flourish.

SOCIAL/ CULTURAL FORCES The three key social/cultural forces that have implications for marketing are the changes in the demographic profile of the population, cultural differences within and between nations, and the influence of consumerism. Demographic forces concern changes in populations in terms of their size and characteristics. 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 over-45s creates substantial marketing opportunities because of their high level of per capita income. They have higher disposable income and higher levels of savings than younger people, tend to benefit from inheritance wealth, and are healthier than ever before. Another demographic change is the growth in the numbers of retired people in Europe. This is partly because people are living longer but also because of early retirement. Changes in household structure and behaviour that have marketing implications are 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. This may reflect a desire to maintain high standards of living for longer. The free movement of workers around the EU has also encouraged the growth of subculturesfor example, the flow of workers from central and Eastern Europe to older, established EU countries.

TECHNOLOGICAL FORCES Technology can have a substantial impact on peoples lives and companies fortunes. Technological breakthroughs have given us body scanners, robotics, camcorders, the Internet, mobile phones, computers and many other products that have contributed to our quality of life. Many technological breakthroughs change the rules of the competitive game. Heavy investment in new technology can pay handsome dividends. The key to successful technological investment is market understanding not technological sophistication for its own sake. Marketing and R&D staff needs to work closely together to achieve this aim. Most of the European countries are technologically advanced and have access to the latest technology.

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ENVIRONMENTAL FORCES Environmentalists attempt to protect the physical environment from the costs associated with producing and marketing products. They are concerned with the environmental costs of consumption, not just the personal costs to the consumer. Five environmental issues are of particular concern. These are combating global warming, pollution control, conservation of energy and other scarce resources, use of environmentally friendly ingredients and components, and the use of recyclable and non-wasteful packaging. Concerns about global warming and the problems associated with climate change have arisen as a result of a quadrupling of carbon dioxide emissions over the last 50 years. More extreme weather conditions, such as hurricanes, storms and flooding, which are reported to be associated with carbon dioxide-induced climate change, are already impacting industries such as insurance, agriculture and oil. BP, for example, took a billion-dollar battering from Hurricane Katrina in the USA. To avoid irreversible environmental consequences it has been agreed internationally that two forms of preventative action are required: 1 Reduction of CO2 emissions 2 A ban on the use of chlorofluorocarbons (CFCs). The purpose is to prevent further depletion of the ozone layer, which lets through increased levels of ultraviolet radiation with potentially harmful health and environmental effects. Governmental response through the Kyoto international agreement, changes in consumer behaviour, and individual action taken by companies such as GE, BP and Bayer to reduce harmful emissions, is required to achieve the objective. Car manufacturers also have a responsibility to reduce their carbon footprint. The manufacture, use and disposal of products can have a harmful effect on the quality of the physical environment. The production of chemicals that pollute the atmosphere, the use of nitrates as a fertilizer that pollutes rivers, and the disposal of by-products into the sea have caused considerable public concern. In recent years the introduction of lead-free petrol catalytic converters, and the launch of hybrid cars such as the Toyota Prius and the Honda Civic, has reduced the level of harmful exhaust emissions. Another concern of environmentalists is the consumption of wood. Forest depletion by the deforestation activities of companies and the effects of acid rain damage the ecosystem. Consumers desire for soft and hardwood furniture and window frames is at odds with the need to preserve forests. Trees leaves absorb carbon dioxide and their roots help to stabilize slopes: a landslide in the Philippines that cost many lives was allegedly caused by illegal logging. A solution is the replanting of forests to maintain the long-term stock of trees. Environmentalists favour the use of biodegradable and natural ingredients and components when practicable, and PETA (People for the Ethical Treatment of Animals) campaigns against cruelty to animals. Concern has also been expressed over the use of genetically modified (GM) ingredients in food products since the health implications are uncertain.

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PESTLE ANALYSIS OF AUSTRALIA

POLITICAL FACTORS Australia is a federal parliamentary democracy. The head of state is the Queen of Australia (Elizabeth II, since 1952) and the head of the government is the prime minister. The country has strong democratic roots, with a government chosen by the people. Political and governmental power is highly decentralized in Australia, with authority being distinctly divided between the states. The desire to be a republic is slowly growing in the nation, as the Australian Republican Movement slowly gains national importance. Though historically the political landscape of Australia was dominated by only two parties, minority parties are now gaining importance, with coalition support required from them. With the economic slowdown, financial policies have come to occupy the centre stage, as the government continues to be blamed for mismanagement. Nevertheless, a number of decisions, such as the ratification of Kyoto Protocol, changes in asylum policy and the reintroduction of collective bargaining have proved immensely popular among the population. ECONOMIC FACTORS Australia recorded a healthy annual average GDP growth rate of around 3.3% during 2002 07. The economy has been experiencing a downturn since 2008, however, with a lower GDP growth rate of 1.5%. Nevertheless, its performance is better than most of the other advanced economies, mainly because its governments finances are in a better state and its exports are dominated by commodities. The downturn was more severe in 2009, with GDP recording a negative growth of 0.5%. In such a scenario, the government's economic stimulus programs took utmost importance. Nevertheless, these programs affected the governments financial health, as revenue income was set to decline. The country also faced a risk of delayed recovery and an increased tax burden for future tax payers if these packages fail to stimulate the economy. The government is expected to continue with its policy of monetary easing along with fiscal stimulus. The Australian government has undertaken various initiatives to make sure there is all-round development in the country, which could transform the economy. The state has funded various projects supporting telecommunication and IT infrastructure, broadband services for local and rural areas, the development of green telecommunications, and carbon trading. The tourism sector provides employment opportunities to more than 480,000 people in the country, contributing more than $78.7 billion to the economy and accounting for more than 3.5% of GDP at the end of fiscal year 200708. The minerals industry in Australia is of considerable economic and social importance, helping its nationals both directly and indirectly. Indeed, the industry has directly contributed over $400 billion to Australias wealth during the past two decades. Australia ranks among the top five producers of most of the worlds primary minerals commodities, such as lead, bauxite and alumina, uranium, zinc, nickel and iron ore, among others.

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SOCIAL FACTORS Australia has an impressive healthcare network, and the government has also taken up teleeducation to disseminate information among the healthcare units. The country has also entered into several healthcare partnerships in Asia Pacific. Australia has far greater social mobility than countries such as the US. While it has a good healthcare network, the country is challenged with a weak social security system and professional work pressure leading to high stress levels. Another problem that is now becoming a worry is the aging population and the corresponding reduction in the labour force. The countrys booming education industry may also take a hit because of increasing instances of attacks on Indian students, who constituted a significant 18.7% of total international students in 2008. Australia offers good opportunities for social mobility, with chances to rise up the income ladder more frequent than in other countries, such as the US. However long-term unemployment and the growing phenomenon of jobless families (where two or three generations of a single family may be out of work) are indicative of the kind of problems faced by the system. The most problematic features of the Australian welfare system are its complexity and the marginal tax rates applied to people who move out of the welfare bracket and work. As the large Australian baby boomer generation progressively moves into older age brackets, maintaining high per capita income growth will become harder to achieve. The proportion of people aged below 55, where labour force participation is normally highest, is expected to decline significantly during the next 20 years. Australian government projections foretell a doubling of the number of people aged over 65 to around 25% of the total population over the next 40 years, while growth in the population of traditional workforce age is expected to slow to almost nil. Excluding an unprecedented rise in fertility rates, the age structure of the population is likely to stabilize thereafter with a far higher proportion of older people than before. Table 3:

TECHNOLOGICAL FACTORS Historically, the Australian government has supported technological development. With government investments in the broadband network, the e-commerce market is set to grow further. Additionally, on the R&D front, the country has entered into scientific pacts with many countries, including India, China and the US. While the country has a proven record in R&D, however, low levels of productivity and high wage costs have dampened its activity in this regard. Also, the number of patents being awarded is on a declining trend. The telecommunications sector has been one of the fastest-growing industries in Australia. With continuous patronage from the government, the communications market is expected to grow at a much faster rate in the coming years. In Australia, business driven by online shopping and e-commerce is at a high, with more than five million households having access to internet at their homes. Among the business segments, 60% of small and medium enterprises (SMEs) use the internet for their transactions and more than 50% of these SMEs use the internet to sell their products and services. As a part of their international science collaboration, Australia and India set up a joint working group (JWG) to create a roadmap for strengthening bilateral co-operation in science
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and technology in April 2008. Prior to this special agreement, 21 projects were already functioning under the India-Australia Strategic Research Fund for advanced scientific development. Furthermore, Australia and China work together via the China-Australia Special Fund for advanced science and technology development. The country has also entered into scientific bilateral collaborations with the US, Canada, South Korea and Japan. With growing international science and technology pacts, the country is set to augment its R&D capabilities. Due to many factors, like low productivity, high wage costs and reduced participation in R&D, Australia fares poorly in terms of research patents in comparison to other developed countries. Even though the country is considered a developed nation, Australia received only 1,546 patents compared to 93,691 in the US and 35,942 recorded by Japan in 2007.

LEGAL FACTORS The Australian judicial system includes a supreme court for each state, the High Court for the whole country and many district level courts within a state. The nation has specific antiterrorism laws and supports many countries to fight terrorists. Although there are distinctive operating bodies in the judicial order, the government needs to ease the rules and regulations with regard to lawyers migrating between various jurisdictions within the country. Australia is also listed as one of the most open economies in the world by the OECD. The country follows market friendly policies and has a very liberal legal regime in its annual review of reforms in 30 member countries. It had the second lowest levels of red tape in terms of business procedures, the third most liberal laws with regard to retail distribution, and the fourth smallest framework of specific industry regulations. The Australian Securities and Investment Commission (ASIC), the regulatory authority for financial institutions, follows the corporate laws very strictly and reviews corporate actions with great diligence. Despite a number of liberalization measures, a few restrictions with respect to investment in particular sectors still exist in Australia. Investment in media, transport and communication has not been fully liberalized. For instance, cross-media ownership is only allowed subject to conditions that no less than five independent voices remain in metropolitan markets and four in regional markets. Similarly, foreign investment in airlines is subjected to more stringent requirements than the standard limit of 49% of the equity in an Australian international airline. Furthermore, foreign investment proposals for acquisitions of Australian airports are subject to examination in accordance with the standard notification requirements and prior approval is required for foreign entry into the telecommunications sector.

ENVIRONMENTAL FACTORS The Australian government has comprehensive policies in place to protect the environment. Moreover, the government encourages all of the citizens to participate in saving and protecting the environment through various schemes. The government has also been active in developing various technologies that are environmentally friendly. Australia has already started to witness the effects of global warming, with the country frequently experiencing the effects of climate change. One of the most severe effects of rising pollution levels has been
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the decreasing area of the Great Barrier Reef. Australia is also facing pollution due to forest fires in South America that produced excessive amounts of carbon monoxide. The rising pollution levels are causing environmental disruption in Australia, and are only getting worse. The proportion of the country's land that is hospitable to useful vegetation has now fallen to 8%, and wetlands in the Murray-Darling basin have come down by 90%. Even the coast and ocean life are under increasing pressure in Australia; it has also been discovered by the forest department that the water yields from woodland to the Melbournes supply catchments have come down by 50%. Scientists estimated that almost one third of the extra carbon monoxide in North Australia was from South America. This is becoming a worrying factor for the authorities in the country. Australia has entered into several international agreements, enabling the country and others to fight pollution with collective strength. Australia has environmental pacts with Association of Southeast Asian Nations (ASEAN) members, the US and also several neighbouring countries. The Australian Capital Territory's green energy scheme encourages citizens to use renewable sources of power. Under electricity feed-in laws, households are paid a tariff 3.88 times the retail cost of electricity for the clean energy produced from rooftop solar panels or other renewable sources that they feed into the grid.

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